Pennsylvania’s burgeoning medical-marijuana industry is and will be carefully regulated. When purchasing insurance, medical-marijuana dispensaries should pay careful attention to the Commonwealth’s regulations, in particular to the regulations relating specifically to dispensaries. Pennsylvania’s medical-marijuana regulations are only temporary, and most of them (including the ones relating to dispensaries) will expire in 2018
Certain of those regulations directly address insurance. For example, Pennsylvania requires that dispensaries “obtain and maintain an appropriate amount of insurance coverage that insures the site and facility and equipment used in the operation of the facility.” 28 Pa. Code § 1141.44(a). “An adequate amount of comprehensive liability insurance covering the [dispensary’s] activities authorized by the permit shall begin on the date the initial permit is issued by the Department and continuing for as long as the [dispensary] is operating under the permit.” Id.
Pennsylvania also requires that all dispensaries “obtain and maintain workers’ compensation insurance coverage for employees at the time the [dispensary] is determined to be operational by the Department.” 28 Pa. Code § 1141.44(b).
Other regulations do not specifically address insurance but nevertheless help form a checklist of relevant coverages. For example, with limited exception, Pennsylvania requires that “a dispensary shall ensure that a physician or pharmacist is present at the facility at all times during the hours the facility is open to dispense or to offer to dispense medical marijuana to patients and caregivers.” 28 Pa. Code § 1161.25. Under certain circumstances, those individuals and/or others employed by a medical-marijuana dispensary may “consult with the patient or the caregiver regarding the appropriate form and dosage of medical marijuana to be provided.” 28 Pa. Code § 11621.23(b)(2)(ii). As such, a medical-marijuana dispensary will need to address professional liability insurance.
Pennsylvania also has prescribed certain steps that must be taken by a medical-marijuana dispensary in the event of a recall of medical marijuana. See 28 Pa. Code § 1161.38. Because there is at least a possibility that medical marijuana could be subject to a recall, a dispensary will want to consider insurance that will provide coverage in the event of such a recall.
In addition to dispensing marijuana-containing products (e.g., pills, oils, creams), dispensaries may also sell “instruments, devices and services related to the use of medical marijuana.” 28 Pa. Code § 1161.27(c). Any of these products could give rise to a third-party claim, such as one alleging bodily injury. A medical-marijuana dispensary also will want to ensure it has coverage for such a claim.
As demonstrated by just these examples, it is imperative that, when considering insurance, a Pennsylvania medical-marijuana dispensary take into account the Commonwealth’s regulations. Insurance-coverage counsel familiar with those regulations may be particularly helpful in this regard. Coverage counsel can also help a dispensary identify and/or procure coverage in what is generally a limited, specialized insurance market.
Zachary S. Roman, a Reed Smith Summer Associate, co-authored this post.