Reed Smith Client Alerts

Last week, Pennsylvania’s Department of Health (the “Department”) awarded 27 dispensary permits to applicants intending to sell medical marijuana in the commonwealth. As with other businesses planning to participate in Pennsylvania’s nascent medical-marijuana industry, these dispensaries must give careful thought to important insurance-coverage considerations. In that regard, medical-marijuana dispensaries must pay particular attention to (i) the relevant regulatory framework in which they will operate, (ii) the risks they will face, (iii) the types of insurance that may provide coverage for those risks, (iv) the available market for purchasing that coverage, and (v) potential issues with the enforceability of any insurance policies.

Authors: Zachary S. Roman

Medical Marijuana

While certain of those considerations (i.e., the regulatory framework) are Pennsylvania-specific, many of the same considerations apply to medical-marijuana-related businesses operating in any state where medical marijuana is legal. And while certain of those considerations apply specifically to medical-marijuana dispensaries, many of the same considerations also apply to medical-marijuana growers/processors and potentially other medical-marijuana-related businesses.

Regulatory Framework: Pennsylvania requires that medical-marijuana 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).