Voluntary Product Recall for Vape Pens by Colorado Cannabis Licensee

Medicine Man Pulls Vape Products with Propylene Glycol or Vitamin E Acetate Off Shelves

 

  • Colorado based Medicine Man issues press release removing vape pens off their shelf if ingredients include propylene glycol or vitamin E acetate
  • Voluntary recalls might be a covered loss on certain product liability insurance policies.
  • Recalling a product will not typically jeopardize the indemnification provision in most product liability policies.  

In a press release, Colorado based cannabis licensee Medicine Man is removing all vape products containing the ingredients propylene glycol or vitamin E acetate.  Vitamin E acetate has been identified by the New York State Department of Health as being linked in their investigation with victims suffering health consequences. 

Product recall covered by insurance?

From a insurance and risk perspective, Medicine Man is taking the prudent step to reduce their potential liability exposure by removing product for sale, if indeed these ingredients are linked to the national health risks associated with vaping.

A “product recall” is typically defined in most product liability insurance policies.  This definition will help determine the type of recall being performed and how the policy may respond.  For example, some policies define product recall based on notification from an authorized government entity versus a voluntary recall.

Depending on the cannabis product liability insurance company, the costs covered for a recall may include notification, transportation, and disposal of product depending on the policy wording.

Does a product recall jeopardize my liability protection?

Not typically.  A product recall demonstrates being proactive and reducing liability for the licensee and insurance company.  Most reasonable insurance companies will view these actions as mitigating your risk exposure. 

If it is determined vitamin e acetate is responsible for the health problems, then cannabis licensees should begin analyzing the many risk factors such as any potential legal basis of the claim or lawsuit, types of damages, other  parties involved, and how their insurance carrier might respond based on the policy wording.

  

 

Cannabis Retailers Want Manufacturers to Cover them from Liability through Insurance

Cannabis stores may not realize most carriers are saying no coverage for vape pen batteries

The latest insurance trend in the cannabis industry has to do with cannabis stores requiring their manufacturers to include them as additional insureds for product liability.  Additional insured means the store is listed on the policy for liability protection.  Even more interesting for insurance geeks are stores are asking the batteries for vape pens must be covered.

A typical scenario is the manufacturer of the vape pen and battery sells these products to a variety of retail cannabis stores.  A store requests their business must be covered on the manufacturers insurance policy for product liability.  The evidence comes in the form of a Certificate of Insurance without any real verification the batteries are indeed covered on the manufacturers policy.

Why are cannabis retailers requesting this type of coverage for batteries?

 

Cannabis Insurance Company making certain requirements

 

We don’t see any evidence of retailers or manufacturers considering this type of obligation in their relationships or contracts.  It may be the cannabis insurance companies forcing their store clients to request the coverage from the manufacturer as a condition of their insurance.  This is a method we strongly are against for a variety of reasons, if its true.

For example, a cannabis store is buying product liability insurance from an agent.  The agents tells the cannabis store they must be added as additional insured on the manufacturers policy or else they may not be able to buy insurance according to the carrier’s underwriter.

The other scenario could be some cannabis store became concerned with exploding batteries and decided to request coverage from their manufacturers in case something went wrong. 

The truth is cannabis insurance companies are not covering most batteries

 

No insurance coverage for vape pens

 

Based on current market conditions certain product liability insurance policies are covering the vape pens.  However, they seem to be running away from batteries.

We reviewed several product liability insurance policies to determine if batteries are being covered. 

Here’s what we discovered:

No Coverage of Batteries on Insurance Policies

Cannabis Insurance Carrier ACannabis Insurance Carrier BCannabis Insurance Carrier C
EXCLUSIONS BATTERIES

This insurance does not apply to "bodily injury", "property damage", or "personal and advertising" arising out of batteries. This exclusion applies regardless of whether:

A. Said batteries were manufactured, sold, handled, distributed or disposed of by your or others trading under your name or on your behalf; or
b. "Your work" or
VAPORIZING EQUIPMENT AND COMPONENTS EXCLUSION

In consideration of the premium charged for the policy, it is hereby understood and agreed that coverage under this policy does not apply to any claim arising out of the use, handling or ownership of vaporizing equipment, or any part of the accessories attached or used with the vaporizing equipment including pens, cartridges, mouth pieces, batteries, chargers, coils and any miscellaneous products used with, or attached to, vaporizing equipment.
DESIGNATED PRODUCTS EXCLUSION--PRODUCT RELATED TO ELECTRONIC CIGARETTES, VAPORIZERS AND SIMILAR DEVICES.

Batteries manufactured, distributed or sold by, or disposed of by, or in any way used or handled by, or sold under the label of :

a. ShenZhen Fest Technology, Co., Ltd
b. ShenZhen E-Young Technology Co., Ltd
c. EFEST
d. ShenZhen Mxjo Technology Co., Ltd
e. MXJO
f. MXJO Tech

In our table, Carrier B is excluding batteries and vape pens from coverage.  Carrier C has a list of batteries they believe are the most dangerous. 

If you’re a store requesting this coverage from your infused product manufacturer it would be prudent to be certain its even offered.  More importantly, cannabis retailers through their agents may want to question the insurance company if this is indeed a requirement of buying and maintaining insurance.