Tag Archives: vehicle

Transporting Cannabis Can Be a Costly Business Risk

By Susan Preston, T.J. Frost
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Did you know that the use of personal vehicles for transporting cannabis products is one of the most frequent claims in the cannabis industry? It surpasses property, product liability and even theft. Businesses are either unaware of the risks involved in using personal vehicles for transporting cannabis, or they aren’t taking them seriously enough.

Considering the strict statutes many states have placed on transporting cannabis should be reason alone to be more diligent. For example, the California Bureau of Cannabis Control’s proposed regulations require cannabis business owners to ensure their drivers have designated permits to transport the product. The state’s current legislation mandates inspections at any licensed premises, and requires employers to provide detailed tracking and schedules on the transport of product. Further, the state prohibits using minors to transport cannabis, and considers it a felony to do so.

Regulatory concerns, combined with the potential liabilities that could come from driver behavior, are keeping insurers from offering auto coverage to the cannabis industry. In fact, just four insurers currently offer the industry auto coverage, with premiums running as high as $17,000 per auto on average. It is important to note that personal auto insurance falls short because it doesn’t cover cargo loss.

Alternatively, because the stakes are so high, many companies are using courier services to transport cannabis product. But cargo insurance is still an issue. Without it, the care, custody and control of someone else’s products, and insurance limits are lacking. Even when the courier has cargo coverage, because they are delivering for multiple companies, the claims payout would have to be split amongst all the customers – likely below the value of your loss.

Consider the following best practices when transporting cannabis:

  • Conduct background checks/review DMV records. Uncovering any potential driver issues prior to hiring is critical. Look for previous DUIs or drug related history. Employees who might use product before getting behind the wheel are a significant danger to other drivers and a major liability to the employer. Even after hiring, be on alert for signs that indicate poor driving performance. Use check-in/check-out processes for all drivers, and conduct regular vehicle walk-arounds to look for scratches, dents or other damage that otherwise might be unreported to the employer.First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk. 
  • Implement quarterly driver training. Educate employees on proper procedures. While minor fender benders and sideswipe accidents are most common, even these can be costly if not handled properly. Once law enforcement get involved in an accident the car’s transportation of cannabis could become a secondary issue. Teach drivers how to handle accidents while on the scene, including informing law enforcement about the cargo and the employer.
  • Use unmarked vehicles. Drivers carrying a significant amount of product and/or cash are tempting targets for thieves. Company cars used for transporting product should be newer, and have no fleet serial numbers or anything identifying the company.
  • Require increased personal liability limits. If an employee is using their own personal vehicle for business purposes, the business owner should require that person carry more than minimum limits of personal liability.  Ideally, they should have $300,000 or more, at an absolute minimum $100,000.

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First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk. Secure the right insurance coverage, and ask your broker/underwriter to provide any additional recommendations to best mitigate your transportation, delivery, and cargo exposures.

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Washington Security Breach Delays Traceability System Rollout

By Aaron G. Biros
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On February 8th, Peter Antolin, the deputy director for the Washington State Liquor and Cannabis Board (WSLCB), sent an email to licensees explaining why the transition to their new traceability system was disrupted. Last Saturday, someone gained access to the sensitive information in Leaf Data Systems, the state’s traceability software that is powered by MJ Freeway.

“A computer vulnerability was exploited on Saturday, allowing unauthorized access to the traceability system,” Antolin told licensees in the email. “There are indications an intruder downloaded a copy of the traceability database and took action that caused issues with inventory transfers for some users. We believe this was the root cause of the transfer/manifest issue experienced between Saturday and Monday.”WSLCB

The email goes on to say that no personally identifiable information was available to the ‘intruder,’ but some sensitive information was clearly accessed. That data includes route information of manifests filed between February 1st and 4th as well as transporter vehicle information including VIN, license plate number and vehicle type, according to the email.

That email leaves much to be desired. For one, they do not exactly have a solution, instead trying to alleviate licensees’ worries with a hollow inanity full of meaningless jargon: “The WSLCB and MJ Freeway continue to implement several strategies to prevent future vulnerabilities to future intrusions,” reads the email. “This includes full logging and monitoring and working with third-party entities. Since this remains an active investigation, details on security are not publicly available.” However, today the WSLCB is hosting a webinar where Peter Antolin, their IT division, the MJ Examiners unit and enforcement will be available to answer questions, according to the email.

WSLCB emailThis is by no means the first security breach that Washington and MJ Freeway have suffered. In May of 2017, Washington originally selected Franwell’s METRC as the contract partner for their traceability software system. Less than a month later in June of 2017, after a mistake in the selection process, Washington selected MJ Freeway instead of Franwell for the traceability contract. Three days later, MJ Freeway’s source code was stolen and published online. Then in September, Nevada cancelled their contract with MJ Freeway after a security breach, their services crashed in Pennsylvania and Spain, and in October it became clear that the company could not meet the October 31 deadline for their new Washington contract.

In November of 2017, BioTrackTHC, the company that held the previous contract for Washington’s traceability software, helped the state through the transition period with a temporary Band-Aid solution to hold the state over until January of 2018. A month after they expected to implement the new MJ Freeway system, the latest security breach occurred this week and disrupting the rollout yet again.

At the end of the email Antolin sent to licensees yesterday, he says there will continue to be attempts to breach the system’s security. “The bottom line is that this incident is unfortunate,” says Antolin. “There will continue to be malicious cyberattacks on the system. This is true of any public or private system and is especially true of the traceability system.” This begs a few questions: why aren’t we hearing about this kind of security breach in other states’ traceability systems? What are other companies doing that prevents this from happening? Why does this keep happening to MJ Freeway?