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Kanna Risk Management recently queried several plaintiff practices about their intentions for filing actions against cannabis businesses. While insisting on anonymity, they all told us that there are several grounds currently, and more coming. All relate to questionable rules.

When the Department of Agriculture’s Marketing Service published its most recent rules on hemp/CBD production — which took effect this last March 22 — many in the industry and their insurance carriers did not take them seriously. Even though nearly 6,000 comments were filed by growers and others during the open period, most were ignored by the government. So instead of standardization everyone agrees on, there are vagaries for growers and their insurers that are still at issue and open for lawsuits.

For example, Pleasanton, Nebraska grower Rory Cruise planted his first crop of 900 hemp plants, which he sent for testing. At first their THC content was 0.19%, well below the 0.3% legal limit, but the next batch was 0.27%. Cruise immediately called the Nebraska Department of Agriculture hoping to finalize testing before his plants got too “hot,” but by the time the rep came by the results were up to 0.36%. His entire crop had to be destroyed by the “Hemp Police.”

This happens because picking the right time to harvest is tricky. As a crop matures, both the THC content and the valued cannabinoid content — CBD and CBG — increase. So if a grower harvests too early, the percentage of CBD is lower. Harvest too late, and there’s risk of going over the THC limit. (Cruise would like the THC limit raised to 1.05%)

In Kentucky, Senator Rand Paul’s Hemp Economic Mobilization Plan asked to raise the allowed THC level to 1%. Growers are currently stuck at the lower number because of an arbitrary decision based on an article published in 1976, when cannabis was not mainstream. One beneficiary of these policies are testing laboratories such as ACS in Sun City, Florida that are equipped with ultra-high performance liquid chromatography.

Hemp grower Robert Mills in Callands, Virginia says that to make money on CBD crops, the THC number should be 8% to 13%. This will all eventually be litigated to a conclusion, and product/general liability carriers need to be aware and flexible. Even growers meeting the lower levels of THC may be subject to lawsuits because the public is confused and unaware … and plaintiff lawyers earn their living by filing these actions. Expect to see changes in wording of product/general liability policies to help growers withstand inevitable lawsuits.

See you next time … and please email your comments to [email protected]

Michael B