Colorado MED Bulletins on Licensees Making Recommendations for Pregnancy Related Morning Sickness
Colorado MED Bulletins for Packaging and Labeling
The Colorado Marijuana Enforcement Division has issued an updated bulletin to cannabis licensees who may be recommending cannabis to women who are pregnant. The first bulletin was issued on May 24, 2018. An updated bulletin was issued on June 4, 2018 reference language to be added to the warning label effective July 1, 2018.
Both of these bulletins essentially refer back to the original packaging and labeling bulletin issued on 02/16/2018.
Beginning July 1, 2018 – “There may be long term physical or mental health risks from use of marijuana including additional risks for women who are or may become pregnant or are breast feeding. Use of marijuana may impair your ability to drive a car or operate machinery.”
Warning labels are not only important for public safety, but protect the cannabis licensee from additional liabilities. If you’re concerned about additional protection, licensees may want to consider professional and product liability.
Updated Bulletin 18-06 Updated (06/04/2018)
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Original Bulletin 18-06 (05/24/2018):
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Packaging and Labeling Rules 18-03 (02/16/2018)
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Colorado Bulletin on 420: Be Safe and Don’t Lose Your License
With 4-20 just around the corner, the Colorado Marijuana Enforcement Division issues a bulletin reminding the industry of what you can and can’t do. For licensees participating in any 4/20 events, please be safe and obey the law. Losing your license just isn’t worth it.
Below are considered unlawful acts:
Buying, selling, transferring, or acquiring medical or retail marijuana in a manner not
permitted by the Colorado Medical Marijuana Code and Colorado Retail Marijuana
Offering for sale or soliciting an order for medical or retail marijuana except within
the Licensed Premises of the Medical Marijuana Business or Retail Marijuana
Establishment specifically designated for such sales;
Consuming or allowing the consumption of medical or retail marijuana on a Licensed
Providing public premises for the purpose of consumption of medical or retail
Displaying any signs that are inconsistent with local laws or regulations or using
advertising material that is misleading, deceptive, or false, or that is designed to
appeal to minors;
and Having on the licensed premises any medical or retail marijuana or marijuana
paraphernalia evidencing the consumption or use of the marijuana.
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Massachusetts Recreational Insurance Requirements for Licensing
Commercial Liability and Product Liability Insurance Limits
The Massachusetts Cannabis Control Board is moving forward with the approval of 935 CMR 500.00 and includes commercial insurance. Below are those important requirements:
Liability Insurance Coverage or Maintenance of Escrow (1) A Marijuana Establishment shall obtain and maintain general liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually, and product liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually, except as provided in 935 CMR 500.105(J)(2) or otherwise approved by the Commission. The deductible for each policy shall be no higher than $5,000 per occurrence.
What other insurance requirements exist in 935 CMR 500.00?
Licensees will need to purchase workers compensation insurance if they have employees. The regulations does not indicate any other obligations such as naming the State of Massachusetts as an additional insured.
What is the purpose of Commercial General Liability?
This is a business insurance policy covering the premise or business location for liability, personal and advertising injury, and legal defense. The State of Massachusetts has determined $1,000,000 per occurrence and $2,000,000 per aggregate will provide adequate protection from third party lawsuits.
What is the purpose of Product Liability?
Product liability is a type of insurance policy protecting a cannabis company from third party lawsuits. An example would be a recreational marijuana customer becomes sick from a cannabis product bought at a store. The customer files a lawsuit against the retail and possibly the manufacturer. The State of Massachusetts has determined $1,000,000 per occurrence and $2,000,000 per aggregate will provide adequate protection from third party lawsuits.
What does $1,000,000 per occurrence and $2,000,000 per aggregate mean?
Per occurrence is the maximum amount paid primarily for bodily injury and property damage. Per aggregate is the the maximum paid for multiple types of claims.
How do I buy insurance to meet the requirements in Massachusetts?
Colorado Marijuana Enforcement Division Rule on Warning Symbols for Packaging
The Colorado Marijuana Enforcement Division has released new rules for the adoption of single Universal Symbol to be used in the packaging, labeling, and product markings on a variety of products.
Dear Marijuana Industry Stakeholders:
Effective immediately, the State Licensing Authority adopts a single Universal Symbol (“Single Universal Symbol”) for packaging, labeling, and on‐product marking of medical and retail marijuana, concentrate, and product (“Inventory”) pursuant to the Medical Marijuana Rules and Retail.
Marijuana Rules, 1 CCR 212‐1 and 1 CCR 212‐2.
From extensive stakeholder engagement through prior focus group and rulemaking meetings that facilitated a comprehensive review and discussion of our labeling framework, the State Licensing Authority committed to evaluating the application of one Universal Symbol to both medical and retail Inventory.
