Liability and its implications for a business’s long-term health and strength are among the most pressing issues for a legal cannabis operator (LCO). Tort law – the branch of the law that deals with civil cases – is both complex and consistently evolving, and failure to comply with the letter of the law can result in liability claims that can severely damage you and your business’s short and long-term finances.
Legally speaking, liability essentially determines who is responsible for harm caused to another, and businesses are heavily scrutinized for any damages to the body or property that occur on premises. A major part of the liability consideration for an LCO includes whether the business has adequate security measures in place to protect customers and employees from harm.
A security system that doesn’t conform to state and local law will open the LCO to a variety of liability risks, as Chris Eggers of CCSS explains in Chapter 18 of his book Securing Cannabis: A Comprehensive Guide To Increase Security, Reduce Costs, Reduce Liability, and Avoid Landmines. When discussing security measures as they apply to liability risks, we primarily refer to security design, fortifications, and operations.
The chapter breaks down liability concerns into two primary categories: corporate and personal. Corporate liability generally refers to a business’s legal responsibility and accountability for its actions or omissions, while personal liability is the same for an individual.
Corporate liability concerning security can be further divided into two closely related fields: premises liability and negligent security liability. While there is significant overlap, premises liability covers a far greater number of areas of responsibility for the business.
Premises liability generally covers the legal responsibility of a business owner to ensure the safety of employees, customers, and visitors who enter the premises. According to the chapter, the key points of premises liability an LCO needs to consider are as follows:
- Duty of Care – legal duty to provide a safe environment for those on the premises.
- Negligence – Failure to exercise reasonable care in removing or labeling potential hazards.
- Risk management – Implementing risk management strategies to address inspections, hazard response, employee security training, and insurance coverage.
- Insurance coverage – Appropriate insurance coverage for the premises
- Investor communication – Communicating security and safety risks, procedures for mitigation, and incident reports.
- Legal considerations – Ensure bases are covered by consulting with legal experts.
Negligent security liability is technically a subfield of premises liability that focuses on the LCO’s responsibility to maintain an adequate security system to avoid potential harm. In short, if someone on-premises is harmed due to criminal activity that appropriate security measures could have prevented, the LCO may be liable for the damages.
Key considerations for an LCO are similar to general premises liability. These include:
- Duty of care: Legal duty to provide a safe and secure environment for those on-premises, including protecting against foreseeable risks of criminal activity
- Adequate Security Measures: A security system that covers known cannabis risk factors in accordance with local/state law.
- Foreseeability: Establishing that security threats existed and that the LCO did not address them.
- Breach of duty – Failure to implement or maintain adequate security measures
- Consequences of negligent security: LCO may be held liable for injuries, medical expenses, emotional distress, and any other damages suffered by the victim(s)
- Prevention and mitigation: Proactively mitigating risks by implementing an effective and compliant security system.
The best way to protect yourself from negligent security liability is to create a solid security plan that fully complies with the applicable laws and your insurance policy. Creating a plan that checks all three boxes is difficult at the best of times and is often better left to specialists like CCSS.
The chapter ends with a comprehensive checklist for protecting your business from catastrophic losses and insurance claim rejections. To access this checklist and every other piece of information you need to create an effective and compliant security system, we recommend checking out the full book. Securing Cannabis: A Comprehensive Guide To Increase Security, Reduce Costs, Reduce Liability, and Avoid Landmines is now available here!
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