Marijuana Business Liability Insurance Bill Pulled by Sponsor

A bill that would have required Colorado marijuana business owners to secure liability insurance coverage has been pulled by its sponsor, but a similar proposal could take its place.

State Senator Robert Rodriguez introduced Senate Bill 23-045 just three days into the 2023 legislative session. It called for business owners to provide proof of at least $100,000 in insurance coverage for each of their marijuana licenses, which confused a defensive pot industry.

"We had a few stakeholder meetings, and there were some discussions of some fixes that needed to be done on this bill," Rodriguez told the Senate Business, Labor & Technology committee at a February 14 hearing, before requesting that his bill be postponed indefinitely.

The insurance coverage suggested in the bill would have covered claims regarding "bodily injury to lawful users resulting from the manufacture, distribution, transportation or sale of adulterated marijuana or adulterated marijuana-infused products." The proposal did not call for covering long-term consequences or intended effects from smoking or using marijuana.

Social equity marijuana business owners and applicants would have had to meet the financial responsibility requirements, as well. Created in 2020 by lawmakers to spur industry involvement in communities impacted by the drug war, Colorado's marijuana social equity program is largely made up of entrepreneurs who struggle to attain financial backing in a federally illegal industry, and a below-average income is one of the qualifications; this proposal would have increased the cost of getting into the business.

The bill was opposed by the City and County of Denver, according to the Colorado Secretary of State's Office, as well as Cresco Labs and Curaleaf, two of the country's largest marijuana corporations. However, a handful of marijuana trade groups and Colorado-based marijuana companies, such as LivWell, Native Roots and the Marijuana Industry Group, were open to the effort as long as some amendments were made.

But after speaking with the state Department of Revenue and Division of Insurance, Rodriguez said he'd learned that such changes wouldn't have fit under SB 045's bill title, "Marijuana Financial Responsibility Requirements." Instead, he could introduce a new measure later in the session or possibly next year.

"The work will continue, and if something comes to some agreement that we can push this bill forward, I would look for a late bill," he told the committee.

Consumer lawsuits over marijuana are rare, but they have been filed in Colorado before, after state authorities recalled commercial pot with levels of banned pesticides, which would have been considered a form of adulterated marijuana under SB 045. In Colorado, edibles have also been tied to potential injury, with the state Marijuana Enforcement Division flagging those made with corydalis, an herbal extract, over concerns of liver harm.

Arkansas, California, Connecticut, Florida and Illinois all have various financial responsibility qualifications for marijuana business owners, according to online insurance marketplace Insurion, while Massachusetts, Michigan and Washington require marijuana business owners to have liability coverage.