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MMJ Products Liability

MMJ Products Liability

As more states begin to pass legislation legalizing cannabis for medical and/or recreational use, the writing seems to be on the wall: cannabis is going to be big business in the coming years. More consumers using these products means more litigious exposure for business owners. Because the cannabis industry is in the business of producing consumable products and devices for consumption, they have huge products liability exposure.  In fact, the first cannabis industry products liability class-action suit was filed in Colorado in October 2015.  It won’t be the last. As an industry that makes or distributes products to consumers, it is imperative that your business have products liability insurance. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is sometimes, but not always, included in a General Liability or Business Owners Package policy.  However, this coverage is usually excluded for cannabis operations. The Insurance Services Office (ISO) defines a products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product, but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review...
MMJ Product Recall

MMJ Product Recall

Since cannabis transactions are still only performed in about half of the United States, it seemed that the industry was immune to what other U.S. businesses are facing on a near daily basis: product recall. That is changing.  In Colorado there were 16 product recalls from September through December 2015 covering hundreds of products including candies, concentrates and oils. Most of these product recalls were due to pesticides.  This looks to be just the tip of the iceberg. While products liability insurance will often cover claims and lawsuits for bodily injury and property damage due to faulty products, there is still the matter of all of the other products that were manufactured at the same time or in the same way. Because these products have the potential to cause similar bodily injury or property damage, they would trigger a product recall. Product recall is not covered under products liability insurance, so a separate product recall insurance policy is required. What Is Product Recall Insurance? The cost to businesses to recall or repair faulty product can add up quickly. Consider the costs to do the following: Notify distributors and retailers about the faulty product. Remove the product from store shelves. Reimburse the distributor and/or retailer for the product. Reimburse consumers who purchased the product prior to recall. Transport the product back to the manufacturer. Repair the faulty product or destroy it. Current and future lost revenues due to damaged reputation. From first notification to recall to regaining consumer trust, product recall insurance is designed to protect your business in the event of a faulty or hazardous product. Do You Have...
Marijuana in the Workplace

Marijuana in the Workplace

As cannabis legalization sweeps across the country, those who use the substance are applauding. However, those who employ these users are now left wondering how to navigate the minefield of legal usage of a substance that was once illegal. Questions about employee rights, the legality of drug testing post-hire and other human resources issues should always be handled by an experienced HR professional or qualified labor attorney.  While Hayes Brokers are not legal professionals, we can advise on the insurance aspects of cannabis use in the workplace. Here is how marijuana usage on the job may affect your insurance policies and premiums: Can You Get Insured or Bonded? Liability insurers and bonding companies typically do not ask for evidence of drug-free employees before insuring a business for liability.  However, an employer’s main concern should be providing a safe work environment that also allows for the completion of projects in a timely manner pursuant to contract. Bonding companies may nonrenew bonds or decline to insure contractors who habitually fail to perform their contractual obligations.  Liability insurance companies may also nonrenew or decline to write policies for any business that has large or frequent claims.  Impaired employees can contribute to both of these, costing employers in increased insurance premiums for years to come. As the legalization of marijuana continues across the country, insurance companies may begin to include questions about drug free programs and marijuana usage on applications as part of the underwriting process. A strict company policy on these issues will make these questions easier to answer. How Will Your Workers Compensation Coverage Be Affected? Workers Compensations pays claims on...
Hash Oil Headaches

Hash Oil Headaches

As new industries arise, old problems can resurface and cause a lot of headaches for employers. The most common one for employers right now is employee status. Who is considered an employee? How can you provide work for someone without being responsible for workers compensation premiums for them, especially if the work is high risk? Uber has been grappling with the independent contractor vs. employee issue for a few years now. The cannabis industry is just beginning to have the same problems and it all boils down to hash oil. What’s the Problem? When produced commercially, hash oil can be expensive. Cannabis operations may find it cheaper to hire someone to make the hash oil for them using the butane extraction process, or purchase it from a local “manufacturer”. This independent contractor may be working out of his or her own home, or in a makeshift facility, such as a shed, near the cannabis dispensary. The butane process is dangerous, and without proper venting and proper equipment, explosions can happen. These explosions cause property damage as well as injury to the independent contractor. How Is This Your Problem? It may seem like a cut-and-dried issue: you hired an independent contractor, so his injuries are his problem, not yours. Unfortunately, it isn’t that simple. Like in the case of California Uber drivers suing for employee status to cover on-the-job injuries, independent hash oil contractors are contacting law firms looking for someone to pay their medical bills. That someone will most likely end up being you. You may have an employment contract with someone signifying he is an independent contractor, but...
Commercial Cannabis Insurance Coverages Needed

Commercial Cannabis Insurance Coverages Needed

Cannabis operations, whether medical or recreational, are subject to the same insurance needs and requirements as most other businesses.  However, there are a few coverage options that you should take note of when purchasing coverage for your business. Do You Need Products Liability? General Liability insurance is needed for every type of cannabis business.  If the space your business occupies is rented or leased, the landlord or lessor will require proof of liability insurance at the business location. Products Liability is usually not included in the General Liability for a cannabis business. This is one coverage that is absolutely necessary to the industry. From growth to distribution, from manufacture to retail operations, Products Liability will protect your business from claims of negligence, defect and more.   Is Your Property Underinsured? Property Insurance coverage is important to all businesses, but there are special areas of concern for medical marijuana businesses and one of them is Tenant Improvements & Betterments. This coverage is often overlooked because business owners believe that contents coverage is enough.  Hayes Brokers knows that medical marijuana businesses put a lot of money into customizing the retail space you occupy.  These customizations are known in the insurance industry as tenant improvements & betterments. Tenant improvements & betterments are defined as substantial improvements that the tenant cannot necessarily take with him when he leaves, but that he would lose money on in the event of a fire or other property damage.  Special display cases, shelving, floor and wallcoverings are the sorts of tenant improvements that should be included in your property insurance policy.   Better Safe Than Sorry For...