Vaping illnesses call for cannabis companies to bolster in-house counsel
What’s happening in the vaping industry might be a catalyst for companies to bulk up their legal departments, says industry lawyer.
The Centers for Disease Control and Prevention recently announced that 33 deaths have been attributed to a pulmonary disease seemingly caused by vaping. Nearly everyone who has died from the disease, and many who have been sick, used a black market THC product, which could be a call for companies to bolster their supply chains and fill out their in-house legal departments.
“A lot of these companies are really startups. When you’re a startup, you’re mostly a skeleton crew and you outsource legal services when you need it,” said Robert DiPisa, co-chair of the cannabis law group at Cole Schotz in its Jersey City, New Jersey, and New York offices. “I think you’re going to see these cannabis companies build out their in-house legal counsel. I think what’s happening in the vaping industry might act as a catalyst for vaping companies to bulk up their in-house legal counsel.”
All but one illness has been connected to black-market products. In September, a legitimate cannabis store in Oregon sold a vaping product with THC, the main psychoactive cannabis compound, to a man who died. Oregon health officials did not name the shop nor the brand that made the product.
DiPisa said in-house counsel at cannabis companies and sellers should begin looking into the indemnification provisions in their contracts more thoroughly.
“I don’t think people are paying as much attention as they probably should to the indemnification provisions in these agreements in the event that illnesses arise out of companies selling these products,” DiPisa said.
Because of the speed of the industry, he said he believes companies will dig into those contracts more than they have been.
“They want to make sure they’re protected. Right now, it is critical for brand recognition. Everyone is creating brands. One illness arising out of one of your products can kill your entire brand,” DiPisa said. “A lot of these companies are doing what they’re supposed to.”
DiPisa also said now is the time for companies to become more transparent with their supply chain process and show how they are growing and creating vaping products to earn the trust of consumers.
“I think it is important now for cannabis companies to come forward and not only show consumers what kind of practices they’re using but to show they’re using good manufacturing principles,” DiPisa said.
However, without clarity or regulations, cannabis companies and their counsel may be hesitant to show exactly what they are doing in terms of supply chain and growing products.
“I think it all comes out to not having the clarity that these companies need from the federal government because there are no vaping regulations,” DiPisa said. “Everyone is waiting for guidance. They’re not getting the clarity they need. States are saying one thing and the federal government is saying another.”
He said because there is no clarity, companies could be putting a target on their backs if a government official or regulator sees problems in the companies’ operations.
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