As more states legalize recreational and medicinal marijuana, the environmental impact of large-scale cannabis cultivation is under greater scrutiny. Environmental concerns for cannabis operations include water and energy use, extraction practices, waste disposal, and odor.
While risk management programs help reduce environmental pollutants, having environmental liability coverage is just as critical. The following case study highlights why.
The Problem: Odor and Environmental Liability
Flowering cannabis plants produce strong odors, which can disrupt neighboring businesses if not controlled. Courts have ruled that odors from facilities fall under the pollution exclusion in commercial general liability policies. A substance doesn’t need to be toxic to qualify as a “pollutant.”
In one case, a Kapnick client faced a lawsuit from a nearby business. The business claimed odors from the cannabis facility drove away customers. Local regulations confirmed the operation was in violation.
The Solution: Environmental Liability Coverage
Fortunately, this client partnered with Kapnick, where we understand the unique risks cannabis growers face. We provided guidance on physical and financial risks, including environmental liabilities.
Because the client had invested in an environmental liability policy, they were protected. The policy covered fines, third-party liability claims related to odor, and defense costs.
