Legal Cannabis Gives Rise to Product Liability Class Actions in the US and Canada

For several decades, most legal actions involving cannabis were focused in the field of criminal law. However, as marijuana becomes legal for medical and recreational use in an ever-increasing number of US cities and states, as well as in Canada, other types of legal action surrounding cannabis have started to appear.

As cannabis becomes a commercial product, standards for its safety, potency, and production will need to be created, assessed, and followed – and manufacturers and distributors may be held accountable for failing to meet those standards.

Two recent cases, filed in Colorado and in Nova Scotia, represent the first attempts at class action product liability claims involving cannabis in their respective countries.

Understanding the Cannabis Product Liability Cases

Flores v. Livwell, filed in the Denver County District Court, and Downton v. Organigam Holdings Inc., filed in Nova Scotia, each sought to hold their respective defendants accountable for the use of a pesticide called myclobutanil, used to treat the marijuana plants.

Myclobutanil is a fungicide that is commonly used to treat food crops, including almonds, strawberries and grapes. When heated, however, myclobutanil converts into hydrogen cyanide. It has been banned in marijuana production in Canada, Colorado, Washington and Oregon, while Michigan limits its presence in cannabis products to 200 parts per billion.

Flores

In Flores, the plaintiffs sought to bring an action against Livwell Inc., a cannabis grower and dispenser. The claim alleged that Livwell had sold cannabis contaminated with Eagle 20, which contains myclobutanil.

In February 2016, the court dismissed the claim, noting that the plaintiffs had not alleged or proven that they suffered an injury in fact. Their sole argument was that they suffered an economic loss by overpaying for a cannabis product that was allegedly contaminated.

Typically, Colorado requires plaintiffs to meet two criteria in order to establish standing to sue. First, the plaintiff must have suffered an injury in fact. Second, that injury must have been to a legally protected interest.

While the Colorado court noted that economic loss can serve as an injury in fact, it may do so only when the defect reduced the good’s original or resale value. Since the plaintiffs in Flores had consumed the product, however, there was nothing to resell and thus no resale value to compare to the resale value of non-contaminated cannabis.

Downton

The defendant in Downton, Organigram, cultivated and sold cannabis products that were subject to a Health Canada recall, violating the Pest Control Products Act when trace amounts of both myclobutanil and bifenazate were found in the marijuana plants. In Downton, the plaintiffs alleged that consuming these contaminated cannabis products cause adverse health effects.

The Nova Scotia court certified the class on several common issues, including negligence in design, development, testing, distribution, marketing, sales, and manufacturing, as well as waiver of tort and breach of several Canadian acts.

The court noted that because Organigram had already been found to have used an ingredient prohibited by law, the court was not obligated to perform a risk-benefit analysis before allowing the product liability claim to proceed. A basis for the common issue of liability, necessary to certify the class, was found in the fact that each member of the class had purchased Organigram’s cannabis – the same cannabis that was later recalled by Health Canada.

How Experts Will Play a Role in Future Marijuana Product Liability Claims

Both Flores and Downton explored issues related to actual injury and causation. One of Organigram’s initial arguments in Downton was that the plaintiffs hadn’t established a sufficient causal link between cannabis consumption and the adverse health effects reported. The court, however, found that this was an issue to be determined by litigation of the case itself, not decided as part of the evaluation of class status.

Determining injury from contaminated cannabis is likely to require the use of expert witnesses for some time, as the question is a complex one. First, many cannabis users choose cannabis as a means to treat an already-existing medical condition, which may make it difficult to separate any adverse health effects from contaminants from symptoms of the underlying condition. Second, research that can draw a clear line of demarcation between the effects of cannabis use and the effects of exposure to heated myclobutanil or other contaminants is lacking or contradictory.

In addition, experts who can help juries understand the regulations that apply to cannabis growth, testing, production, and labeling may be essential to help juries sort out questions of negligence in product liability as well as questions of comparative or contributory negligence.

Marijuana law remains a new frontier in many ways. Consequently, qualified experts will remain an essential part of legal teams on cannabis cases for years to come.