4 Steps to Protect Your Cannabis Business from Lawsuits


For any business owner, it’s easy to become preoccupied by the day-to-day operations of your business, but it is also important to consider how you might anticipate legal threats, including potential lawsuits, that might threaten the long-term success and viability of your business. Because of the unique legal position of marijuana businesses under state and federal laws, they are in some ways more vulnerable to lawsuits than other kinds of businesses.

By working with a reputable cannabis business law attorney, you can plan ahead to prevent these legal threats. Here are 4 steps you can take to protect your marijuana business from lawsuits:

#1. Obtain Robust Insurance Coverage

In California you are required to carry basic commercial general liability insurance in order to run a marijuana business. Depending on the kind of marijuana business you own, however, you may want to purchase additional insurance to cover:

  • Product liability
  • Crop insurance
  • Workers’ compensation
  • Property damage
  • Business interruption and loss of income
  • Commercial auto insurance (for delivery vehicles)
  • Employment disputes
  • Crime/theft
  • Cyber liability

An experienced attorney will be able to review your insurance needs and offer guidance to ensure your business is adequately insured.

#2. Protect Your Intellectual Property

As the cannabis landscape grows more and more competitive, it is crucial for cannabis business owners to develop a comprehensive intellectual property strategy. Investors, in particular, are increasingly prioritizing a company’s intellectual property as part of their value assessment. Without the necessary trademarks, copyrights, patents, and protected trade secrets, you could lose the right to capitalize on your intellectual property and open yourself to lawsuits from competing claims. It is essential that you consult with a reputable attorney about how to protect your intellectual property.

#3. Follow All Proper Procedures and Regulations

Marijuana business are regulated by a myriad of local, state, and federal regulations that are constantly shifting, but it is critical that you remain in compliance with all proper procedures and regulations that apply to your business.

For instance, you must ensure that you are maintaining proper licensing and use permits for your business. If you are selling marijuana products directly to consumers, checking for valid ID for each individual sale is a vital step in protecting yourself from lawsuits. It is also vital that you properly package and label all cannabis products marketed for sale. California has specific packaging and labeling guidelines for cannabis products. Furthermore, cannabis products meant to be consumed via smoking must carry a label warning against the risk of cancer and reproductive harm, as required by Proposition 65.

While it can be difficult to keep track of the most current laws, working with a lawyer can help you to ensure that your business remains compliant with all regulations.

#4. Hire a Reputable Marijuana Business Lawyer

From helping you to successfully and properly set up your business to ensuring you have adequate insurance coverage to helping you navigate the local, state, and federal laws that regulate your business, an experienced cannabis business attorney can help to ensure that your business thrives both now and in the years to come.

With over 65 years of combined experience, our legal team at Purdy & Bailey, LLC, understands the needs and challenges of your marijuana business. Protecting yourself and your cannabis business from liability can seem overwhelming, but our team is here to help guide you through every step of the process to ensure that you and your business are well-protected from legal threats. Whether you are concerned about protecting your marijuana business from lawsuits or need help to defend against a lawsuit, Purdy & Bailey, LLC is here to guide and protect your business. We can help you to understand the unique needs of your business and, if necessary, will vigorously represent you in court.

If you want to protect your cannabis business from lawsuits in California, contact Purdy & Bailey, LLC today at (858) 360-7080 to schedule a consultation.

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