Tag Archives: exposure

How to Properly Store Plastic Cannabis Packaging

By Danielle Antos
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Your plastic cannabis packaging has a big responsibility. It contains and protects your product, communicates pertinent product information and delivers the first brand impression to your consumers. In order for plastic packaging to fulfill these important roles, you must take care to store and handle it properly.

Following storage condition requirements for plastic bottles helps protect your cannabis product, your company and your customers. It doesn’t matter if your cannabis packaging is HDPE (high density polyethylene), PP (polyethylene) or PET (polyethylene terephthalate), proper storage is imperative to maintain the integrity of the product until you’re ready to fill it.

Bottle and closure storage conditions such as time, temperature and humidity can have an effect on plastic containers. The exposure and age of a sample can also affect shrinkage, impact properties and the stress crack resistance of the container. Not to mention the potential threat of contamination to your cannabis product and the poor impression of your brand in the eyes of your consumers.

You may be wondering how to obtain storage information. The best place to start is with your cannabis packaging partner. Your supplier should be ready and willing to share all vital storage information with you. The best suppliers realize that there is more to a business relationship than just the financial transaction of buying packaging. The first step in proper storage is to identify the type of material that was used to manufacture your bottles and closures.

Know Your Bottle Material Type – HDPE

If you are utilizing HDPE for your cannabis packaging, the storage time should be minimal and a strict first-in-first-out inventory should be maintained. Many end users will re-approve bottles after two or three years to ensure they are damage-free.

In addition, elevated storage temperatures allow plastic containers to further shrink and harsh conditions can actually cause severe distortion. The degree of distortion and shrinkage depends on the design and how the bottles have been stored. Higher storage temperatures also accelerate the aging process of the container. A moderate storage temperature should be provided to safeguard consistent bottle dimensions and properties. It is routinely reported that HDPE bottles can withstand temperatures of 110°F/33°C for brief periods.

Although humidity itself will not degrade the plastic container, a humid environment can have a direct impact on the secondary packaging, such as the cardboard cartons used for shipping. If you use stretch wrap and/or control warehouse conditions, secondary packaging problems can be alleviated.

HDPE bottles and closures should be kept as clean as possible – it is best to leave them in the original sealed cartons. The storage area should be kept clean, dry and dust, odor, insect, and rodent-free. Following this rule will help to build consumer trust in your brand. No one wants to purchase cannabis products in dirty, dusty contaminated packages.

Using PET Bottles?

PET bottles should also be used in a first-in-first-out system to limit the time in storage. Long-term storage should be accomplished using a sealed polyethylene plastic bag or lined drums, totes, bins, Gaylord containers, supersacks or seabulks. The plastic liner will help prevent dust and dirt from entering the bottles.

Elevated storage temperatures (above 100°F/38°C) allow empty PET bottles to shrink, mainly due to relaxation of the oriented and partially oriented regions of the bottle. Extreme temperature conditions (above 131°F/55°C) can cause severe distortion of the amorphous areas of the bottle, including the finish and neck. Moderate storage temperature should be maintained to ensure consistent bottle dimensions and properties.

To help protect PET bottles from contamination, the storage area should be kept clean, dry and dust, odor, insect, and rodent-free. Additionally, the storage area should be approved for food storage. PET bottles should not be stored in direct sunlight, and aromatic materials such as spices, solvents, ink, cleaning supplies and disinfectants should not be stored in the same area.

When empty PET bottles are shipped to or through areas where the outdoor temperature may exceed 90°/32°C, it is recommended that a temperature-controlled container or trailer capable of maintaining a temperature of 80°F/27°C or lower be used.

Polypropylene (PP) Closures

Closures are also an important part of your cannabis packaging. The storage time of unlined closures should be minimized. As with bottles, a strict first-in-first-out inventory should be maintained.

Elevated storage temperatures allow unlined PP closures to further shrink. Harsh conditions can actually cause severe distortion. The degree of distortion and shrinkage depends on the closure design and storage conditions. High storage temperatures accelerate the aging process of the closure; moderate storage temperatures should be provided to ensure consistent closure dimensions and properties. Like HDPE bottles, this type of closure can withstand temperatures of 110°F/43°C for brief periods.

