Last October, we alerted you that watchdog groups were filing notices of violation (NOVs) against cannabis dispensaries for alleged violations under Proposition 65. Specifically, NOVs were filed for pesticides in cannabis edible products and for marijuana smoke. Proposition 65 requires that businesses with 10 or more employees provide a clear and reasonable warning to California consumers before knowingly and intentionally exposing them to any agent on a list of more than 900 chemicals known to cause cancer or reproductive toxicity, including agents such as certain pesticides and marijuana smoke. Before private parties can sue businesses under Proposition 65, they must first issue an NOV to the business and provide a copy to the Attorney General of California. If the Attorney General’s office does not act within 60 days or the allegedly offending business does not settle the NOV with the plaintiff, the private party can take the business to court for penalties described in greater detail below.
In January 2018, we further informed you that a particular plaintiff that had waited the prescribed 60 days after filing NOVs was taking the next step under Proposition 65. That plaintiff, Michael DiPirro began filing lawsuits claiming that paraphernalia, including smoking pipes and rolling papers trigger obligations under Proposition 65 because their consumption and use result in marijuana smoke. The cannabis dispensaries being sued by DiPirro were establishments in Alameda County focused on recreational cannabis use.
Now, we are seeing the wave growing into other cannabis markets and regions – similar lawsuits are being filed against medicinal cannabis dispensaries in Los Angeles County. On March 9, 2018, plaintiffs Anthony Ferreiro and Donny Macias sued two medicinal cannabis businesses in Los Angeles County Superior County Court in separate actions. The actions filed by Ferreiro and Macias both claim the defendant medicinal cannabis dispensaries market “products containing marijuana intended for smoking, including but not limited to, pre-rolled products, unprocessed and processed marijuana intended to be heated, combusted, then inhaled, and specifically, the flowers, leaves, and other organic parts of marijuana plants….”
The widening net cast by plaintiff consumer groups pursuing cannabis dispensaries under Proposition 65 should not come as a surprise. Over the years, Proposition 65 plaintiffs have continued to expand their reach into additional markets and consumer products. The financial incentive for issuing Proposition 65 NOVs and filing such lawsuits can be significant. As we explained in previous alerts, companies that violate Proposition 65 can be liable for civil penalties up to $2,500 per day per violation, injunctive relief, and reasonable attorneys’ fees incurred by the plaintiff’s counsel in pursuing the matter. As NOVs continue to surpass the 60-day waiting period, we expect to see an increasing number of cannabis businesses cited as defendants in California court proceedings.
The recent upsurge of Proposition 65 lawsuits against cannabis businesses highlights the importance of a fulsome Proposition 65 compliance plan to proactively reduce the opportunity for alleged violations. A comprehensive compliance plan addressing the relevant laws and regulations, including but not limited to Proposition 65 should help minimize the legal risk involved in operating businesses focused on cannabis consumer products.