Marijuana Business Magazine November-December 2019

Marijuana Business Magazine | November-December 2019 94 C annabis vape manufacturers should be preparing for a long legal fight in the coming months. The biggest news in the cannabis industry for 2019 has been the vaping health scare, which has seen hundreds of people fall ill across the country and more than two dozen die from pulmonary illnesses tied to vaping. In late September, health officials reported that most of those sickened used cannabis vape products containing THC, and many of those in the first two states to report illnesses—Illinois and Wisconsin—said they used counterfeit marijuana products from the illicit market, not licensed MJ companies. Despite the many unknowns, cannabis companies can take preventive measures now to gird against the lawsuits that will likely be filed in the coming months and lessen the potential for damage via litigation. In Washington state, a man filed suit in September against six cannabis vape companies for allegedly causing his lung illness. It’s believed to have been the first suit of its kind in the state. More are expected. “There really haven’t been a lot of product-liability claims yet,” said Rachel Gillette, a Denver-based cannabis attorney with Greenspoon Marder. “I say ‘yet’ because they’re bound to be coming.” Key actions business owners can take include: • Maintaining strict compliance with state regulations. • Closely monitoring their supply chain to check for contaminants or unapproved additives. • Adhering to Good Manufacturing Practice (GMP) to ensure products are made in accordance with the relevant standards. “This is all about product liability,” said Ben Bodamer, a Columbus, Ohio- based cannabis attorney. “The core of product liability protections from a legal standpoint starts way before you have the possibility of these claims.” COMPLIANCE IS KING For Bodamer, the first consideration for a cannabis executive looking to sidestep any legal pitfalls is strict compliance with state regulations. “In every single state that has medical cannabis or adult-use cannabis, there are regulations about how to conduct busi- ness,” Bodamer added, such as product testing and packaging requirements. If the regulations in a certain state aren’t clear enough, then it’s up to the company to exceed those requirements, he added. For example, if state regulators don’t require testing for certain additives or contaminants, but they can make people sick, a vape product company should still be screening for those potential liabilities. Gillette re-emphasized that point. “Compliance is important, no matter what,” she said. “And it’s strict compliance, not substantial compliance.” Given the scrutiny that will be on producers of vaping products, companies need to go beyond the rules and regulations when it comes to compliance. For example, one potential cause of illness related to the vaping outbreak is that people are adding compounds to vape cartridges after purchase. “There may not be a regulation that prohibits someone from manufacturing a customizable product,” Gillette said, but if a consumer can easily modify a vape product and ends up sick because of an additive, then perhaps the product needs to be made more secure. “A manufacturer needs to be very thoughtful in light of what’s going on and potential liability claims,” she added. As the vaping health crisis unfolds across the United States, cannabis executives can take steps to be proactive and protect their companies against the kinds of class- action lawsuits that surely will be filed. Marijuana business executives looking to protect their firms should: • Strive to maintain strict compliance with state rules and regulations. • Have systems in place to monitor the supply chain for all parts, ingredients and finished products. • Follow the standards set by Good Manufacturing Practice certifications to produce safe, high-quality vape oils. • Get contracts signed by all suppliers, including hardware manufacturers. Vaping Crisis Juul has stopped advertising its products on the heels of the vaping crisis. Courtesy Photo