When stored in humid conditions, pay attention to the integrity of the cardboard cartons the closures are stored in. The use of stretch wrap and/or controlling warehouse conditions will help alleviate damage to the cardboard. Just like their bottle counterparts, PP unlined closures should be kept as clean as possible and it is best to store in original sealed cartons.

Proper Storage Supports Your Bottom Line

Storing plastic bottles improperly can reduce the integrity of the plastic, therefore making it unsuitable to contain your cannabis product. Poor storage can also be detrimental to filling lines and cause production problems, which can result in reduced efficiencies and added costs.

Product recalls can also be a by-product of poor storage due to increased chances of product contamination. If plastic bottles and closures are not properly stored before using, distortion and shrinkage can damage the bottle labels used to identify your product. Shrinkage of your plastic closures result in a poor sealing surface which is detrimental to the freshness of your cannabis product. All of these side-effects can be very damaging to your brand image, from which it’s hard to recover. Consumers will lose confidence in your brand – leading to reduced profits for your bottom line.

Whether your cannabis business is in the early start-up stages or established with loyal customers, properly storing your plastic packaging will help protect your brand, decrease the risk of product recalls and increase your profitability.

When You Don’t Know What You Don’t Know: Debunking Cannabis Insurance Myths

By , T.J. Frost
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For all of today’s growing acceptance and legitimacy with cannabis, the reality is that today’s operators – whether growers/producers or dispensary operators – still face risks in running their businesses. If, in the old days, a customer got deathly ill from cannabis contaminated with something from somewhere during the distribution chain, oh, well. But now that there’s a legal system of checks and balances; there’s recourse when issues arise.

The problem is that the business is so new that most people don’t know what they don’t know about mitigating those risks. And that, unfortunately, extends to many in the insurance business who need to be doing a better job helping put the right protections in place.

One grower bemoaned to me at a cannabis trade show, “I sure wish I could insure my crops.” What? “You can,” I told him. His old-school ag broker didn’t know any better and didn’t do him any favors with his ignorance. But it brought home the point: We have to start treating cannabis like the real business it is.

Reviewing the existing insurance policies of today’s cannabis businesses uncovers some serious gaps in coverage that could be financially crippling if not downright dangerous should a claim be triggered. Retail dispensaries, for example, are high-cash businesses, making banking and trusted employees a must-have.Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days. 

And a close eye must be cast to lease agreements for hidden exposures, too. We know a Washington state grower that had no property insurance on its large, leased indoor growing facility. The company’s lease made its owners, not their landlord, responsible for any required building improvements. It was one of a variety of serious exposures that had to be fixed.

Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days. Rather than find themselves under-insured, they can start by learning what they probably have wrong about insurance. Dispelling three of the most common myths is a good place to start.

Myth #1: Nobody will insure a cannabis business.

Not remotely true. You can and should get coverage. Think property and casualty, product liability, EPLI and directors and officers, employee benefits and workers comp. Additionally, you should be educated on what crop coverage does and doesn’t cover. Depending on your business’ role in production and distribution, you might also consider cargo, stock throughput, auto, as noted, crime and cyber coverage. It pays to protect yourself.

Myth #2: If my business isn’t doing edibles, I don’t have to worry about product liability insurance.

The reality is that product liability may be the biggest risk the cannabis industry faces, at every level on the supply chain. There’s a liability “trickle down” effect that starts with production and distribution and sales and goes down to labeling and even how the product is branded. Especially when a product is an edible, inhalable or ingestible with many people behind it, the contractual risk transfer of product liability is an important consideration. That means the liability is pushed to all those who play any role in the supply chain, whether as a producer or a retailer or an extractor. And all your vendors must show their certificates of insurance and adequate coverage amounts. Don’t make the mistake of being so excited about this new product that you don’t check out the vendors you partner with for this protection.

Myth #3: Any loss at my operation will be covered by my landlord’s policy.

As the example I cited early illustrated, that’s unlikely. Moreover, your loss might even cause your landlord’s insurance to be nullified for having rented to a cannabis business. It’s another reason to examine your lease agreement very carefully. You want to comply with your landlord’s requirements. But you also need to be aware of any potential liabilities that may or may not be covered. Incidentally, even if your landlord’s policy offers you some protection, your interests are going to be best served through a separate, stand-alone policy for overall coverage.

