Advertising and labeling of marijuana edibles was one of the key talking points at the OLCC Community Listening Meetings on Marijuana. Businesses involved in marijuana edible production not only have a product liability risk for fear that consumption of the product might cause bodily injury, but they could also face false advertising claims of not having the marijuana edible dosage listed on the label of the product even a warning about delayed effects when consuming marijuana-infused foods.
The Oregonian story, How potent are marijuana edibles? Lab tests yield surprising results highlights at this time there is no standardized test among testing laboratories. The complexities that exists for testing are many as all THC infused food products contain different levels of sugars, fats, oils, proteins, carbohydrates and most importantly THC. Companies that make marijuana edibles will have an exposure for false advertising claims until an accurate testing method is developed to analyze the THC level within medibles.
The law that protects consumers from a business claim of false and misleading advertising is the Lanham Act, The wording of the Lanham Act states:
(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
The area within a marijuana business insurance policy that will provide you with protections for false advertising claims is advertising injury. Advertising injury coverage is designed to protect policyholders against suits based on advertisements. A potential false advertising claim could be brought against your business insurance policy for any of the following:
- Incorrect marijuana edible dosage and serving size
- Faulty expiration dates
- Delayed effects of consumption
- Non conforming label to what is actually in the marijuana edible product
The potential for a false advertising claim cannot be discounted if any of the above situations can be tied to your product. Advertising injury coverage will also provide protection in case of a suit due to the same kind and likeness of another’s product. An example of this is Hershey, the largest chocolate maker in North America, reportedly settled a lawsuit against TinctureBell, LLC and TinctureBelle Marijuanka LLC which alleged trademark infringement, trademark dilution, false designation of origin, unfair competition and passing off.
Whether you are a marijuana dispensary or a food and beverage company you want to make certain that you understand the nature of potential claims, and make certain you have marijuana business insurance in place for your business from these type of claims.