Editor’s note: This is part of a series of articles based on panels and presentations during Insurance Journal’s 2020 Insuring Cannabis Summit on Nov. 19.
Things aren’t just moving fast in the legal cannabis space, they are moving very fast.
“Oh, it’s moving at light speed for law, not light speed in general, but light speed for law,” said Katy M. Young, managing partner at Ad Astra Law Group, LLP.
Young, who is also president of the International Cannabis Bar Association, was asked for a landscape of what’s happening in the legal cannabis space as part of a panel, “Lawsuits and Regulations in Cannabis You Should Know About,” during Insurance Journal’s 2020 Insuring Cannabis Summit on Nov. 19.
A panel of legal experts tackled an array of legal issues facing those in the business of insuring cannabis, including product liability, intellectual property litigation and related risks, the Telephone Consumer Protection Act, employment litigation, directors & officers, class actions, regulatory exposures and litigating in federal court.
The panel was moderated by Ian Stewart, founder and co-chair of the cannabis and hemp law practice at Wilson Elser. Also on the panel was Michael H. Sampson, a partner with Leech Tishman who chairs the firm’s insurance coverage group and co-chairs its cannabis group, and Jodi Green, a partner in a Nicolaides Fink Thorpe Michaelides Sullivan LLP, who represents and counsels insurance companies at the trial level and on appeal.
Sampson has become an expert in TCPA lawsuits, involving unsolicited phone calls and text messages, in the cannabis space. He said there’s “been a plethora of cases filed against cannabis, particularly dispensary’s or entities that are doing the marketing for those third parties, doing the marketing for the cannabis dispensaries.”
He said damages awarded could be “six, seven, eight, nine figures,” because the suits are being brought as class actions, with each text message carrying a statutory penalty.
“So the cash register kind of rings up very quickly and I think that’s what a lot of folks are looking at,” Sampson said.
Sampson’s firm conducts a “health and welfare” check with clients, looking at texting policies, who at the company has the authority to text customers, often texts are sent.
“And so I think it’s really incumbent on everybody in the industry in particular dispensaries to really be looking at their internal policies, looking at the TCPA and making sure that they’re aligned and that you’re not opening yourself up to litigation because everybody here deals with insurance coverage and risk mitigation,” Sampson said. “This is really the prototypical announcement prevention is worth a pound of cure. It’s a lot easier to get the processes in place upfront than to have to deal with litigation and damages after the fact.”
Green said that as a coverage attorney she wonders where the client education with these companies is coming from.
“So obviously from my view, I think it’s very important to have education and training for the these people that, they’re not going to have coverage for something that is going to be a company busting claim, potentially $900 billion,” Green said. “Many of these cases are in the tens of hundreds of millions, just based on the number of texts that are sent out multiplied by what $500 or 1500 for a willful violation or something like that. So it can really seriously damaging.”
Stewart, echoing Young’s feelings about the speed in which the law and lawsuits are moving in the cannabis space, looked ahead to what this means for the coming year.
“So 2021 could be very interesting for the cannabis industry and particularly for the commercial carriers and brokers that want to enter the space,” Stewart said.
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