7 Areas Ripe for Marijuana Litigation

Potential pitfalls in an evolving industry

The use and distribution of medical and/or recreational marijuana are now legal in 29 states and the District of Columbia. We’ve already written several articles on the growth and risks involved in the evolving U.S. marijuana industry. But since expansion is expected to continue at a brisk pace, it’s worth taking another look at some of the legal issues that are cropping up, with a particular focus on exposures to product liability.

Two marijuana products liability cases have already been filed:

• Though the defendant in Flores v. LivWell successfully defended the allegations, this case set precedent as the first marijuana-related class-action suit to be filed in the U.S. More will surely follow.

• Kirk v. Nutritional Elements involves a murder. Nutritional Elements faces this failure-to-warn suit that alleges a consumer ingested their product and killed his wife in a marijuana-induced delirium. “Failure to warn” means a manufacturer and/or distributor didn’t disclose to consumers certain dangers associated the use or ingestion of their product. The Kirk v. Nutritional Elements case is pending.

Lack of federal regulation and the struggles state regulators have in applying current laws has the industry facing potential claims in the following areas.

1. Negligence

Negligence is when a party acts in a careless manner that results in bodily or property damage. Negligence is similar to a failure-to-warn claim in that it can be based on the obligation manufacturers and distributors have to act reasonably. This includes warning consumers of known health risks. Failure to provide is one aspect of negligence.

2. Breach-of-Contract Claims

Consumers, by purchasing a product, enter into contracts with the retailers/distributors/manufacturers. Breach-of-contract claims can be brought when a consumer thinks the purchased product did not execute as expected or was more dangerous than they thought it would be.

3. Intentional Misrepresentation

Claims related to fraud will likely increase since the industry’s marketing efforts are not being effectively monitored. Use of banned pesticides is already an issue within the industry. The Flores lawsuit referenced above addressed this issue, arguing that LivWell intentionally lied in its ads about the quality of their product.

4. Marketing to Youth

Years ago, the tobacco industry faced claims of improperly directing their marketing and advertisements at youth. In most jurisdictions where marijuana is legal, marketing efforts aimed at youth is banned. However, lack of self-monitoring in the industry’s advertising could see attempts by plaintiffs to make youth marketing claims.

5. Design Defect Claims

Claims of defective design argue that the product’s intended purpose is not safe or suitable. The constantly evolving edibles market and hybridization of marijuana strains exposes manufacturers and distributors to consumer claims that design defects or alterations resulted in health risks, addiction, or a more dangerous than product warnings indicated.

6. Breach-of-Warranty Claims

Such claims arise if the manufacturer’s or distributor’s representation about their product turns out to be false. With regard to medical marijuana, these could be claims about the product’s effectiveness in preventing, curing, or controlling specific medical disorders. Those in the industry shouldn’t make unsubstantiated claims about their products and it’s recommended they have an implied and express warranties disclaimer.

7. Unfair Trade Practices

Laws forbidding unfair or deceptive trade practices exist in most states. Such laws were used against the tobacco industry when it was alleged it concealed or misrepresented the health risks and addictive qualities of tobacco. It stands to reason that the marijuana industry will face similar claims.

Source: Zane A. Gilmer. “Emerging Products Liability Threats to Growing Marijuana Industry.” http://www.lexology.com. 19 Jan. 2017