How might recreational-use cannabis impact commercial liability?

How might recreational-use cannabis impact commercial liability?

Recreational-use cannabis is officially legal in Canada, opening doors to new opportunities for insurers, brokers and risk managers across the country. As more licensed producers and retailers crop up, there will be a growing need for commercial risk transfer, both through conventional and specially-developed insurance policies.

From a commercial liability perspective, there will be short-term, mid-term and long-term risks associated with recreational-use cannabis legalization, according to Mario Fiorino, director of legal and assistant counsel at the Insurance Bureau of Canada (IBC), and speaker at the upcoming Cannabis Cover Masterclass Toronto 2018.

“I think the most significant short-term risk for business operators and for Canadians as a whole is road safety – both in the personal passenger space and in commercial transportation,” Fiorino told Insurance Business. “At this point, the Government has to engage in an aggressive public awareness campaign to make sure consumers understand the risks of cannabis use in tandem with the operation of motor vehicles.

“The insurance industry, including brokers, also has a role to play in ensuring consumers are educated about the consequences of impaired driving. In Ontario, there’s going to be a zero-tolerance regime around cannabis-impaired driving, regardless of driving experience. It’s essential that all stakeholders in the industry engage in this public awareness campaign.”

Communication and education will also play an important role in the workplace, according to Fiorino. Employers face potential employment practices liability if they do not provide appropriate insight over the use of recreational cannabis in the workplace, and adjust human resource policies accordingly, he explained.

Likewise, social hosts are going to face an evolving liability landscape. As Fiorino pointed out, the principals that have traditionally been associated with social host liability and alcohol will have to adapt and evolve to encompass situations around mixed impairment of alcohol and cannabis.

“Long-term commercial liabilities are going to depend on a number of factors, including the development of scientific and medical information, as well as the behaviour of licensed producers, retailers and the Government as a regulator,” Fiorino commented. “One of the key long-term commercial exposures might be in the product recall space, around allegations of product defect. We could also see allegations with respect to warnings around physical and/or mental risks associated with potential overuse and addiction to cannabis. Only time will tell with respect to these long-term allegations.”

Learn more about the key risks and coverage needs in the emerging cannabis industry by attending Insurance Business’s Cannabis Cover Masterclass Toronto 2018. On November 28, leading insurance influencers will discuss key perspectives on regulation, cannabis-specific risk, business growth and how these forces combine to shape the current and future insurance market. Sign up here.
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