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The Cannabis Industry’s “Big Tobacco” Moment: What Insurers Need to Know About Murray v. Cresco
A massive 320-page class action complaint filed on May 4, 2026, in the U.S. District Court for the Northern District of Illinois has the attention of the cannabis sector. The insurance professionals who underwrite it should also be paying close attention. The case, Murray et al. v. Cresco Labs Inc. et al., represents the most ambitious legal assault yet on the marketing practices of major cannabis multistate operators (MSOs). The complaint makes explicit comparisons to the litigation playbook against “Big Tobacco” in the 1990s. With claims across 12 states and spanning allegations of Racketeer Influenced and Corrupt Organizations (RICO), consumer fraud, breach of warranty, negligent misrepresentation and more, this lawsuit signals a new era of litigation risk that could reshape how cannabis companies are underwritten and insured.
What the Case is About
Murray v. Cresco is a consumer class action brought by more than 40 named plaintiffs on behalf of recreational cannabis purchasers in Arizona, Connecticut, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Ohio, Rhode Island, and Virginia. The defendants are three of the nation's largest cannabis MSOs: Cresco Labs Inc., Green Thumb Industries Inc. and Verano Holdings Corp. Each defendant is a vertically-integrated cannabis operator, meaning they cultivate, process, distribute and sell cannabis products under a portfolio of consumer-facing brands. Cresco sells under brands like Sunnyside, High Supply, FloraCal, and Wonder Wellness; Green Thumb uses brands like Rhythm, Dogwalkers, Good Green and Rise; Verano operates under Zen Leaf, Encore Edibles, BITS and Cabbage Club, among others.
The case was filed under the Class Action Fairness Act (CAFA) in the Northern District of Illinois, the location of the defendants’ principal places of business. The complaint explicitly carves out claims related to physician-prescribed medical cannabis, focusing solely on adult-use purchases. A companion case targeting Curaleaf Holdings was filed the same day in the District of Connecticut.
The Central Narrative
Plaintiffs allege that the defendants knew, or should have known, that cannabis products pose serious mental and physical health risks, yet chose to market those same products as safe, therapeutic, and even medicinal. The complaint paints a picture of an industry that borrowed from Big Tobacco's playbook, allegedly sponsoring less-than-rigorous research to generate consumer friendly health claims while burying the mounting scientific evidence of harm. As the complaint puts it, the defendants “deceptively marketed cannabis as medicine capable of alleviating or treating the very mental health disorders” they “knew or should have known were caused or exacerbated by the use of their products.”
The Liability Theories
The core liability theory is the federal RICO cause of action. The plaintiffs allege that the defendants operated an “enterprise” engaged in a pattern of racketeering activity, including dealing in controlled substances illegal under federal law, mail fraud, wire fraud, and monetary transactions in criminally derived property. The RICO claim is significant because it opens the door to potential treble damages, meaning any actual damages could be tripled, plus attorneys' fees. The U.S. Supreme Court's 2025 decision in Medical Marijuana, Inc. v. Horn confirmed that RICO can apply to economic harms tied to mislabeled cannabis products.
The complaint also asserts state-specific consumer protection claims in all 12 states where the representative plaintiffs reside. These include violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, the Michigan Consumer Protection Act, New York's General Business Law Section 349, the Ohio Consumer Sales Practices Act, and analogous statutes in each remaining jurisdiction. Across all states, plaintiffs argued that defendants made affirmative misrepresentations about health benefits while concealing known risks, inducing consumers to purchase products they otherwise would not have bought, or to overpay for them.
The complaint further alleges breach of express and implied warranties under each state’s version of the Uniform Commercial Code. By representing their products as treating depression, anxiety, PTSD, pain and other conditions, defendants allegedly created and violated express warranties that the products would perform as described. Implied warranty claims assert that cannabis products marketed as wellness aids were not “fit for the ordinary purposes for which such goods are used.” Finally, negligent misrepresentation claims target the defendants’ alleged failure to exercise reasonable care in communicating health information to consumers.
The Health Science at the Heart of the Case
The factual backbone of the complaint runs over a hundred pages of citations to various scientific studies and papers. The plaintiffs reference research alleging connections of cannabis use to psychosis, schizophrenia, bipolar disorder, depression, suicidal ideation, and anxiety. The complaint cites a 2025 study finding that states with open recreational dispensaries experienced a 12 percent increase in admissions to state mental health facilities for psychotic disorders. A 2021 Danish study is also referenced for its finding that schizophrenia cases associated with cannabis use disorder increased 300 percent to 400 percent over 20 years as potency doubled.
The complaint also cites cardiovascular studies, including a 2025 meta-analysis that reportedly found cannabis use doubled the risk of cardiovascular death and increased stroke risk by 20 percent. Another cited study estimates the odds of heart attack among cannabis users at more than six times higher than non-users. The complaint also highlights prenatal risks, citing a 2025 review linking cannabis use during pregnancy to increased risk of miscarriage, stillbirth, and preterm birth. Cannabis hyperemesis syndrome (CHS) and cannabis use disorder (CUD) are include in the complaint’s litany of health harms.