The State Licensing Authority’s adoption of a Single Universal Symbol is intended to further protect public health and safety by enhancing consumers’ ability to identify products containing marijuana. Further, by eliminating distinctions between Universal Symbols for medical and retail marijuana, the Single Universal Symbol works to simplify and improve compliance regarding packaging, labeling, and product marking requirements.
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What can be Learned from the only Lawsuit filed by a Cannabis Company against their Insurance Carrier
Dispensary Green Earth Wellness against Atain Specialty Insurance
The cannabis industry has experienced few lawsuits involving a cannabis operation suing their insurance company. We’re aware of just one and it occurred when Green Earth Wellness Center (“Green Earth”) of Colorado Springs, Colorado filed a lawsuit against their insurance carrier Atain Specialty Insurance Company (“Atain”) back on December 20, 2013. The case is filed in the United States District Court for the District of Colorado entitled The Green Earth Wellness Center LLC, Plaintiff v Atain Specialty Insurance Company, Defendant Civil Action No. 13-CV-03452-MSK-NYW.
Green Earth believed insurance coverage existed for living cannabis plants damaged by smoke from a nearby wildfire known as the Waldon Canyon Fire. That smoke damage made those plants essentially worthless. Green Earth claimed $200,000 to their grow facility primarily mother plants and clones and $40,000 in damage to buds and flowers.
Green Earth is a small business licensed by the State of Colorado to produce and sell medical marijuana from two locations. Atain is part of a large insurance empire known as the H.W. Kaufman Group that includes a subsidiary named Burns & Wilcox with over $1 Billion in premium written. Burns & Wilcox represented Atain as their licensed wholesaler underwriting Green Earth’s request for insurance.
Court records show Green Earth purchased through a retail insurance broker introduced by Burns & Wilcox. The policy included commercial general liability and business personal property. For those who may be unfamiliar with insurance, commercial general liability covers liability for a variety of reason related to your business and premise. The commercial general liability was never the issue during the lawsuit because no liability existed from a third party. The lawsuit was seeking payment for the property damaged by smoke.
Green Earth Wellness focused on the Definition of Stock
If coverage for a living plant was to be available, Green Earth would focus on the business personal property coverages because this is where a policy offers coverage for “things” a business owns. A cannabis company will own a variety of things such as grow equipment, computers, lighting, hvac systems, and cannabis. That cannabis might be alive or cured depending on the stage of production. If coverage is to exist, Green Earth would review their insurance policy for important terms and conditions to lead them in the right direction.
One of those terms most likely to catch the attention of Green Earth was the word “Stock.” The insurance policy defined stock as
“merchandise held in storage or for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping.”
It was the “raw materials and in-process or finished goods” Green Earth believed their living cannabis plants fall neatly into this definition. Many people reading this definition would consider this to be plausible. Marijuana clones will eventually mature into budding plants. Those buds are the raw materials for a variety of finish products such as joints, concentrates, and edibles.
However, most insurance industry professionals with experience in cannabis insurance during this time period would have known stock was never meant to cover living plants on the business personal property policy. This would have been difficult for Green Earth to know, unless they had been working with an experienced retail insurance broker. In 2012, there may have been one insurance carrier offering crop insurance to the cannabis industry during this period of time.
Green Earth believed coverage was purchased because of a medical marijuana crop application had been completed
Court records show a medical marijuana crop application was part of the underwriting process. How this form became part of the application process was murky by Green Earth and others deposed. A typical application will include standardized forms known within the insurance industry as Acord forms. Court records indicate Acord form numbers 125, 126, and 140 were submitted by the retail insurance broker to Burns & Wilcox.
Quite possibly, the medical marijuana crop application was part of another submission to a different insurance carrier and was inadvertently included with the submission to Burns & Wilcox.
Medical marijuana crop application
Regardless, the fact a medical marijuana crop application was part of the underwriting file showed the possibility crop insurance was part of the insurance request.
The quote stated “Coverage does not extend to growing or standing plants.”
The quote and binder issued by Atain to Green Earth both stated “Coverage does not extend to growing or standing plants.” Most business owners contemplating the purchase of insurance are likely to read this statement and decide quickly this policy is not the right choice.
Court records indicate the retail insurance broker reviewed the insurance quote with Green Earth. Those same records further indicated neither the retail insurance broker and Green Earth having any recall of discussing this important disclosure. Atain had every right to believe they were not offering coverage for living plants.
Clear communication is essential during the procurement of insurance with the cannabis industry
Clear communication is a foundation in having good business relationships. Insurance is a complicated product that should be sold by experienced professionals with a good understanding of important terms and conditions. The Green Earth lawsuit could have been avoided if evidence existed to demonstrate a mutual understanding of the coverages being purchased by those parties involved.