The Legal Fallout - What Happens After a Product Liability Claim?

A single consumer claim can trigger a chain reaction with serious legal, financial, and reputational consequences. If your cannabis business is named in a product liability case, it’s not just about one sick customer—it’s about how well your company is prepared to defend itself.

1. How Legal Claims Typically Begin

It usually starts with a consumer complaint—someone claims your product made them sick or caused harm. This can quickly escalate into:

• Demand letters

• Class action lawsuits

• Regulatory investigations

• Media coverage and public backlash

  
  

In many cases, the complaint doesn’t even have to be valid to cost you time and money.

2. What’s at Stake Legally

The legal process can include:

• Attorney fees and court costs

• Evidence collection and expert testimony

• Settlements or judgments

• Ongoing regulatory scrutiny

  
  

Depending on the severity of the case, you might also face penalties from cannabis control boards or health departments, especially if the issue points to negligence in testing, labeling, or quality control.

3. Damage to Brand and Business

Even if your business wins the case, the damage may already be done:

• News articles and public records remain online

• Retailers may pull your products from shelves

• Distributors may hesitate to work with you

• Consumer trust takes time (and money) to rebuild

  
  

Reputation recovery is often the most difficult—and expensive—part of the fallout.

4. Legal Risk Management for Cannabis Brands

You can’t prevent every lawsuit, but you can protect your company with proactive risk management:

• Keep detailed records of every batch, test result, and vendor

• Review and update your quality control SOPs regularly

• Maintain consistent labeling and packaging protocols

• Ensure your legal team or compliance officer is up to date on state and federal regulations

  
  

And above all, have the right insurance in place.

At Budrisk, we work with cannabis brands to build legal resilience through tailored product liability coverage, expert guidance, and proactive claims support.

👉 Request a personalized quote today to make sure your business is ready—before a claim ever lands on your desk.

Coming Soon: Part 4: Lessons Learned—Building a Resilient Cannabis Brand Post-Crisis

How can we help?

Budrisk strives to meet our client's evolving business needs beyond insurance. If there is any way we can further promote your business, please don't hesitate to let us know. 

It is our goal that Budrisk clients feel satisfied with their service and supported at every step of their business journey. 

As we are always on the lookout for new business, do you know anyone else in the cannabis industry who would benefit from our services? 

CONTACT US