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March 2017

Legalizing Marijuana: And The Litigation Begins...

As the access to and use of marijuana becomes increasingly legitimate and common, it is reasonable to assume that the businesses that operate within this environment will experience significant legal "growing pains". Specifically, the operational risks that companies within the marijuana space face are significant given the limited involvement of regulators, and the attributes commonly associated with consumption. As a result, it is not surprising to see the start of what we believe to be a significant volume of litigation targeting many of the largest players in the industry.

As was reported through the second half of 2016, three licensed producers (Organigram, Mettrum, and Aurora) issued a recall on certain products that the companies had sold due to the alleged presence of banned pesticides. Myclobutanil is a commonly used agricultural fungicidal pesticide known to save crops from mildew. Unfortunately, it is known that Myclobutanil will generate hydrogen cyanide when heated/ignited (as would be done when smoking dried cannabis) which will result in negative side-effects to the consumer. Bifenazate, a pesticide used to control pests, specifically mites, is considered toxic when inhaled. Both of these compounds were identified by Health Canada as being contained in the cannabis sold and distributed by the three affected licensed producers.

As a result of these recalls, it was not surprising to learn that a class action lawsuit has recently been initiated...

As a result of these recalls, it was not surprising to learn that a class action lawsuit has recently been initiated as against Organigram in Nova Scotia. In this action, the representative plaintiff alleges that she purchased and consumed the dried cannabis to address her ongoing pain and discomfort as recommended by her doctor. She reported then experiencing significant adverse consequences following consumption including severe nausea and vomiting, both of which limited her ability to complete many of her pre-consumption activities of daily living. The representative Plaintiff alleges that she selected Organigram as it represented that its product was organic, healthier and safer than non-organic medical cannabis. The representative Plaintiff alleges that Organigram's design, development, testing, manufacturing, distribution, sale and/or marketing were negligent and resulted in harm to the health of the Plaintiff and the Class Members. As a result of these damages, the Plaintiff and Class Members seek that Organigram returns all profits generated to the Plaintiff and Class Members and establish a medical monitoring process for the benefit of the Class Members. As the action was only just launched, it will be interesting to monitor as it progresses through the court system.

Given the widespread publicity of the recalls along with the current hype around the valuation of the various companies that operate in the space, it is no surprise to see the initiation of this class action and anticipate other similar class actions in different jurisdictions. We also anticipate a significant increase in non-class action litigation for all operational failures that result in injury or damage to individuals or companies. Given this, we continue to encourage all participants along the supply chain to employ proper risk management techniques to decrease their litigation risk and protect profits earned to date and anticipated for the future.

See all articles in this theme of Legalizing Marijuana:

  1. Are Dispensaries and Vapour Lounges the new Tavern?
  2. Product Liability for Producers, Distributors, and Dispensers
  3. Drugged driving and how insurers can manage risk
  4. Medical Marijuana: Considerations for Employers
  5. Drug Recognition Experts and Drug-Impaired Driving
  6. And The Litigation Begins...
  7. Potential Impact on Social Hosts
  8. Marijuana Legalization: Ontario Weighs In


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McCague Borlack LLP is a member of the Canadian Litigation Counsel, a nationwide affiliation of independent law firms. Through CLC's association with The Harmonie Group, our clients have access to legal excellence throughout North America, the U.K. and Europe. |