Kara Thorvaldsen (Partner-Boston) and Ian Stewart (Partner-Los Angeles) discussed ideas for their tenure on the CLM’s newly formed Cannabis Committee, which aims to promote education on claims and litigation management relative to all aspects of the cannabis industry.
 
Kara: I haven’t seen enough of any one type of claim to call it a trend, but we are starting to see employment claims relating to discrimination and the need to accommodate people who are prescribed and using medical marijuana, in particular. Additionally, there is a lot of concern about directors and officers liability because cannabis-related businesses are privately funded − they cannot get small business loans from FDIC-insured banks. So you have a lot of investors who are really worried about their investments, and they are going to be looking to hold directors and officers accountable if their investments go up in smoke, so to speak.
 
Ian: Some say that the two most regulated products in the country are uranium and pot, and it’s probably not far from the truth. If anything goes wrong at any point along the chain of distribution, you can have insurance claims for those losses. However, there are big gaps in terms of what policies will cover. So insurers must try to figure out what happened along the distribution path to cause a loss, which could be anything from a state regulator saying, “Sorry, you can’t sell it,” to problems with the plants’ track-and-trace system, a recall, or a mislabeling issue. We’re also trying to figure out highly specific regulatory schemes in each state. So there are all sorts of problems right now that the industry is trying to work through, and they all invariably come back to some sort of insurance claim.