What Cannabis Companies Must Know About Strict Product Liability

• Published date: 23 March 2023
• Subject Matter: Consumer Protection, Cannabis & Hemp, Product Liability & Safety
• Law Firm: Wilson Elser Moskowitz Edelman & Dicker LLP
• Author: Mr Ian Stewart

The term "product liability" is used by many in the cannabis industry to generically describe a wide variety of product risks, some of which do not fall within the traditional legal definition of strict product liability that arises from a defective or dangerous product.

This broad definition encompasses non-bodily injury claims by consumers or competitors who allege consumer fraud, false advertising, label errors and unfair competition. Although such claims have given rise to significant product recalls and consumer class actions involving cannabis products, these should be considered a distinct set of risks compared with traditional product liability injury claims.

New medical research relevant to traditional product risks continues to emerge, such as research findings announced in February by the American College of Cardiology that people who use marijuana daily have a significantly increased risk of developing coronary artery disease.

This article discusses important factors that cannabis companies must consider when evaluating the traditional product liability risks of cannabis products.

Traditional Product Liability
It is axiomatic that a manufacturer, distributor or retailer is liable in tort if a defect in the manufacture or design of a product causes injury while the product is being used in a reasonably foreseeable way.

Strict liability has been invoked for three types of product defects that include manufacturing defects, design defects and warning defects, which include inadequate warnings or failures to warn. Any person or entity that is an integral part of the overall production and marketing enterprise may be subject to strict product liability.

Prospective plaintiffs' counsel seek to overcome current obstacles to proving liability for cannabis products under the common tests used by courts. In addition to liability for failure to warn, this includes proving a design defect through the consumer expectation test and the risk-utility test.

Each state has adopted one or both of these standards, or a modified version, though a few states do not recognize product liability under state law.

The Consumer Expectation Test
Approximately 25 states have adopted some version of the consumer expectation test as a means to prove strict product liability.

Under this test, the plaintiff must prove that the product did not perform as safely as an ordinary consumer would have expected it to perform when used - or misused - in an intended or reasonably foreseeable way. The plaintiff also must establish that the product's failure to perform safely was a substantial factor in...