In 2018, the government of Canada introduced legislation which legalized cannabis across the country. Since then, they have been releasing new regulations in waves governing the manufacturing, distribution and sale of different types of cannabis products. The next wave of regulations concerns edible cannabis, cannabis extracts and cannabis topicals. These rules, which go into effect October 17, 2019, permit a broad range of new cannabis products into the market. They also outline strict requirements for product composition, ingredients, and THC content; as well as packaging, labelling, and marketing.
Some of the regulations for these new products include:
- A limit of 10 milligrams of THC per unit for edibles and extracts
- A limit of 1000 milligrams of THC per package of topicals
- All packaging must be plain, child-resistant and display the standard cannabis symbols and health warnings
- The products must not be appealing to children and youth
- The products must not make any health, dietary or cosmetic claims
- Production of edibles must be done in a separate facility from where the cannabis is processed
The Government of Canada has compiled the final regulations on canada.ca; download the comprehensive chart (.pdf).
Protect your cannabis business from unforeseen liabilities with specialized insurance.
Making these products legally available creates new risks to each operator in the supply chain, the most substantial of which is product liability. With more options for Canadians to legally consume cannabis, more opportunity for litigation is created in a young and ever-changing industry.
Whether you’re a grower, processor, or distributor, you should have a basic understanding of the most common exposures so you can secure the proper coverage. Understanding your exposures will help you work with your broker to build a sound risk management plan to protect your business.
Product liability can generally be divided into three main areas of risk:
- Product contamination: If a consumer experiences adverse health effects or illnesses after using cannabis, your company can be held liable. Contaminated products may also carry the risk of causing long-term health effects, increasing the cost to your business. Regardless of the cannabis consumable you sell, the risk of a lawsuit due to contamination, product mislabeling, or misrepresentation should be factored into your risk management strategy.
- First-party claims: First-party claims include situations like fire, theft, water damage or business interruption. Additionally, they include things like product recalls which can also have significant costs, depending on the scale. Having the proper precautions in place, including a comprehensive quality control, and product recall, program, are important steps to mitigating their impact.
- Third-party claims: Third-party claims are situations where your business can be held responsible for accidents, even if you aren’t directly at fault. Due to the mind-altering nature of cannabis, the risk can be higher for any business selling products containing it. Product liability claims related to accidents, injuries, defects and similar losses are increasingly common in the cannabis industry.
Producing high-quality, safe products is a key part of being successful in the cannabis industry, but it’s just one piece of the puzzle. It’s just as important to have the proper risk-management procedures in place, and the right insurance coverage to go along with it. To learn more about how we can help identify and manage your business’s unique risks, contact one of our experienced brokers today to learn about our industry-leading protections.
