CBD InsuranceHemp Insurance

The Need for Product Liability Insurance for A CBD Dispensary

By August 31, 2020September 1st, 2020No Comments

CBD Dispensary

The legalization of both medical and recreational marijuana in major states has pushed several ventures to stream into the industry. Given the risks associated with running a business, it is essential for a venture to protect all its frontiers. Failure to do so can leave a business exposed to a multitude of liabilities, particularly for those operating within the CBD industry. Not only is the CBD world highly-regulated, but it is also the fastest growing industry. Drawing a significant amount of attention, businesses of any scale need to realize the importance of insurance.

Product liability insurance is designed to protect any business against claims of personal injury or property damage caused due to the consumption of products sold by the business. Hence, with insurance intact, a business won’t have to pay the compensatory amount or any legal costs if it faces a product liability claim.

For most business owners, entering the CBD industry is overwhelming, as they’re unaware of the challenges involved. Immaterial of their position within the chain of distribution, businesses need to secure an appropriate insurance policy, be it a hemp farming insurance or a general liability policy. Errors in judgments are an inevitability and can be present in any segment of the distribution channel. This is why each segment requires a tailored insurance policy. Follow through to understand the significance a product liability insurance policy entails for a CBD retailing business.

  • The Core Business Of A Dispensary Is its Products Range

A dispensary sells CBD items that customers and patients take away for use. If in case the use of a product results in negative side effects or possible illness, a consumer holds the dispensary responsible. Not being aware of the whole supply chain, a consumer will most likely file a claim against the dispensary they know of. This puts the dispensary in a predicament, as they aren’t responsible for claims such as poor testing standards or inaccurate advertising on the part of the manufacturer.

  • A Dispensary Is Responsible For The Products Under Its Control

It is the misconception of certain dispensaries that any given issue with the product is directly related to a cultivator’s or manufacturer’s mistake. They fail to take into consideration that CBD products that are consumed through drinking, eating, smoking, vaping, or topically applying can experience changes while under the dispensary’s control. Due to inappropriate storing, handling, or mishandled inventory management, fungus, mold, or bacteria can start to grow within these products.

With negligence being on the part of the retailer, the retailer is solely responsible for any product liability claim they face.

  • A Dispensary Is Responsible For Its Employee’s Actions

In certain cases, a cultivator, distributor, or manufacturer may end up mislabeling a product. Owing to the product being mislabeled, an employee working within the dispensary may end up recommending an inappropriate product. This mislabeling could be about the combination of ingredients or certain allergic elements present within the product. Unfamiliar with the cultivator’s or manufacturer’s mistake, a consumer will most likely file a product liability claim against the dispensary.

  • A Dispensary Is Entirely Responsible If It’s Vertically Integrated

Certain dispensaries are vertically-integrated, meaning they grow and produce their own CBD products. Present at the supply chain from start to finish, a dispensary is entirely responsible for any faults in the production process, any mislabeling errors or any fungus present in the product due to storage.

  • The Insurance Allows The Dispensary To Focus On its Core Business

For any given producer, hemp & CBD business insurance gives a venture peace of mind. An insurance policy gives protection to business, letting them focus on what matters most. The relevant legal counsel engages with the claim and ensures the CBD operation insurance policy associated with the business pays the claim completely. This eases the dispensary and takes the burden off of them.


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