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New York Approves Two Medical Marijuana Manufacturers in Orange County and Related Product Liability Issues

New York Approves Two Medical Marijuana Manufacturers in Orange County; Related Product Liability Issues

For more information, please contact The Ahearne Law Firm, PLLC at (845) 986-2777 for an initial consultation and case evaluation.

State officials announced Tuesday that they have authorized two more medical marijuana manufacturers in Orange County and one in Ulster as part of an expansion that will double the number of businesses making and distributing the regulated drug to 10.

One of the newly licensed businesses is Valley Agriceuticals, which already bought a 139-acre property in the Town of Wallkill and started construction in 2015. Erik Holling, Valley Agriceuticals’ president, said in a statement that the company was getting its Wallkill plant “up and running” and finalizing leases on its four dispensaries. It had planned to build two structures totaling 100,000 square feet on Dosen Road for growing and processing marijuana. iAnthus Capital Holdings, Inc., an investment firm that buys marijuana businesses, announced last month that it was buying Valley Agriceuticals for $17 million.

The state also has authorized Citiva Medical to produce medical marijuana in Orange County and PalliaTech to do so in Ulster County. The other companies to get the licenses are: Fiorello Pharmaceuticals and New York Canna. Each of the five newly approved businesses will sell their marijuana in pill or vapor form to certified patients at dispensaries in four counties. Orange County will get two dispensaries as a result of the new licenses, one operated by PalliaTech and another by New York Canna, which will do its manufacturing in the Syracuse area.

Orange County already has one marijuana producer: PharmaCann, which operates a 180,000-square-foot production house off Neelytown Road in the Town of Hamptonburgh. The company – one of five companies out of 43 applicants that got licenses in 2015 – grows marijuana in its greenhouses, dries the leaves and extracts oils that are put in capsules, vape cartridges and other devices.

By 2020, legal market sales of marijuana nationwide are expected to surpass $22 billion. The growth of the marijuana industry has led to the potential for significant product liability litigation. Product liability litigation is likely to include suits for physical injury arising from intoxication and suits for physical injury arising from long-term medical effects including addiction. It also will include consumer suits alleging deceptive and improper marketing, such as campaigns targeting minors. Companies selling marijuana products for medical use could be subject to the same sorts of claims asserted against makers of conventional prescription drugs, such as failing to warn about side-effects.

Much of the law in this area, like in all areas of product liability, will be determined by the states. The sale and use of marijuana, though illegal under federal law, is shielded from federal prosecution in states that have allowed it, and more states are doing so. Edibles—including how much and how strong the marijuana is that’s in them—are likely to be the main focus for product liability suits. Edible marijuana products include a range of items from chocolate bars, baked goods and candies, to graham crackers and potato chips. Younger and older people metabolize substances differently. Much will depend on how a product is marketed and what representations are made.

Tetrahydrocannabinol (THC) is the main psychoactive ingredient in marijuana, and its levels may be a heavily-litigated area. One significant problem related to determining the appropriate dosage and potency levels for marijuana arises because cannabis has been illegal under federal law during most of the time when public health science and methods were developing. Therefore, there are comparatively few epidemiologic studies examining its association with health risks and health benefits.

Only two marijuana product-related suits are known to have been filed:

  • Flores v. Liv Well, Inc., Colo. Dist. Ct., No. 2015CV33528, alleged a cannabis grower used a toxic pesticide called Eagle 20 on its crop. When the pesticide is heated with a standard lighter, it ultimately breaks down into hydrogen cyanide, a well-known poison. Plaintiffs said in their suit, filed in 2015, that LivWell intentionally sprayed Eagle 20 on its cannabis plants and sold them to medical and recreational marijuana customers without adequate warning. The suit in Colorado state court was a putative consumer suit, alleging the plaintiffs suffered economic loss. However, it was dismissed after the court found that the plaintiffs consumed the product and didn’t show injury. Colorado later banned the pesticide.
  • Kirk v. Nutritional Elements, Inc., Colo. Dist. Ct., No. 2016CV31310 , was filed by the guardians of three children in Colorado state court against dispensary Nutritional Elements Inc. and manufacturer Gaia’s Garden LLC. The suit alleges the children’s father shot and killed their mother in 2014 after consuming “Karma Kandy Orange Ginger,” an edible marijuana product containing more than 100 mg of THC. The defendants didn’t adequately warn about side effects such as delirium or paranoia, and failed to warn that edibles are metabolized more slowly than leaf marijuana when smoked, the complaint says. The father’s reaction to the edible product likely caused a state of anxiety and, or, panic, the suit says. The law suit is still pending.

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