General liability issues in the cannabis industry

On Behalf of | Mar 1, 2022 | Business Liability |

Cannabis companies in California face a broad range of conflicts when engaging in legal, corporate and financial transactions. Business disputes may arise because federal laws are more restrictive against the sale, manufacture and use of cannabis than state laws. Resolving disputes starts by reducing the risks of liability, obtaining adequate insurance coverage and learning more about cannabis laws and regulations.

Legal conflicts

Compared to companies in other types of industries, cannabis businesses face numerous challenges when securing financing, manufacturing products and making corporate transactions. Even if cannabis is legal in one state, there are federal and international laws that will conflict with its laws, creating a complex web of legal complications. There are challenges to raising capital and performing any other activity or transaction that is needed to manage a business.

Liability issues

California was one of the first states to legalize cannabis for medicinal and recreational use. However, the cannabis industry faces a high rate of risks that require liability insurance. The types of business liability issues surrounding canna-business include the risks of bodily injuries, property damages and false advertising claims.

The types of coverage include general liability, product liability and commercial property insurance. Crop coverage protects against risks surrounding the expenses of growing crops legally. Insurance covers a business’s expenses for lawsuits that may be filed by customers, business associates or other companies.

The importance of insurance protection

California is a lenient state when dealing with previously illegal substances. However, there are restrictive laws in other states and governments that complicate the ability to manage cannabis businesses. Insurance is recommended for every cannabis business regardless of the state in which it operates.