Product Liability In The Cannabis Industry: Insights From 2022 & Looking Forward

• Jurisdiction: United States,Federal
• Law Firm: Arnold & Porter
• Subject Matter: Consumer Protection, Food, Drugs, Healthcare, Life Sciences, Cannabis & Hemp, Product Liability & Safety, Food and Drugs Law
• Author: Mr Andrew K. Solow, David A. Kerschner and Alessandra Lopez
• Published date: 12 April 2023

In 2022, product liability lawsuits in the cannabis/cannabidiol (CBD) industry continued to focus on levels of THC and the psychoactive ingredient in cannabis, while federal agencies continued issuing warning letters for CBD products (including CBD-infused food and dietary supplements) that made misleading medical claims. Against this backdrop of ongoing litigation and regulatory enforcement, 2022 showed that at the Federal level, there is more recognition that marijuana is becoming increasingly normalized. For example, President Biden pardoned federal offenses of simple marijuana possession and requested a reassessment of marijuana's classification as a Schedule I drug under federal law. Additionally, Congress passed its first standalone piece of cannabis reform with the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) which, among other things, will ease restrictions on cannabis research and allow for more clinical trials. And even though the Food and Drug Administration (FDA) declined to act on CBD products, the agency announced that it will work with Congress to create a new regulatory framework for CBD products (2023 FDA Announcement).

These events of the past year provide a glimpse into what the future may hold for cannabis and CBD companies when it comes to product liability risks. This article looks at the types of product liability actions that the cannabis and CBD industry faced in 2022 and may encounter in the future, and provides some basic guidance on how to best mitigate, and if necessary, defend these potentially costly litigations.

Focus on Cannabis and CBD Risks

A central part of any product liability lawsuit'regardless of whether brought under a design defect and/or adequate warning theory'is that a product caused or was a substantial contributing factor to a Plaintiff's injury or illness. Thus, any potential safety concerns over cannabis/CBD could end up as the subject of litigation in the future. In the 2023 FDA Announcement, the FDA recognized that "the use of CBD raises various safety concerns, especially with long-term use," including potential harm to the liver and negative interactions with certain medications. The agency also noted that questions still exist on how much CBD can be consumed, and for how long, before causing harm. Furthermore, on December 2, 2022, President Biden signed the MMCREA into law, which is intended to advance research on the potential risks and medical benefits of cannabis and cannabis products.¹ This additional funding will not only help researchers learn more about possible safety risks that may lead to future product liability claims, but will also allow for better exploration of the benefits of these products to possibly expand product indications and help reach new customers.

Given the FDA's statements and the increased funding for new research, CBD and cannabis companies should ensure that they are properly monitoring both regulatory communications and new research regarding risks that may be associated with their products. As new information is released, companies should evaluate how their product labels and marketing messages should be altered. Announcements like this one by the FDA can be seen as providing industry participants with knowledge about certain risks, and how companies react could be analyzed, post hoc, in any litigation down the road.

2022 Product Liability Actions

Over the last year, misbranding/mislabeling issues presented some of the most prevalent litigation risks for industry participants.

An example of a warning letter the FDA sent to a CBD products company making health claims

For example, at the Federal level in 2022, the FDA issued thirty-three warning letters to CBD companies, a nearly 400% increase from 2021. These letters generally focused on CBD products...