One of the major forms of risk for cannabis businesses is product liability. Although the conditions for this area of law vary state to state, it generally extends to not only hold manufacturers accountable, but also retailers, often citing strict liability, negligence, misrepresentation of theories, and/or express or implied warranties. This inclusion occurs largely to place legal pressure on retailers to push their manufacturers to improve the quality of their products. Product liability is most relevant for marijuana infused products, such as edibles, where someone could fall ill after use/ingestion of the product. It is also one of the most expensive cases for a business to face, having estimated median damage awards of $350,000. There are many skillful ways to minimize risk against product liability.
Utilizing the Product Life Cycle Concept
One strategy businesses can use when evaluating product liability is the product life cycle concept. By treating each part of the product’s “life” as a separate stage (pre-production, production, and post-production), businesses can more easily identify the different possibilities of liability and fix these and other relevant product concerns. Each “life” stage should be made up of steps, such as “design,” “process control,” and “inspection,” in order to ensure quality. Product life cycle should focus on documentation and checking for defects, including design defects, warnings and instructions defects, and manufacturing defects, also known as “bench error.”
Adequate documentation is one of the first steps in protecting against product liability. Consider investing in digital microscopes in order to photo ID each batch, and label products in a way similar to how pharmaceutical prescriptions are labeled. Each label should include information such as a content description, strength and potency, date of issue, instructions for use and storage, and expiration date. Furthermore, it should have relevant warnings such as “topicals not to be ingested,” “avoid eye contact,” “keep away from children,” and “do not use while operating heavy machinery.” In case of a product recall, all of this documentation will be necessary for further reference.
Third Party Testing
All batches should be tested by a third party, checking quality and verifying that the product is free of contaminants such as molds or pesticides. After testing, the facility should store small samples of each batch for 90 days in the event that you are asked to procure a “controlled” sample.
Additional Product Liability Tips
Below are several other tips to protect your business against product liability:
- Choose packaging that will discourage tampering or unauthorized use while preserving freshness.
- Use a product tracking system in order to easily ID the source lot in case the product needs to be recalled.
- Incorporate patient notifications, product capture and testing, and sample retrieval and testing in a detailed recall process.
- When possible, require vendors to show proof of liability insurance.