Five Ways to Cover Your Cannabis Business
Cannabis has become a big business in the nine states that have legalized its recreational use, and especially here in Oregon.
However, inconsistencies between federal and state laws continue to create potential problems for owners, operators and investors in those enterprises.
The federal Racketeer Influenced and Corrupt Organizations Act (RICO) was passed in 1970 to combat organized crime. However, it has been expanded in the decades since then to include other activities considered illegal by the federal government, including drug trafficking.
Under RICO, defendants are liable for three times the amount of provable damages, plus attorney fees.
What this has meant for cannabis businesses is that concerned neighbors have been able to use RICO to file lawsuits against them for the loss of property values due to their proximity to their operations and the associated odors. Around 200 defendants in the industry have been named defendants in a lawsuit currently pending in Oregon.
One is a facility that produces cannabis extracts and edibles. Even though it is legally licensed to operate in Oregon, it’s still being charged for operating illegal under federal law. An allegation in the lawsuit is that interstate commerce laws were violated because the finished product crossed state lines.
All of these events raise a series of issues for persons within the industry to consider.
Will your insurance policy defend you against these types of suits?
Based in Beaverton, ABI Insurance offers cannabis business insurance that covers general and auto liability, professional and malpractice liability for physicians and testing labs, insurance for building, business personal property, tools and equipment, workers compensation and coverage to protect crops from physical damage and theft. The company’s cannabis business insurance policies are specifically tailored to reduce the risks and liabilities associated with the cannabis industry.
Defense is expensive.
Some insurance carriers have developed exclusions to policies that exempt them from having to defend against such lawsuits. Such policies are not yet standard, so it’s important to have an agent who specializes in this area. ABI Insurance has two cannabis business insurance experts on its highly trained staff of professionals, who can help provide the certainty needed by industry practitioners to navigate potentially stressful situations.
Under such circumstances, the wording of policies is critical. Practitioners will want to be sure to get written confirmation from their carriers that they would respond to lawsuits filed against their clients.
Do you carry products liability coverage?
As a dispensary, distributor, manufacturer, or grower, you may be required to have products liability to do business with up and downstream partners as part of the supply chain.
ABI Insurance is able to insure the entire supply chain, from seed to store and everywhere in between, with policies that meet state guidelines for both medical and recreational marijuana operations.
Do you rigorously maintain the seed to sale tracking records to prove that your entire transaction took place in the state you were licensed in?
How long does a records request take to fulfill should you have to prove your product did not cross state lines? These key pieces of information can be extremely important when defending against such lawsuits.
Do you have an attorney selected who is well vetted and experienced in cannabis litigation matters?
Lawyers tend to specialize in different aspects of the law, so you will want someone who is familiar with the particular challenges facing your industry.
For more information, you can call ABI Insurance at 503-292-1580. You can get a free, no-obligation quote via telephone or online at https://abipdx.com/forms/get-commercial-quote.