Cannabis Industry Faces Budding Product Liability Issues

 

Source: Law360

By Adam Detsky

December 5, 2016

 

Pot smokers are not the only ones lining up outside the local dispensaries. Plaintiff personal injury attorneys are as well – watching, lurking, waiting for their chance to pounce, with dollar signs in their eyes – waiting for their chance to seek punitive damages, given that many states allow damages beyond compensatory for intoxication-related injuries to others.

 

Smoking cannabis is not just a matter of rolling a joint or packing a bong anymore. Marijuana-related technology has evolved, and has resulted in multiple areas for the products liability legal community to watch.

 

One area of note is vaporizing. Vaporizing is generally considered to be the healthiest way to consume marijuana as the user is – supposedly – only inhaling the vapor of the tetrahydrocannabinol (THC), the primary cannabinoid in marijuana that causes the sensation of being high. According to some estimates, the vaporizing process eliminates as much of 95 percent of the smoke inhaled, which generally is easier on the lungs.

 

Another main cannabinoid is cannabidiol (CBD). CBD is non-psychoactive and will not get the user high. Most strains of cannabis used for medicinal purpose have much higher CBD content. But whether the user is vaporizing for recreational or medicinal purposes, the process for vaporizing remains the same, and involves heating the cannabinoids to boil out the THC or CBD. In the case of CBD, the boiling point is 320°F-356°F (160°C-180°C), while the boiling point of THC is 315°F (157°C).

 

Cannabis vaporizers comes in all shapes and sizes – some can take up a whole coffee table, while others look like a writing utensil. Many are powered by mass-produced, pen-size batteries, which have not necessarily been through extensive quality control and testing.

 

The range of vaporizers and other smoking paraphernalia extends from reasonably safe to dangerous. But the issues presented to the products liability world only start there. The most significant risk to manufacturers and sellers of cannabis products now comes from marijuana-infused edible products.

 

The edible options for cannabis consumers are nearly limitless. Manufacturers and their dispensary clients now offer pot brownies, pot cookies, pot chocolate bars, pot soda, pot gummies and pot truffles, among other products. A dispensary may take on the feel of a 7-11.

 

The areas where the edibles market opens itself up to product liability litigation are numerous. If the cannabis used to manufacture the edibles is not organic, there may be fertilizers or pesticides being consumed. Also, whether the manufacturer has a means of ensuring even distribution of THC throughout the product becomes important.

 

Consumers often do not realize that cannabis will take significantly longer to affect them if eaten, and consequently, may eat too much. They also often do not realize that one small bite could be a full dose – regardless of whether or not they are provided with clear warnings and instructions for use.

 

For example, chocolate bars made with infused cannabis or cannabis extract can be about the same size as a standard candy bar. A person may eat a standard Hershey bar or Kit Kat at one time. But in the case of a cannabis-infused chocolate bar, that may be the equivalent of eating 5 to 10 times the recommended dose.

 

A cannabis-infused edible product has already become the subject of a product liability lawsuit. In 2014, Richard Kirk purchased pot-infused candy, legal under Colorado law, from a licensed dispensary. Subsequently, Kirk was charged with shooting and killing his wife – an outcome caused by ingesting the candy, his criminal defense attorney claims.

 

The Kirks’ three children have brought a civil suit against the dispensary and the manufacturer of the edible product. Kirk, their father, has been named as a co-defendant. The suit alleges that both the bite-sized candy’s manufacturer and the store that sold it recklessly and purposefully failed to warn Kirk of its potency and possible side effects – including hallucinations, paranoia and other psychotic behaviors.

 

The practical implications of this first case, and the others sure to follow, are numerous. While most states do not require insurers to pay punitive damage awards, the resulting pain and suffering verdict could have significant implications on insurers in the industry or considering entering the industry.

 

While the news media paints a shiny picture of the tax dollars generated by legal cannabis sales, it is unclear how much profit cannabis sellers and manufacturers make – and whether they have any product liability insurance coverage at all.

 

As in any product liability matter, compliance with state requirements and industry standards for labeling and packaging products is imperative. However, these new products still carry some unknown risks.

 

The truth is that states with legalized recreational cannabis will likely adjudicate products liability claims differently than in states where marijuana is legalized for medical purposes only. Additionally, there will considerable differences among the medical marijuana states.

 

Furthermore, the right to prosecute such a claim may not be available to a plaintiff in federal court, and in some state courts, even where sale is legal under certain state law, given the fact that cannabis is still illegal under federal law as a Schedule 1 narcotic.

 

Thus far, there is very little judicial precedent on the risk issues facing manufacturers and sellers of cannabis in the states where it is legal, given the fact that legalization has only occurred over the past few years. Even in the case of Richard Kirk, it is nearly impossible to determine if his children’s case will have any impact at all on the cannabis industry.

 

The cannabis customer is buying a product commonly known to have an intoxicating affect. We do not hold liquor stores liable unless they sell to someone visibly intoxicated. But we do, as a society, hold product manufacturers liable for placing an unreasonably dangerous product on the market. This is a double-edged sword – because just as there are no universally accepted studies linking cannabis use to psychosis, there are no such studies stating otherwise.

 

And that has plaintiff’s counsels seeing green – not to smoke – but because this all sounds like a question of fact for a jury, and that sounds like negotiating leverage. Still, few plaintiff’s attorneys would want to proceed with a case where the plaintiff was knowingly using a Schedule I drug.

 

As regulated cannabis is evolving, so are the laws applied to cannabis products, the warnings and labels, and public knowledge. Will labeling and packaging measures be enough to prevent liability for the manufacturers and sellers of cannabis products? The answer: no one truly knows yet.

 

Adam Detsky is an associate at Wilson Elser, with a litigation practice in Colorado and New York courts.