In October, we reported on the filing of the marijuana industry’s first class action lawsuit, Flores v. LivWell, Inc., in Colorado state court by two marijuana users. Plaintiffs alleged that LivWell sprayed thousands of its plants with a dangerous fungicide known as Eagle 20 and that, when burned, it releases a poisonous compound, hydrogen cyanide. See post. Interestingly, plaintiffs in LivWell did not claim any personal injury resulting from their alleged inhalation of hydrogen cyanide, but instead claimed they would have paid less for the marijuana had they known it had been treated with Eagle 20. Although the LivWell suit was recently dismissed for failure to allege a cognizable injury, the industry will likely face increased litigation in the coming months related to the use of illegal pesticides.
From a product liability perspective, it is typical within an industry that a class action lawsuit will attract the attention of regulatory authorities that piggyback on issues related to the underlying lawsuit. Once regulations are enacted, further lawsuits usually follow, claiming the manufacturers are breaking the newly-enacted rules. In addition, companies often face the hard decision of whether to issue a product recall. The use of pesticides in the marijuana industry provides a case study in how class action lawsuits, regulatory action and product recalls may create a trifecta of issues for marijuana manufacturers to manage.
First, by way of background, one may wonder why are pesticides used for marijuana cultivation in the first place? Climates in states where marijuana is legalized for commercial sale, such as Oregon, Washington and Colorado, require indoor cultivation. See article. As a result of the indoor climate and overplanting, the plants become “stressed” and are more likely to develop certain fungus and mites. Industry manufacturers pressured to keep up with demand turned to pesticides to fight against the biological attacks on their inventory. See id.
Concurrently with the filing of the first class action lawsuit in Colorado, the use of potentially dangerous pesticides in marijuana cultivation raised concern for state environmental regulators. That overwhelming concern led to an investigation by the Denver Department of Environmental Health. See post. In response to the “growing” pesticide problem, Colorado proposed stricter rules on pesticide use related to marijuana cultivation in October 2015. Since then, Washington and Oregon have also issued lists of approved pesticides that are considered safe for use. See, e.g., Colorado’s “pesticide use in marijuana production website page;” and Washington’s approved list. In addition, last month, the Washington State Liquor and Cannabis Board (WSLCB) took action against two of the state’s largest cannabis producers pending its investigation into the use of prohibited pesticides. See article.
Also last month, the very first cannabis product recall was announced in Washington State. See article. This followed several marijuana product recalls in Colorado at the end of last year. In its press release, the Washington-based company affirmed its “commitment to safety and integrity” and asked for customers’ “understanding and patience while [the Company[ work[s] to resolve this issue. . . .” Unlike industries regulated by federal agencies such as the Food and Drug Administration, the marijuana industry does not have defined procedures for product recalls. Instead, the industry follows recommended procedures. See Recall Procedures Sec. 9.3. Thus, manufacturers are largely tasked with determining whether to institute a recall voluntarily as a means to limit their liability exposure. Such considerations involve balancing recall costs, reputational harm, and disruption to vendor contracts.