Five need-to-know facts for hemp, CBD insurance coverage
Consider these facts when placing coverage for cannabis-related products that could cause bodily injury.
If you’re a broker serving clients in the cannabis or hemp industry, it’s important to understand as much as possible about the risks these types of businesses face — particularly when it comes to knowing how to best mitigate your clients’ liability exposures.
The following are five need-to-knows when considering placing coverage for cannabis-related products that could result in bodily harm.
Hemp and cannabis come from the same plant. Although a close cousin of the marijuana plant, hemp differs in that it contains very little THC — the psychoactive compound in cannabis that creates a high. Provided that the hemp plant, or its products, contains less than 0.3% THC, federal law allows for growing and commercializing hemp. Products with more than 0.3% THC are considered marijuana and remain illegal at the federal level.
CBD products present bodily injury exposures. CBD products are typically ingested, inhaled or applied topically. As such, they pose the potential to cause bodily injury to consumers who may have an adverse reaction to the products themselves, or any impurities the products may contain. Product liability insurance mitigates the risk of an injured party suing the manufacturer, distributor or retailer, and prevents the insured from being directly responsible for paying settlements.
CBD oil is a health supplement. From stress to panic attacks, headaches to arthritis, CBD oil is being used as a health supplement to treat and manage a number of ailments. The different types of CBD products include creams, gums, capsules, patches and tinctures.
CBD oil can be extracted from marijuana and hemp plants. Manufacturers of CBD products sometimes use marijuana plants in the production of their CBD oil. They do this by separating the THC from the CBD. CBD products that are processed in this manner require strict quality control protocols to ensure the CBD products are not over the legal limit for THC.
California’s Proposition 65 will impact online retailers in all states. The California Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) requires businesses to provide warnings to Californians about significant exposures to chemicals that cause cancer, birth defects or other reproductive harm. Because this warning can apply to many CBD products and because CBD products are sold online and across state lines, this law can impact businesses in other states when their products are sold in California.
Norman Ives (nives@wwfi.com) is cannabis practice leader and wholesale insurance broker, and Morgan Moore is life science practice leader and wholesale insurance broker at NutraRisk, a division of Worldwide Facilities. As a wholesale insurance broker and program manager, NutraRisk specializes in insurance coverage for the nutraceutical and cannabis industries.
This article first appeared on NutraRisk’s blog and is republished here with consent.
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