The exclusions are not going to make anyone happy.
They were, of course, bound to happen in the wake of the deaths and hundreds of lung illnesses tied to vaping.
Many cannabis retailers have responded to the crisis by pulling vaping products off their shelves.
For example, Medicine Man, which operates five retail outlets in Colorado, stopped selling vape products with propylene glycol or vitamin E acetate.
“The decision to take this particular product off our shelves was significant, as the confidence and trust of our consumers is paramount to our core values,” Medicine Man President and Chief Executive Officer Sally Vander Veer said.
“Hopefully the rest of the industry will also conclude that removing these cannabis products with the chemical additives under scrutiny from the market is in the best interest of consumers and all of us as operators,” she said.
CDC laboratory tests of fluid collected from the lungs from 29 patients with vaping-related lung injuries found vitamin E acetate in all of the samples examined. Vitamin E acetate is used as an additive in the production of vaping products.
Even before those test results came in, the CDC recommended that people should not use e-cigarette, or vaping, products that contain THC, “particularly from informal sources like friends, or family, or in-person or online dealers.”
To say that this raises liability concerns is to understate matters. With lawsuits stacking up across the country, there’s a good dose of panic among many.
We’re talking about anyone in the e-cigarette and cannabis vaping supply chain, from manufacturers to retail and convenience stores that sell those products. Depending on how things work out, the liability exposure they face is huge.
According to various media reports, many of the lawsuits include fraudulent marketing claims, alleging that vaping device maker Juul misrepresented that its e-cigarettes are a safer alternative to traditional cigarettes, when they are in fact equally addictive. The plaintiffs also allege that e-cigarettes are defectively designed and inherently dangerous. Alleged injuries include claims of addiction, cardiovascular disease, seizures, birth defects and respiratory illness.
And, of course, Juul isn’t the only named defendant in many of these claims.
While plenty of questions remain unanswered at the moment, we’re seeing carriers add exclusions for all sorts to their product and general liability policies.
More specifically, health hazard exclusions are being added so that no coverage will be provided for any bodily injury claims arising from vaping.
Battery exclusions also are popping up in product liability policies in light of reports of exploding e-cigarettes. Exploding e-cigarettes have shattered peoples’ jaws and even killed people. There’s no single identified cause of these explosions, but according to the Food and Drug Administration, they appear to be associated with “battery-related issues.”
Exclusions are also appearing in property policies for retail operations that might carry e-cigarettes.
In short, while getting the right coverage at adequate limits has never been a cake walk in the cannabis industry, the vaping crisis is only complicating matters.
If you’re concerned or have questions about your existing insurance policies or if you just want to make sure you have the proper coverage in place to protect your cannabis business from a loss, please don’t hesitate to contact us.
Spencer Mahoney heads the Cannabis Practice at CCIG. Reach him at 720-212-2051 or Spencer.Mahoney@thinkccig.com.
CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.