Medical marijuana liability exclusion
By David Thamann
Perhaps this is jumping the gun a bit, but has any thought been given to putting a medical marijuana liability exclusion in the commercial general liability (CGL) policy? The number of dispensaries legally distributing marijuana for medicinal purposes has been increasing (especially in California), and this trend is no doubt going to continue. If any thought is being given to this idea, the liquor liability exclusion in the current general liability form could serve as a guideline. That exclusion (in the ISO CGL form) applies to bodily injury or property damage for which any insured may be held liable by reason of: causing or contributing to the intoxication of any person; the furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or any statute, ordinance or regulation relating to the sale, gift, distribution, or use of alcoholic beverages.
The liquor liability exclusion is meant to prevent general liability coverage for a claim against an insured based on the insured's being held ultimately responsible for someone getting drunk and then proceeding to damage someone's property. It is not an overwhelming stretch of the imagination to see something like this happening after a patient receives medical marijuana. (No doubt, the legal dispensaries of medical marijuana will have regulations and safeguards to prevent any such occurrences. However, bars and taverns and restaurants have regulations and restrictions on alcoholic consumption, and that has not prevented alcohol-related incidents.)
So, how would one apply medical marijuana liability exclusion that has been patterned after the liquor liability exclusion?
Let's imagine a patient going into a medical marijuana dispensary and receiving his treatment. After leaving the dispensary, the patient goes to his apartment and starts smoking more marijuana from his personal stash. The patient gets high and proceeds to accidentally burn his apartment down along with the rest of the building. Many people are injured and the apartment building is heavily damaged. The story comes out that the patient received his marijuana treatment from the insured, ABC Meds. Who is to say that the marijuana treatment did not contribute to the patient's actions? Even if the treatment was responsible for only a small percentage of the patient's condition, the insured will certainly be included in any lawsuit. And even if the insured is not found legally liable for the injuries and damages, defense costs could be staggering.
By tweaking the wording in the standard liquor liability exclusion, the insurer of ABC Meds can preclude coverage for any claim based on the insured's causing or contributing to the intoxication of the patient. The insurer can simply replace the words "alcohol" and "liquor" with "marijuana" or some such wording, and the exclusion is ready for use. This would be a new exclusion on the general liability policy and could be just as effective as the current liquor liability exclusion.
Of course, if the idea of another exclusion in the general liability form is not practical or is unacceptable for some reason, the insurer can always consider the use of an endorsement. The current CGL form has many endorsements that can be added to the policy to exclude coverage for certain practices of the insured.
For example, there is an exclusion for designated professional services, and another specifically for health or cosmetic services, and still more that apply to professional liability. An exclusionary endorsement can be worded in such a fashion to prevent coverage for claims against an insured medical marijuana dispensary, whether that dispensary is considered a medical facility, a professional entity, or even a non-profit organization.
It may be that there is no need for a medical marijuana liability endorsement in that the risk exposure is small or even nonexistent. It may be that current exclusions in general liability forms or current endorsements are capable of defeating any claim based on the dispensing of medical marijuana. It may be that the criminalization of marijuana use will continue to be the norm throughout the country, and thus, not be included as an insurable item. And, it may be that I am just blowing smoke, so to speak. Then again, with the public attitude towards the use of marijuana for medical purposes changing (even if ever so slowly), it may be good advice to put the possible liability exposures of medical marijuana dispensaries on the agenda.
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