These are interesting times for the burgeoning legal cannabis business. Getting smart – fast – about the risks and how to manage them will be important as the industry grows into its potential.

Clearing Up the Haze Surrounding Cannabis Product Liability Risks

By Susan Preston, T.J. Frost
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When a thriving cultivator purchased additional cannabis from a wholesale grower to meet the 5,000 pounds he was short, he was left holding the bag. A customer complained of a strong sulfur taste, and soon it was discovered that the wholesaler had applied the wrong pesticide concentration, rendering the cannabis unusable. The cultivator had to pull contaminated cannabis product from the shelves, a move that cost the company $3.5 million.

This story is not unique. When running short on product, cannabis businesses will often turn to other suppliers and partners to help them fulfill their orders. Unfortunately, improper vetting and a lack of understanding and compliance with state regulations and other requirements may lead to a loss of product integrity and costly product liabilities. Product liability can include more than just the cannabis itself, such as the equipment – vape cartridges, batteries, and lighters. This can quickly inflate the risk and, of course, the cost of a product liability claim. It is possible to transfer some of these cannabis risks to product liability insurance.

Top Three Product Liability Exposures Facing Cannabis Cultivators and Distributors

Three key areas of product liability exposure face cannabis business owners. It’s important to understand how each will affect your business.

  1. Product contamination.When cannabis is sold in an edible form, business owners could face claims of food poisoning or illness. If the product is smoked, there are exposures to contamination, product mislabeling or misrepresentation, and possible health hazard claims related to long-term exposure to potential contaminants.
  2. First party claims. Claims made in the event of an accident, injury or loss, whether caused by the business owner or someone else, will create another set of exposures, including manufacturing defects, failure to warn users on potential product usage hazards, improper labeling, or any product-related defect such as mold or odor.
  3. Third party claims. Cannabis business owners could be liable for claims stemming from the use of their cannabis product that result in a DUI, property damage, loss of wages, medical expenses and bodily injury.

It is possible to transfer some of these cannabis risks to product liability insurance. While there are multiple lines of product liability insurance, you’ll want to make sure you choose one designed specifically for the cannabis industry. These policies may provide coverage for the following exposures:

  • Product contamination
  • Bodily injury damages
  • Fines and penalties for non-compliance with state regulation
  • Bodily or property injury caused to others by product misuse, or by a third party
  • Manufacturing or product-related defects

While product liability insurance covers a number of cannabis risks, it doesn’t cover them all. Cannabis operations require a variety of coverage – property, crime, general liability, worker’s compensationand crop insurance. Insurance carriers will differ in definitions, policy exclusions and coverage language for each policy.

Because designated cannabis product liability and business operations coverage is fairly new and the marketplace features a wide range of options, make sure to work with a broker who understands the fine print of your policies, and your unique needs. The right broker can provide advice and loss control to help you reduce product liability exposures, make product and risk management recommendations that best mitigate your exposures to prevent loss, and ensure the proper coverage to address potential claims.

Matt Engle
Soapbox

Insurers Must Play Catch-Up to Meet Cannabis Industry Needs

By Matt Engle
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Matt Engle

As the cannabis industry continues to grow, demand for insurance products is also increasing. While insurers have been cautious about entering a market that carries the stigma of a Schedule I drug, the cannabis industry is clamoring for insurance coverage options tailored to meet the needs of key players— distributors, growers, processors and retail dispensaries.

The escalating need for insurance products tailored to these cannabis business sectors has not expedited an increase in coverage offerings. The slow entry of insurance carriers into the cannabis sector can be tied to a reluctance to insure an industry with emerging and often unknown risks. This will begin to change as more information becomes available on what loss ratio trends look like in the cannabis industry.

For now, there is a wait-and-see stance held by insurance carriers. This presents a major concern for cannabis-related businesses that are subject to risk at every stage of the supply chain, with particular exposure for theft, general liability, crop loss, and product liability.some degree of crime and theft coverage is needed for these enterprises to help manage the risks associated with a cash-based business

Theft

For cannabis companies, the use of paper currency is a huge part of their risk exposure. Federal banking regulations have limited these businesses to dealing mostly in cash, which makes them a prime target for crime and fraud. Currently, only one carrier will insure coverage for cash and theft risk, and the policy is limited to $1 million for most risks. This is inadequate coverage since many operators have more than that amount on-site.

