Vape Gate and today's cannabis product liability market

It was more than a year ago that stories regarding lung injuries stemming from consumers vaping THC-contain products gripped headlines and vitamin E acetate joined the collective lexicon.

“What we called Vape Gate moved pretty quickly. It started in late August but was over by the end of the year,” Ian Stewart, founder and chair of the national cannabis and hemp law practice at Wilson Elser, explained. “We know now, with very few exceptions, the vape issues were due to black market products.”

With the news that has broken since then, the vaping issue has taken a back seat. But has Vape Gate had a lingering impact on product liability insurance for cannabis companies?

“Bottom line, there is still some apprehension on writing vape or vape-related risks, but insurers are optimistically cautious,” said Jay Virdi, Hub International’s chief sales officer for cannabis insurance and risk services in the U.S. and Canada. “It is going to take cooperation between the cannabis industry and regulators to get their confidence back.”

TJ Frost, U.S. cannabis segment leader for Hub International, told PropertyCasualty60.com that product liability pricing has gone up for cannabis companies, but those increases are being seen across the entire sector because of a hardening market. Nonetheless, Hub is optimistic about the cannabis industry’s outlook for the coming year.

During Vape Gate and its immediate aftermath, insurers moved quickly to add exclusions in product liability policies for unapproved or illicit additives, according to Stewart, such as the now sinisterly regarded vitamin E acetate.

“The vape issue is over,” he told PC360.com. “It gave the cannabis industry a black eye, but the lesson learned is that we need solid regulations and on a federal level. We need federal engagement with the cannabis industry to prevent stuff like Vape Gate.”

While there was a spike in product liability pricing following the event, Rocco Petrilli, chairman of the National Cannabis Risk Management Association, told PC360.com that today’s market is calmer by comparison. In fact, he explained Vape Gate was something of a wake-up call for the cannabis industry.

“It was really eye-opening. One of the silver linings of those very dark clouds is it propelled risk management to a much higher spot on cannabis owner-operators’ agenda,” Petrilli said.