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Prop 65 California Hashish Merchandise Warning Open the gates for lawsuits

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Starting January 3, all cannabis products sold in California will require a Prop 65 warning on the label. This is likely to trigger an influx of product liability lawsuits within the industry.

In theory, health warning labels are a good thing – they alert consumers that the product they are buying could potentially have an impact on their health. In practice, however, they lead to over-regulation, frivolous lawsuits, and many California consumers have begun to ignore them because they can be vague and applied so liberally.

The Proposition 65 labels date from the mid-1980s and apply to any product that contains known toxins or carcinogens, even if the amounts are trace and research is inconclusive. When the new mandate comes into effect next month, all products that produce “marijuana smoke” and products containing Delta-9 THC will require a warning label. This applies to almost all products on the legal market, minus the current and edible CBD (cannabidiol) or CBG (cannabigerol) products.

Legal experts say these types of mandates are often enforced by private lawyers and plaintiffs rather than state regulators. This practice was originally intended to prevent the judicial system from lagging behind in smaller cases, but has evolved into a kind of under-the-radar industry that pursues small business owners.

“The bounty hunters (people who go to stores specifically to look for unlabeled products) can begin regulating and enforcing them on January 3, 2021,” said Anne Marie Ellis, an Orange County lawyer specializing in product liability a webinar in early December.

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A bit about Prop 65

Proposition 65, formally known as the Safe Drinking Water and Toxic Enforcement Act of 1986, was created to protect the contamination of California’s drinking water sources by chemicals known to and requires that to cause cancer, birth defects, or other reproductive harm the company maintains an up-to-date list (updated regularly) of chemicals that cause these reactions.

The program has expanded over the past few decades, and you can find Prop 65 warnings on all food, children’s toys, hygiene products, and even entire buildings (for example, my local Wal-Mart has a Prop 65 warning that says there are chemicals in it are the building are known carcinogens).

In addition, there is no penalty for sending an unnecessary sign, resulting in vague and overused warnings that rarely resonate with consumers. For these reasons, among others, the law has received harsh criticism over the years, with critics saying it creates “over-warnings” and “meaningless warnings”. These views have also been confirmed in numerous legal proceedings.

Application to the cannabis industry

From January 3rd, all products that produce cannabis smoke and / or contain THC will be subject to the new law. The labels on which these new products will be sporty can be in two different formats: a standard warning or a short version.

The standard warning is quite long and a bit more detailed, while the short version gets straight to the point and is intended for smaller products. Most likely, you will see more of the short version on pharmacy products. This version reads: “WARNING: Cancer and Reproductive Harm – www.P65Warnings.ca.gov.” Short and threatening.

“If a product doesn’t have the warning on its actual packaging, the warning needs to be placed in an obvious location for consumers to see,” Ellis said. “And because both marijuana smoke and THC will be triggers for Prop 65 requirements, literally every company doing business in California must comply with the law, not just companies that make smokable cannabis products.”

This includes many non-flammable products like groceries, topicals, and vapes, unless both contain isolated CBD or other non-psychoactive cannabinoids AND do not produce smoke when consumed.

Prop 65 laws and litigation, however, are not new to the cannabis industry in the Golden State. Cannabis smoke has been on the state’s list of carcinogens since 2009 and THC since 2018. In January 2020, a decision by the California Department for Environmental Protection listed both as potential reproductive toxins.

Contradicting research on THC and cancer

Now for this issue of THC (tetrahydrocannabinol) as a carcinogen. The existing studies on the subject are contradicting, but overall research shows that it is helpful, not harmful. For example, a number of small studies have found that inhaled cannabis is helpful in treating the nausea and pain (especially neuropathic) associated with chemotherapy.

Recent studies have even documented THC and other cannabinoids as cancer inhibitors and found that they can slow growth and / or cause death in certain types of cancer cells. This has been proven several times in laboratory Petri dishes and in animal experiments.

Research into the medicinal uses of cannabinoids has been ongoing in Israel for decades. Just last year, Professor Raphael Mechoulam of the Hebrew University of Jerusalem received a $ 2,000,000 scholarship for this purpose.

Mechoulam leads a research team working to develop cannabis-based therapies for three aggressive cancers: melanoma (skin cancer), neuroblastoma (cancer of the surrounding area and mainly neural system in children), and believlastoma (brain tumor).

I came across a study that indicated that exposure to cannabis could “increase the susceptibility and / or incidence of breast cancer and other cancers that do not express cannabinoid receptors and are resistant to Delta9-THC-induced apoptosis”. In this scenario, it is related to very specific cancers and more research is definitely needed.

Liabilities and Lawsuits

According to Ellis, the main problem companies will face when this law goes into effect will be the cannabis industry’s “bounty hunters”, who are basically undercover buyers looking at pharmacies for cannabis products that do not meet the new mandate. In these situations, they often file a “Violation Notice” and push for an out-of-court settlement – in other words, they’re looking for money.

“This is a low hanging fruit for attorneys who want to make money quickly and don’t want to work a lot,” said Lara DeCaro, a San Francisco attorney who represents numerous cannabis companies. “Most legal marijuana companies already meet the Prop 65 labeling mandate as these requirements have long been on most companies’ radars.” However, she anticipates there will be an influx of legal complaints targeting the “industry wanderers” who wait until the last minute to catch up on the latest news.

There are many lawyers who make a living doing Prop 65 cases in other industries as they cover all consumer products and businesses and the list is over 1,000 chemicals that are considered dangerous. About 90% of Prop 65 cases – across industries – are settled out of court. Business fines for violating these regulations can be up to $ 2,500 per product per day. So if you have 3 non-compliant products, expect fines of $ 7,500 every day until you remediate it.

“They will go around much like they do under the (Americans with Disabilities Act), find violations, and then file numerous complaints,” DeCaro said. “Regardless of whether these complaints are well founded or not, they will name a number of people, and the defendants will throw a few thousand dollars on them just to make them go away. At this point it is a cost-benefit analysis. Am I going to spend $ 20,000 on a lawyer to fight it and kick him out, or will I just spend $ 3,000 on a lawyer and get the person to leave? “

What the future brings

While this may come as a shock to some of the newer companies or those who aren’t particularly concerned about the logistics of working in the industry, for the most part the word is out and most cannabusiness owners are well prepared for January 3 ..

“The industry is aware of this. The need for Prop 65 has been discussed pretty well, ”said Pamela Epstein, lawyer for Eden Enterprises in Oakland and a board member of the California Cannabis Industry Association. “Prop 65 is generally on most checklists for inbound and outbound products at the manufacturing, distribution and retail levels, so they should be ready.”

Overall, people are prepared for Prop 65 to hit the California cannabis industry. But for those who don’t, this could be a very costly mistake. So you should do whatever you can to ensure compliance early next month.

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Beth Edmonds