The Michigan state capitol in Lansing. Credit: Mike Fourcher / Grown In

As of the new year, Michigan enacted new cannabis liability insurance law that amended proof of financial responsibility insurance requirements for applicants and licensees under the Medical Marihuana Facilities Licensing Act (MMFLA), a change industry leaders are welcoming. Signed into law in December, the new rules become effective on March 30, 2022.

“The new policy will help to ensure that our members are covered in the event of a liability claim by ensuring the insurance carriers are not able to include exclusions in their policies, explained Robin Schneider, executive director of the Michigan Cannabis Industry Association. “This will effectively weed out bogus insurance policies that don’t actually protect the industry.”

A series of product recalls and warnings in the cannabis sector last year and other instances created a level of liability that was not originally foreseen when regulations were laid out, Rick Thompson, executive director of Michigan NORML says. 

“In one instance joints were rolled using human saliva then offered for sale,” Thompson told Grown In. “Beyond the yuck factor, during a pandemic this creates a level of liability not originally foreseen when our regulations were laid down. It may be true that companies purchased a minimal liability policy, and that was seen by the MRA as inadequate to satisfy the litigious lusts of our lawsuit-crazed legal community. Legal action in other states has exposed many different ways in which product liability can disrupt companies. This seems to be a case of watch, learn, and adapt on the part of state regulators.”

Michigan Senate Bill 461, enacted last December 29,  mandates licensed cannabis businesses have product liability insurance coverage and that every licensee or license applicant must file with the state’s Marijuana Regulatory Authority (MRA) “proof of financial responsibility” of at least $100,000 per license for liability of bodily injury resulting from the manufacture, distribution, transportation or sale of “adulterated” cannabis or cannabis products. 

Specifically, the email further notifies, state law now requires the following:

  • The insurance policy is issued by a licensed insurance company or licensed captive insurance company in this state.
  • The insurance policy does not include a provision relieving an insurer from liability for payment of any claim for which the insured may be held liable under the act.
  • The insurance policy covers bodily injuries to a qualifying patient, including those caused by the intentional conduct of the licensee or its employee or agent. However, the policy would not have to cover bodily injuries to qualifying patients caused by the licensee or its employee or agent when acting with the intent to harm.

The updated application documents are now available on the MRA website. Applicants and licensees are encouraged to obtain applications and forms directly from the website to ensure they are using the most up-to-date materials.

Correction: While the law was enacted on December 27, 2021, it takes effect on March 30, 2022. This report has been updated to reflect that critical information.

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Brad Spirrison is a journalist, serial entrepreneur and media ecologist. He lives in Chicago with his son. Interests include music, meditation and Miles Davis.