Pot Industry May Soon Face Surge Of Product Liability Suits

The cannabis industry should brace itself for a surge in consumer class actions as the market matures and the plaintiffs bar grows more sophisticated, a panel of product liability experts said.

Panelist Ian Stewart, co-chair of the cannabis practice at Wilson Elser Moskowitz Edelman & Dicker LLP, noted that most product liability claims could be sorted into two categories: those that allege bodily injury due to some defect in the way the product was made or marketed, and those that claim products were labeled inaccurately. He said claims in the first category, which often carry heftier liabilities, are relatively uncommon in the cannabis space, but that could change soon.

Co-panelist Jasmine Wetherell, a civil litigator who is of counsel at Perkins Coie LLP, said the situation in the food and beverage industry, which has become a major target for consumer class actions, could serve as a helpful harbinger of what the cannabis industry faces as it continues to grow.

According to a Perkins Coie analysis cited by Wetherell, there were a few dozen consumer protection actions filed against food and beverage companies in 2012; last year the number had surged to more than 350, she said.

She noted that the vast majority of claims are being brought under state consumer protection laws, either those on the books in California or others closely modeled on them.

Some claims have alleged that the product doesn’t do what it purports to do — a warning for the marijuana industry, whose boosters have been enthusiastic in selling the public on the plant’s purported medicinal and spiritual benefits.

“We all know cannabis is often touted for having miracle abilities, but these claims are really risky under [consumer protection laws],” Wetherell said.

Wetherell noted that consumers could also allege that cannabis products don’t contain what they purport to contain. She pointed to similar lawsuits alleging that yogurt and kombucha brands did not have the live cultures listed on their labels and warned that cannabis companies listing their full manifest of cannabinoids could open them up to similar complaints.

“Here we could see that translates to allegations that, on a simple level, the product doesn’t contain the amount of CBD or THC it claimed to have, and therefore we overpaid for it,” she said.

The panelists noted that the standards of proving liability in other industries — a risk-benefit analysis or an assessment of what a reasonable consumer could expect — are lacking in cannabis so far because the expertise and consensus are not yet there, but that could all change as the market grows.

“We don’t have enough consumers who are knowledgeable about the product to have formed those expectations,” said Stewart. “That’s a hurdle for the plaintiffs to get over, but I think as time goes on they’re going to be able to make these cases.”

LAW360: https://www.law360.com/articles/1490205

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