In states with legislation legalizing cannabis, the cannabis sector will be able to move away from operating in cash if Congress passes the Secure and Fair Enforcement (SAFE) Banking Act, which would protect financial institutions from liability for federal prosecution that could arise from servicing cannabis-related businesses authorized under state law. Until banking regulations give the cannabis industry the ability to operate as legitimate businesses with the stability and safety that would deter criminal activity, some degree of crime and theft coverage is needed for these enterprises to help manage the risks associated with a cash-based business.

General Liability

Cannabis-related businesses need the same general liability coverage as other businesses to protect their premises and operations from lawsuits involving public contact. However, standard general liability policies—which exclude Schedule I substances from coverage—were not created with cannabis businesses in mind. It is still difficult for these businesses to obtain adequate general liability as a result of the legal uncertainty associated with the industry.

Product Liability

Product liability exposures for cannabis businesses encompass a wide range of areas, including edibles, vaporizers, pesticides, mold/fungus, misrepresentation, label claims, breach of warranty, deceptive practices, and failure to warn.

A major area of exposure concerns accidents resulting from impairment. A cannabis cultivator, processor, distributor, or retailer potentially may be considered liable in the event a product defect results in injury after reasonable use or when label defects fail to warn users that a product may have psychoactive effects.

Another area of risk exposure involves products that contain THC, the psychoactive compound that gives cannabis users a high. As the number of THC-containing products such as edibles and tinctures increases, so does the potential exposure to product liability claims for manufacturers and retailers.

The California Cannabis Track-and-Trace (CCTT) system also has implications for product liability. The CCTT is a statewide system used to record the inventory and movement of cannabis and related products through the commercial supply chain. All state cannabis licensees, including those with licenses for cultivation, manufacturing, retail, distribution, testing labs and microbusinesses, are required to use this system. The product liability impact lies in its capacity to determine responsibility along the supply chain from seed to sale.

For example, if a plastic vape pen explodes, a product liability lawsuit could have repercussions for many touch points across the supply chain beyond the manufacturer of the pen–all of which can be identified through CCTT. Entities that touch cannabis products such as soil suppliers or delivery persons also have product liability risk exposure. Personal injury attorneys can find incident-related parties easily and determine liability. This makes it particularly important to add these parties to the policy as additional insureds to help reduce claims exposure.

Crop Loss

Another area of concern for risk exposure is crop loss. Crop insurance is generally hard to obtain due to the significantly different nature of cannabis crops compared to traditional crops like corn or soybeans.

Fires in Sonoma County devastated cannabis crops in Northern California back in 2017.

An indoor crop insurance policy covers cultivators when there is loss resulting from threats such as fire, theft, and sprinkler leakage. However, crop insurance policies generally do not cover losses resulting from mold, rot, disease, changes in climate, or fertilization issues. Many growers forgo this coverage and instead elect to absorb losses and regrow their crops.

Outdoor crop coverage is generally unavailable, or the cost is prohibitive. Any potential for writing outdoor crop insurance for the cannabis industry essentially disappeared as a result of the recent wildfires in California. These devastating fires highlighted the pressing need for property damage and business interruption coverage for growers and dispensaries and other downstream businesses whose supply was disrupted. This lack of available outdoor crop insurance is one of the more notable gaps in available cannabis business insurance coverage.

While cannabis businesses operating in states that have legalized medical and/or recreational cannabis use have challenges getting adequate insurance coverage, there is some good news on the insurance front for those in California. Last year, California’s insurance commissioner announced approval for carriers to offer insurance coverage specifically to cannabis businesses. The state also approved a cannabis business-owners policy (CannaBOP) program that provides a package policy containing both property and liability coverage for qualifying dispensaries, distributors, manufacturers, processors and storage facilities. Colorado is on the verge of being the second state to approve its version of a CannaBOP program.

While more insurance carriers are beginning to write cannabis coverage, the limited insurance options and policies with restrictive plans currently offered todaydo not meet the needs of the cannabis industry. Insurers must catch up to the coverage requirements of this sector by offering more options tailored to growers, retail dispensaries, processors and distributors with better terms and better pricing.