Cannabis Product Liability Insurance

Protect Your Brand—and Your Bottom Line

As the cannabis industry grows more regulated and competitive, businesses face increased exposure to product-related lawsuits. Whether you manufacture, process, or sell THC or CBD products, one claim of contamination, mislabeling, or injury could threaten everything you’ve built.

Heffernan Insurance Brokers helps cannabis companies secure reliable cannabis product liability insurance that meets industry standards and satisfies retailer, distributor, and investor requirements.

What Is Cannabis Product Liability Insurance?

Cannabis product liability insurance protects your business if someone claims harm or injury after using your product. It covers legal defense, court costs, settlements, and recall expenses—helping shield your business from financially devastating lawsuits.

Coverage can apply to:

• Contaminated products (mold, pesticides, heavy metals)
• Mislabeled THC/CBD content
• Faulty or hazardous devices (e.g., vaporizers)
• Adverse reactions to edibles, tinctures, or topicals
• Claims of false advertising or dosage errors

Whether you handle cultivation, processing, or retail, product liability insurance for cannabis businesses is critical for managing your exposure.

Who Needs Cannabis Product Liability Insurance?

Any company involved in the cannabis supply chain can be held liable in the event of a claim—even if you didn’t manufacture the product. That’s why this coverage is essential for:

• Cannabis growers selling flower to dispensaries or direct to consumers
• Processors and extractors making oils, concentrates, and tinctures
• Manufacturers of infused products like edibles, topicals, or beverages
• Retailers and dispensaries selling branded or white-labeled items
• Distributors transporting finished goods

If your name is on the packaging—or even on the invoice—you could be named in a lawsuit.

What Does Cannabis Product Liability Insurance Cover?

This coverage typically includes:

• Legal defense costs associated with a covered claim
• Medical expenses from consumer injury or illness
• Settlements and court-awarded damages
• Recall expenses (including notification and disposal)
• Regulatory fines associated with mislabeled or noncompliant products (optional)

Cannabis product insurance can be written as a standalone policy or included in a broader cannabis business insurance package with general liability, crop coverage, and more.

Common Product Liability Risks in Cannabis

Here are real-world examples of cannabis product liability claims:

• A consumer falls ill after consuming a mislabeled edible with higher-than-indicated THC levels
• A vape pen malfunctions and causes physical burns
• A patient with a compromised immune system is exposed to mold in packaged flower
• A topical CBD product causes a skin reaction due to unlisted ingredients

A single incident—even if unintentional—can lead to legal action, negative publicity, and business disruption.

Frequently Asked Questions

Is cannabis product liability insurance required by law?

Not in every state, but many retailers and distributors require proof of coverage before partnering with you. Having this insurance also demonstrates professionalism and risk awareness to investors and partners.

Does general liability cover product claims?

No. General liability covers third-party slip-and-fall incidents or third-party property damage, not issues related to your actual product. A separate product liability endorsement or policy is needed.

How much coverage do I need?

Most cannabis businesses start with $1 million per occurrence, with higher limits recommended for manufacturers and distributors. Heffernan will tailor recommendations based on your product type, volume, and customer base.

Does this cover both THC and CBD products?

Yes—but it’s important to clarify. Some policies treat hemp-derived CBD differently from THC-containing products. We’ll help you navigate these distinctions and secure comprehensive cannabis and CBD product liability coverage.