Canada: Legalizing Marijuana: Product Liability For Producers, Distributors, And Dispensers

With the legalization of marijuana appearing to be more like an inevitability than a possibility, the options for consuming marijuana continue to expand. Individuals can now consume marijuana in a variety of different forms, including various edible products (baked goods, teas, oils and capsules, with more products being developed each month). As marijuana has the capacity to cause significant impairment, producers, distributors, and dispensers of both marijuana and marijuana-based edible products will likely be found to owe certain duties to consumers.

It is well-established at law that producers, distributors, and dispensers can be held liable for injuries sustained by consumers from the use and consumption of a product. In the context of civil litigation, once it is established that the product is defective or different from what was set out on the label and caused the alleged injuries, the burden falls on the producer, distributors and dispenser to disprove their negligence. Therefore, producers, distributors, and dispensers of marijuana and marijuana-based edible products ought to ensure that they take appropriate actions to reasonably minimize a consumer's risk of injury, and to ensure product quality.

While the exact nature of the duties owed are likely to be clarified by the Government of Canada when legalization occurs and by the Courts, listed below are a few recommendations to improve consumer safety.

Quality Control

Producers, distributors, and dispensers of marijuana and marijuana-based edible products have the primary duty of ensuring that their products are reasonably safe. The producers will have to ensure that their products are properly tested to ensure that the products sold are labelled correctly with the percentage of THC and other cannabinoids accurately set out, and distributed evenly throughout the marijuana plant and edible products. A parent company of a producer can also be held liable for production defects, where the parent company was in a position to know that the inspections carried out by the producer, in the normal course of production, were insufficient to reveal latent (not outwardly apparent) defects.

Warnings

Producers, distributors, and dispensers are likely to be found to have a duty to warn consumers of potential risks associated with the products sold. It is important to look to the nature and extent of product usage, and historical challenges of the particular product when determining the obligations to warn intermediaries and consumers of potential adverse effects of the product. With respect to marijuana and marijuana-based edible products, many studies have been conducted with many more anticipated in the near future that will increase knowledge of the dangers and benefits associated with consumption. As this duty is a continuing duty, producers will have to update consumers and others along the distribution chain of the risks associated with consumption and use. This duty continues even after the product has been sold to ensure that the consumers remain apprised of all potential adverse effects. While the law in this respect remains unclear, it is anticipated that this will include the need to provide the THC and other cannabinoid content percentages on the label, information about recommended serving sizes, as well as warnings regarding the potential impacts that marijuana can have on physical and mental functionality.

Learned Intermediaries

Many producers distribute their products through a learned intermediary (in this case, properly qualified distributors and dispensers) to ensure that the end user is a learned ultimate consumer. When doing so, a producer can defend potential litigation by arguing that a learned intermediary or learned ultimate consumer has actual or imputed knowledge of the potential dangers of the product in question. Producers can then (often successfully) argue that they are partially or entirely absolved of liability. In the case of certain products, making available to learned intermediaries current and complete information may be sufficient to discharge the producer's duty to warn consumers of dangers it knows, or ought to know, are inherent to the use of the product. That said, the courts have held that producers have a heavy onus to provide clear, complete and current information and that they are not necessarily entitled to rely on a learned intermediary as a defence to a consumer's product liability claims. The courts have historically adopted a subjective test that asks whether the particular consumer would have consumed the product in the event that he or she was fully informed of the risks of that procedure.

TaskForce on Cannabis Legalization and Regulation

The recommendations set out above were recently addressed in the report issued on December 13th by the Task Force on Cannabis Legalization and Regulation. While the Task Force issued recommendations, it will ultimately be for the Government of Canada, the provinces, and the municipalities to determine the "rules of the game", including the labelling obligations, warnings, and the different systems that companies are to have in place. One of the recommendations made by the Task Force was to implement a seed-to-sale tracking system that will hopefully allow all parties along a distribution chain to properly educate consumers as new information is learned, and reduce potential legal exposure.

In Summary

While the marijuana industry is in its infancy, product liability law in Canada is well developed, and ought to guide the behaviour of marijuana producers, distributors and dispensers. Marijuana producers and intermediaries ought to take all reasonable steps to ensure consumer safety. This analysis holds true for medicinal, and recreational marijuana use. We believe that it is imperative that companies involved in marijuana production, and distribution act carefully, responsibly, and professionally in order to protect themselves and their clientele.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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