Budtenders Must Consider Liabilities Colorado MED’s Morning Sickness Bulletin

Budtenders Must Consider Liabilities Colorado MED’s Morning Sickness Bulletin

Recommendation Could Trigger Liability Claim for Negligence

The Colorado Marijuana Enforcement Division’s (“MED”) recent bulletin 18-06 REPORTS OF LICENSEES MAKING RECOMMENDATIONS FOR PREGNANCY-RELATED MORNING SICKNESS could result in other issues for those allegedly making these types of claims–professional liability.  According to the bulletin, budtenders and store personnel have been allegedly providing information on marijuana use to pregnant women experiencing morning sickness. 

Buying medical and recreational cannabis

Buying medical and recreational cannabis to help with morning sickness

In order to protect consumers, the MED reminds licensees of warning labels used by the industry to address this specific topic:

“There may be long term physical or mental health risks from use of marijuana including additional risks for women who are or may become pregnant or are breast feeding. Use of marijuana may impair your ability to drive a car or operate machinery.”

When budtenders or store personnel make recommendations to the public, they may be held to a different standard due to their experience and expertise.  Particularly medical marijuana establishments whose patients rely more heavily on advice for treating certain illnesses.  Consequently, a customer who relied on the employee to use cannabis during pregnancy to help with morning sickness may file a lawsuit seeking damages. 

As a result, the cannabis company may turn to their insurance carrier seeking coverage for this type of claim. 

Is coverage available for this type of claim on a commercial general liability policy?

Most likely not.  The reason is certain exclusions could be invoked by the insurance carrier such as a professional liability exclusion.  Below is an example from a cannabis general liability insurance policy:

It is agreed that this policy shall not apply to liability arising out of the rendering of or failure to render professional services, or any error or omission, malpractice or mistake of a professional nature committed by or on behalf of the “Insured” in the conduct of any of the “Insured’s” business activities.

The insurance carrier may claim a budtender or store employee advising customers who are pregnant that cannabis will help or cure morning sickness is a liability not covered by a standard general liability policy.  The insurance carrier is likely to consider this a failure to render professional services along with malpractice.  In addition, if the Marijuana Enforcement Division was to determine this type of act was a statutory violation would further support the insurance carrier’s denial of the claim.  

What type of insurance would cover this type of claim?

Possibly a professional liability or product liability insurance policy might cover this type of claim.  However, certain exclusions may  be invoked by the insurance carrier. 

Budtenders and Store Employees must avoid making these recommendations.  Owners need to train their personnel.

The bottom line for budtenders and store employees is don’t make these types of claims as it will lead to numerous problems statutorily and legally most likely not covered by insurance.  Cannabis licensees are encouraged to properly train their employees and document this process in their standard operating procedures.      

Here was the study that prompted the MED bulletin that resulted in 70% of dispensaries recommending cannabis for women who are pregnant:

[pdf-embedder url=”http://cannabishempinsurance.com/wp-content/uploads/2018/05/Denver-Health-Marijuana-Pregnancy-Study1.pdf” title=”Denver Health Marijuana Pregnancy Study(1)”]

New Insurance Products for the Cannabis Industry

Latest Update:  Existing Insurance Carrier Expanding their Product Lines

A recent product flyer from one of our established insurance carriers expanding their product offering to the cannabis industry despite the fact other insurance carriers are leaving. 

Coverage highlights include:

  • Living Plant or Crop Insurance:  Insurance protection for your living plants from theft or fire.
  • High Limits for Cannabis Stock:  Need to protect your final product with high limits.
  • Equipment Breakdown:  The protection of valuable equipment due to a covered loss
  • Excess Liability up to $10,000,000:  Important for cannabis companies with multiple locations and numerous landlords requiring certificates of insurance.
  • Trade Show and Events Coverage:  Removes the premise only liability endorsement and provides coverage when you’re at the trade show.
  • Product Liability:  Adds coverage for your product being sold into the stream of commerce
  • Professional Liability:  Concern with providing advice to others that may be erroneous or negligent.
  • Hired and Non-Owned Auto Liability:  Insurance protection from when your employees are driving their own vehicles for company business.  Example would be those employees visiting customer who end up in a accident.  How is your business protected from the lawsuit by the third party? 

Insurance Carrier Product Update Sheet

List of Insurance Products for Marijuana Companies