The cannabis market is booming, and with its popularity has come an upward trend of litigation. A Reuters analysis of cannabis-related filings in the first half of 2022 – specifically focusing on civil litigations brought in the 19 states with legal adult-use cannabis programs – revealed some fascinating trends to watch in the burgeoning industry.
Cannabis Commercial Disputes Dominate
A whopping 34% of the cannabis litigation Reuters identified in its analysis were classified as “commercial disputes,” which encompass contract breaches, landlord-tenant issues, securities fraud, and other business torts. Commercial disputes were by far the most common litigation topic, which is unsurprising given the cannabis industry’s expansion over the past several years in both mature, established markets like California and new, fledgling markets like New Jersey. Reuters estimates that commercial disputes will continue to dominate the litigation landscape for cannabis, as the industry’s massive growth is not expected to slow any time soon.
Actions Against State and Local Government Will Likely Continue
The second most common dispute topic identified in the report was classified as actions against state and local governments. These actions related to the regulation and administration of state marijuana markets, with licensing as a major issue. As states continue to unveil medical and recreational cannabis initiatives, such litigation will likely continue.
Other Trends to Watch
Tax issues, employment disputes, and intellectual property actions were also common over the past half year. In particular, trademark infringement was a hot topic – and is complicated by the fact that the United States Patent and Trademark Office denies registration to cannabis-themed trademarks as a matter of policy due to the federally illicit nature of cannabis.
Antitrust and Compliance Actions by State and Local Governments Least Common
The Reuters analysis showed that actions brought by state and local governments for compliance regulation failures (like unlicensed operations) were the least common litigation topics so far in 2022, along with antitrust suits, which only comprised 2% of the litigation included in the analysis.
Looking Forward
Legal experts believe the cannabis market could soon see an influx of products liability suits. As the cannabis industry expands and matures, there may be an increase in allegations that various products have led to bodily injury or were mislabeled or defective. As the plaintiff pool for potential litigation widens, so too does the probability of products liability lawsuits.
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