Legal adult-use marijuana is associated with risks that may cause bodily injury and property damage. Many of these risks have been well documented and widely discussed in the media, including theft, fire, motor vehicle accidents and consumption-related injuries. The potential for an increase in the number and value of cannabis-related product liability claims and lawsuits, however, is of particular concern to the cannabis and insurance industries. The production, distribution and sale of an ingestible product that has psychoactive effects – accompanied by a wide range of anticipated labeling and marketing representations – will certainly result in robust product liability litigation.
Proposed regulations require that participants in the cannabis industry have liability insurance. Public policy supports this requirement for several reasons. First, there is a strong public policy in favor of compensating those who suffer compensable injury. Second, private insurance regimes often provide excellent loss prevention services directly – and indirectly by their underwriting practices. Finally, liability insurance provides stability to industry participants.
Product Liability Generally
A manufacturer, distributor or retailer is liable in tort if a defect in the manufacture or design of a product causes injury while the product is being used in a reasonably foreseeable way. Strict liability has been invoked for three types of defects – manufacturing defects, design defects and “warning” defects, i.e., inadequate warnings or failures to warn. Anderson v. Owens-Corning Fiberglas Corp. (1991) 53 Cal.3d 987, 995. “Beyond manufacturers, anyone identifiable as ‘an integral part of the overall producing and marketing enterprise’ is subject to strict liability.” Arriaga v. CitiCapital Commercial Corp. (2008) 167 Cal.App.4th 1527, 1534.
To make a prima facie case, the plaintiff has the initial burden of producing evidence that he or she was injured while the product was being used in an intended or reasonably foreseeable manner. If this burden