Form CG 00 68: Cannabis Exclusion
1. What the Form Is
The CG 00 68 Cannabis Exclusion is an endorsement to the Commercial General Liability (CGL) policy. Its primary purpose is to eliminate coverage for bodily injury, property damage, and often personal and advertising injury, arising from any involvement with "cannabis" or "cannabis"-related operations or products. This form modifies the standard CGL policy by specifically carving out risks associated with cannabis, which many insurers are unwilling to cover under a standard policy. The exclusion is typically broad, aiming to prevent coverage for claims stemming from the design, cultivation, manufacture, distribution, sale, furnishing, or use of cannabis and cannabis-containing products.
The definition of "cannabis" within such exclusions is critical and generally encompasses:
- Any goods or products containing any amount of Tetrahydrocannabinol (THC) or any other cannabinoid, whether natural or synthetic.
- This includes, but is not limited to, cannabis plants (seeds, stems, flowers, etc.), extracts, derivatives, resins, oils, waxes, hash, hemp (unless a specific hemp exception applies), and infused liquid or edible cannabis products.
The exclusion applies regardless of the legal status of cannabis in a particular jurisdiction.
2. Classes of Business It Applies To
The CG 00 68 Cannabis Exclusion can be attached to CGL policies for a wide array of businesses, particularly those where the insurer wants to ensure no coverage for cannabis-related liabilities. It is not typically used for businesses directly involved in the cannabis industry that are seeking coverage for their cannabis operations (they would need specialized cannabis insurance). Instead, it's more common for:
- Businesses with incidental or potential cannabis exposures: For example, a retail store where the insurer wants to exclude liability if an employee were to illicitly sell cannabis products on the premises.
- Property owners and managers (Lessors): Landlords leasing space to tenants, where the insurer does not want to cover any liabilities arising from a tenant’s cannabis cultivation, processing, or sales. (Note: Some specific cannabis exclusions, unlike a general one, may contain a lessor's risk exception, but the user's summary of CG 00 68 does not indicate this).
- Manufacturers of non-cannabis products: To prevent claims if their products are misused in conjunction with cannabis or if their premises are used for undisclosed cannabis activities.
- Contractors and service providers: Businesses whose employees might work on a premises where cannabis is present (e.g., an electrician working at a dispensary or a private residence where cannabis is grown) and the insurer wishes to exclude liabilities directly arising from the cannabis itself or cannabis operations.
- Any business in a portfolio where the insurer has a general policy of not covering cannabis-related risks.
3. Special Considerations
Several important factors should be considered when the CG 00 68 Cannabis Exclusion is attached to a CGL policy:
- Breadth of Exclusion: These exclusions are typically drafted to be very broad, encompassing a wide range of activities and substances related to cannabis. This means any connection to "cannabis," as defined, could trigger the exclusion.
- Impact on "Products-Completed Operations Hazard": Claims arising from products containing cannabis or completed operations related to cannabis would generally be excluded.
- Negligent Acts: The exclusion often applies even if the claim alleges negligence or other wrongdoing in the supervision, hiring, employment, training, or monitoring of others, if the underlying bodily injury or property damage involved cannabis.
- No Hemp Exception Implied: Based on the summary provided ("Excludes coverage for bodily injury or property damage arising out of cannabis operations or products"), this specific CG 00 68 does not mention a hemp exception. Standard ISO cannabis exclusions sometimes offer an exception for "hemp" that meets legal definitions (e.g., low THC content), but this should not be assumed unless explicitly stated in the form.
- Regulatory Landscape: While cannabis laws vary significantly by state, this exclusion is generally intended to apply regardless of local legality if the insurer has an underwriting appetite to avoid cannabis risks.
- Coverage Gaps: For any insured with actual or potential cannabis exposures, this endorsement creates a significant coverage gap. Such insureds would need to seek specialized cannabis liability coverage elsewhere.
Real-world example: A commercial landlord leases space to a tenant who, unbeknownst to the landlord initially, begins cultivating cannabis. A fire originates from the tenant's cultivation activities, causing property damage to an adjacent unit and bodily injury to a visitor. If the landlord's CGL policy includes the CG 00 68 Cannabis Exclusion, the insurer would likely deny coverage for these third-party claims due to their origin from "cannabis operations."
4. Key Information for Agents and Underwriters
Agents and underwriters must be particularly diligent when the CG 00 68 Cannabis Exclusion is part of a CGL policy:
- Risk Assessment: Underwriters should thoroughly assess any potential for the insured's operations to involve cannabis, even indirectly or unexpectedly. The presence of this endorsement signifies the insurer’s intent not to cover such exposures.