Time and again I have warned cannabis industry participants that federal prohibition means nothing when it comes to liability created by defective products. Colorado is a prime example of the threat and the power of cannabis product recalls. And though for years now we’ve seen various cannabis businesses in Colorado pull their products from the shelves for illegal pesticides and/or manufacturing under unsanitary conditions, we have yet to see an official product recall for cannabis in the state of California.
And why would we? The state hasn’t had any legitimate, enforceable, or uniform regulations to corral cannabis operators into worrying about consumer safety (other than self-imposed best practices). Though it’s pretty clear recalls should already be happening in California based on some of the available product in the state’s medical market, they haven’t yet – but they will.
With the passage of the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA, aka SB 94), medical and adult use cannabis in California will soon be under one regulatory regime. Outside of MAUCRSA’s mandatory quality testing and packaging and labeling thresholds, what will California’s ultimate quality assurance and consumer protection operational standards look like? MAUCRSA regulations will fill in the baseline blanks and that will happen this fall, according to the state.
I’ve practiced law in enough regulated cannabis states to know that quality assurance, testing, and protecting the public through total product perfection isn’t going to be easy or cheap, and it’s going to be mandatory if you want to keep your cannabis license. Still, even with your best quality assurance game face, you may not (more like never) escape the toe catch that is products liability. And with California being such a litigious state, as the Wall Street Journal editorial board recently pointed out, it’s only a matter of time before even more plaintiffs start suing cannabis operators alleging defective, dangerous, or mislabeled products and Prop. 65 violations.
If you’re not familiar with product liability, the most important thing you need to know is that the cannabis industry is not immune from it just because cannabis remains federally illegal.
Just the mere fact that my firm’s cannabis attorneys have written so many blog posts and articles on cannabis safety and cannabis product liability – at least ten at last count – ought to tell you how truly important this issue will be in California once things truly get rolling here.
What then should you as a California cannabis business owner do to protect yourself from product related lawsuits and government actions? Again, the MAUCRSA regulations will no doubt create a baseline of what operators need to do if their products are defective. But you’ll need to go above and beyond that to ensure you’re ready to take on a recall situation or to defend yourself in the event of a product liability lawsuit.
Oftentimes, one of the best ways to mitigate against product liability claims is by instituting a product recall. In most industries, recall standards are dictated by either federal or state law or both. But since cannabis is federally illegal, neither the Food and Drug Administration (FDA) nor any other federal agency has rules or guidelines on how to undertake a cannabis recall.
However, since the federal government “tolerates’ only the cannabis regimes of states with robust marijuana regulations, it is not surprising that most states with commercial marijuana laws require their licensed marijuana businesses have a recall plan in place as a condition for receiving state licensing — and California will probably be no different.
But few states have much in the way of specifics on what should go into a recall plan for a cannabis business. When our cannabis attorneys draft marijuana licensing applications for our clients, we are careful to make sure the recall steps we map out in the licensing application recall plan can actually be fairly easily accomplished. A gold-plated grandstanding recall plan may sound great when you are working to secure your cannabis license, but if you can’t execute on or afford that plan, you are only creating trouble for your cannabis business down the road.
In crafting a realistic cannabis product recall plan, you should, at minimum, consider or do the following:
In addition to formulating a solid and reliable recall plan, you also might want to consider conducting a mock recall to ensure your recall systems will work when the real deal occurs. Compliance audits can also be a big help in shoring up loose ends on a recall.
Cannabis product recalls are only going to increase in California as robust regulations under MAUCRSA hit all cannabis operators. So now is the time to get your cannabis product recall plan in place.
Hilary Bricken is an attorney at Harris Bricken, PLLC in Los Angeles and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at [email protected].
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