Focus on Industry Awareness
The complaint emphasizes that these health risks are not new discoveries. It alleges that the defendants had “actual and constructive knowledge” of these dangers, derived from years of publicly available peer-reviewed studies and governmental advisories, yet “failed to adequately warn their customers.” Instead, plaintiffs contend the defendants went in the opposite direction by marketing cannabis as a remedy for the conditions it allegedly makes worse.
The Playbook is Growing
The lead attorney in Murray v. Cresco, Patrick Kenneally, is a former Illinois county prosecutor with a track record of taking on cannabis companies. In 2023, he compelled dispensaries in McHenry County, Illinois to post in-store warnings about cannabis-related mental health risks, a first in the country, and to fund a billboard campaign linking cannabis to suicide and schizophrenia.
An earlier, similar lawsuit against Verano was dismissed in March 2026, but the new complaint appears broader and more detailed. A spokesperson for Verano told MJBizDaily that the suit “mirrors claims that have been rejected by courts in similar legal actions against multistate operators in the industry earlier this year.” Whether the 320-page complaint overcomes those defenses remains to be seen.
Rescheduling Adds Fuel
The timing is notable. On April 23, 2026, the Department of Justice issued an order rescheduling state-licensed medical marijuana and FDA-approved cannabis products to Schedule III of the Controlled Substances Act (CSA). Greater federal legitimacy may bring greater legal exposure. Rescheduling is likely to expand market access and raise expectations for product safety and accurate labeling, making negligence and consumer protection claims more likely for compliance lapses.
Canada Offers a Preview
Canada legalized recreational cannabis nationally in 2018, and its litigation experience since then is instructive. The country has seen a wave of product liability class actions, including Downton v. Organigram Holdings, the first certified cannabis product liability class action in Canada, involving pesticide contamination. Proposed actions have also targeted major Canadian producers over inadequate risk disclosures related to CHS. The pattern is consistent with what now appears to be emerging in the United States – consumer litigation follows the market opening up.
Why This Matters for Cannabis Insurers
For insurance professionals, Murray v. Cresco crystallizes several risks that the industry has long discussed in the abstract. The case represents a concrete, large-scale litigation event with the potential for enormous exposure. The RICO claim alone, with its treble-damage multiplier, could transform a significant jury verdict into a catastrophic one. Class certification across 12 states would dramatically multiply the defendant pool and the aggregate damages.
The underwriting on cannabis product liability has, to date, focused on potential contamination, mislabeling, and the occasional exposure or ingestion-based bodily injury claim. Murray v. Cresco, however, introduces a different species of claim, one rooted in marketing conduct rather than product defect in the traditional sense.
Currently, the insurance industry is largely insulated from large consumer class actions like Murray v. Cresco. Many cannabis policies contain broad health-hazard exclusions, which could deny coverage for claims involving specified adverse health effects from cannabis products. Class action exclusions are common, as are exclusions for statutory penalties like treble damages under RICO and state consumer protection awards. RICO-based claims are also vulnerable to criminal-acts exclusions or specific carve-outs for racketeering-related conduct.
Coverage Disputes on the Horizon
Notwithstanding this insulation, insurers should expect that defendants in cases like Murray will tender claims under their commercial general liability (CGL) policies, products completed operations policies, directors and officers (D&O) policies, and any specialty cannabis coverage they hold. The question of whether deceptive marketing and failure-to-warn allegations fall within a products-completed operations hazard, an advertising injury provision, or some other coverage grant will likely be fiercely contested.
What Underwriters Should be Asking
Going forward, underwriters writing cannabis risks should scrutinize their insureds' marketing practices with the same focus they currently bring to product testing and labeling. Documented testing integrity, warning protocols, supply-chain oversight, and recall history are all important along with marketing discipline. Policies should be reviewed for RICO and state consumer statute exposure. Underwriters should pay attention to emerging scientific studies on the health effect of cannabis use. Insureds that continue to make unsupported health claims, the kind at the center of Murray v. Cresco, present a different risk profile than those that keep their marketing factual and scientifically supported.
Conclusion
Murray v. Cresco may or may not succeed on the merits. Defendants will raise formidable challenges, including preemption arguments, standing issues, the difficulty of class certification across a dozen state consumer-protection regimes, causation defenses and the still-evolving science around cannabis and health. But the complaint’s sheer scale, its RICO backbone, and its explicit comparisons to Big Tobacco litigation signal that the era of treating cannabis product liability as a hypothetical future risk is over.
For insurers and their cannabis policyholders, the takeaway is practical and immediate. Marketing claims are now a front-line litigation target, and the industry needs to treat them accordingly. Risk-mitigation programs should include compliance audits of all consumer-facing health claims, robust product warnings modeled on the warnings that accompany over-the-counter medical products, and honest internal assessments of what the science supports. Meanwhile, insurers should be reviewing policy language to understand their own exposure in the event that lawsuits like this one multiply.
This article was published in the May 18, 2026, posting of Insurance Journal.
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