Cannabinoid science and medicine are maturing contemporaneously with the cannabis products that have quickly gained traction with millions of consumers, and it is all happening while the Food and Drug Administration (FDA) silently waits on the sidelines ‒ at least for now.
This may be a recipe for potential tort liability that is presently unseen by the cannabis industry. The current frequency and severity of cannabis-related product liability lawsuits are certainly much lower than the dire predictions made by the industry several years ago, but it would be irresponsible to think that the past predicts the future. Although most product suits filed to date have focused primarily on allegations of contamination by pesticides or other contaminants, and few actions have alleged bodily injury from an inherent product defect or failure to warn, the industry should be prepared to defend a new breed of cannabis product liability lawsuits that seek to establish alleged serious adverse health consequences from cannabis use. This new expert-driven legal strategy has the potential to be used against any company that sells products that contain THC, CBD or any of the minor cannabinoids. Those companies should sit up and take notice.
Studies on the Safety and Efficacy of Cannabis Use
As a society, we hold product manufacturers liable for placing an unreasonably dangerous product on the market. What is "unreasonably dangerous," however, is an open question when it comes to cannabis since, until recently, federal illegality largely has precluded the availability of long-term studies on the safety and efficacy of cannabis use. The number and quality of peer-reviewed studies on medical risks from cannabis consumption have increased over the past few years, coinciding with cannabis legalization at the state level and relaxation of rules around cannabis research.
Such research includes findings consistent with the potential for increased risk of stroke and cardiovascular complications, respiratory depression and psychosis, with enhanced intoxicating effects seen in less-experienced users. Cannabinoids also have been shown to have potential epigenetic effects, including changes to sperm that could feasibly impact embryonic viability or growth. In 2018, Duke University released a study advising men to abstain from using cannabis for at least six months before trying to conceive a baby. Similarly, cannabis may be responsible for certain prenatal and early childhood developmental problems when it is used by pregnant or lactating women. Marijuana and THC have been added to California's notorious Prop 65 statute as chemicals that may cause "reproductive harm" with no safe harbor level, meaning that any trace amount of THC without proper product warnings will trigger a violation of the statute. This also potentially implicates CBD products that may have tiny but detectable levels of THC. In addition, the FDA recently held a public meeting that addressed how cannabinoids may affect men and women differently, and emphasized that more research is needed on the topic.
Will the Courts Be the New Regulators?
There continues to be little judicial precedent for the product risk issues facing manufacturers and sellers of cannabis in the states where it is legal, given the limited number of reported decisions. Armed with new studies, however, potential plaintiffs may start seeking to use the courts as quasi-regulators for the cannabis industry. Even without allegations of bodily injury, it is not difficult to see how this science-based approach can be used to prosecute potential consumer class actions against THC and CBD companies alike. Numerous classes of consumer products that are less regulated than cannabis have gone through cycles of litigation over decades, resulting in more-robust product warnings and instructions used to ward off future liability.
For example, strong analogies can be drawn between the cannabis industry and the dietary supplement industry. Following passage in 1994 of the federal Dietary Supplement Health and Education Act, the supplement industry grew rapidly. Under the Act, supplement manufacturers did not require FDA approval before marketing dietary supplements that were sold in the United States prior to 1994. This unregulated, or at least quasi-regulated, market allowed a number of bad actors to sell potentially dangerous supplements with no real consequences. By the early 2000s, however, the plaintiffs' bar had taken notice of the supplement industry, and the resulting litigation – while having the positive effect of cleaning up the industry – drove a good portion of it out of business.
Leveraging the Lessons Learned
The cannabis industry today is in a position not terribly different from that of the supplement industry post-1994. While it faces similar legal risks, it also can learn from the supplement industry's mistakes. Unlike that market, the cannabis industry has made enormous progress in self-regulation that includes a thorough licensure process, rigorous product testing, advanced "track and trace" programs, and the adoption of third-party standards. Nevertheless, cannabis businesses may be confronted by an increasing product liability exposure as the market and the science continue to mature in tandem.
Proactive product risk management through consumer education may help to mitigate these risks. Companies can review their product labels, advertising and online presence to identify statements or omissions that may allow a shrewd plaintiffs' attorney to assert a viable claim that the product falls short of the consumer's expectations or is otherwise defective through a failure to warn. One day, it may be common to see lengthy inserts in cannabis products similar to those used in over-the-counter drug products. Until then, cannabis companies must rely on developing best practices and sound business judgment.
This article was published on January 27, 2021, by Cannasure Insurance Services.
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