Public Act 55 of 2021 was approved by the governor and filed with the Secretary of State on July 13, 2021. Director Andrew Brisbo of the Michigan Marijuana Regulatory Agency (MRA) communicated details of this amendment to the Michigan Regulation and Taxation of Marijuana Act (MRTMA) in the Advisory Bulletin found here.
This amendment adds section 11a, which prohibits licensees from selling or transferring marijuana to a minor or to a person who is visibly intoxicated at the time of the sale. This establishes for Michigan’s cannabis industry what are commonly being referred to as “Gram Shop” laws, similar to the Dram Shop laws currently in place for businesses that serve or sell alcohol. This law establishes liability for businesses that serve or sell marijuana to minors or visibly intoxicated persons that result in death, injury, or property damage to another person. (This was signed by the governor on July 14, 2021. Pending state approval of the coverage—which is expected to take effect well in advance of the expressed Oct. 11, 2021 date.)
Why implement Gram Shop laws?
If injuries occur to a third-party from an underage or visibly intoxicated person, this legislation’s intent is to shift liability back to the licensee. As its currently written, the law states it applies to any license type that sells or transfers marijuana products. This definition could be used by a court to open liability to all license types (including those that grow and transport product).
What do Gram Shop laws mean for my business?
Per the Advisory Bulletin, the law is interpreted to apply to Medical Provisioning Center, Adult Use Retailer license and Microbusiness types. Applicants for those license types in process must evidence coverage by uploading a policy with “Gram Shop” coverage in the amount of $50,000 per required license prior to Oct. 11, 2021. That means that all current holders of Medical Provisioning Center and Adult Use Retail licenses must purchase or add the coverage by this date and will be asked to evidence on the normal renewal date of each license.
What should my cannabis business do next?
First off, it is important that you currently have a Product Liability insurance policy in place that completely satisfies the state requirements. Under Section 408 of the Medical Marihuana Facilities Licensing Act (MMFLA), an applicant/licensee must provide proof of financial responsibility in an amount not less than $100,000 for liability for “bodily injury” to “lawful users” resulting from the manufacture, distribution, transportation, or sale of “adulterated marihuana.” Each licensee then purchases a Product Liability insurance policy to comply with Section 408 and the issuing insurance carrier completes a the Attestation form, certifying that “no products liability exclusion exists in the liability coverage”.
Despite these requirements of Section 408 and the Attestation certification, liability policies issued to MMFLA licensees that contain certain policy exclusions will most likely render such policies inadequate of satisfying the financial responsibility requirements of Section 408. Examples of these exclusions may include:
- Pollution
- Asbestos, lead, silica, mold, fungus, and/or bacteria
- Communicable disease
- Specified product/substances
- Criminal Acts/Willful Violations
The purpose of the Attestation form is to confirm that the listed insurance policy has been issued and not to alter the coverage. We share these details of the first insurance requirement so that licensees are aware of potential gaps in coverage and that they may not be compliant.
For those insurance policies that already satisfy the state’s financial responsibility requirements, some insurance companies are automatically adjusting their policies to account for this change. Other companies are faced with the challenge of being a “non-admitted insurance carrier”.
This means that yet another compliance issue with the insurance requirements may come up. However, it is best to work with your agent and insurance company to fully understand how your policy and coverage apply.
Contact Spire Insurance Solutions
While there may be a lot of uncertainty regarding this new requirement in the industry, Spire Insurance Solutions and our partners in the cannabis industry will continue to monitor and provide updates as this develops. Contact our team to do a full review of your current insurance coverage to ensure you’re compliant with state requirements and protecting your business as intended. You can click the icon below or email us at [email protected].
More Cannabis Industry News
Want to stay up to date on the latest cannabis insurance news? You can find more on important topics in the cannabis industry on our blog.
Or get more information about insurance solutions for the cannabis, CBD, and hemp industries from Spire Insurance Solutions here.
About Spire Insurance Solutions:
Spire Insurance Solutions provides risk management solutions to both the Recreational & Medical Industry. Through a consistent approach, Spire is your expert buyer of insurance and helps companies purchase important Insurance coverages in the evolving Cannabis industry. With years over 45 years in business with experience in assessing risk, our team sees that many cannabis related businesses do not have the coverage they desperately need. Our mission is provide unparalleled and caring service to our clients through our knowledgeable staff and give back to our employees, agency, industry and our communities.
When it comes to insurance, it helps to work with an agency that has both the experience and capabilities to meet your needs. We will help you manage and plan for your potential risks. As professionals, we assess your needs and offer you a variety of insurance products to choose from. Let Spire Insurance Solutions elevate your insurance solution to help your growing business.
Disclaimer: This Blog/Web Site does not provide insurance or legal advice. This site is for educational purposes only as well as to provide you with general information and a general understanding of insurance, not to provide specific legal advice or specific contract advice. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute a client relationship.
The information on this Blog/Web Site is not intended to be a substitute for professional insurance or legal advice. Always seek the advice of a licensed agent in your state pertaining to insurance and legal issues.
Author: Tyler Bartosh
Sources: MRA – Marijuana Regulatory Agency; Kevin Cross – SARFA
