New Law Requires Cannabis Companies File "Proof of Financial Responsibility"

Senate Bill 461, signed into law recently by Gov. Gretchen Whitmer, requires that cannabis companies provide product liability insurance of at least $100,000 per license for bodily injury resulting from the sale, distribution, or manufacture of cannabis products.

Changes to the MMFLA

The law amends the Medical Marihuana Facilities Licensing Act (MMFLA) to do the following:

  • Require businesses obtain a liability insurance policy as proof of financial responsibility;
  • Require a licensee or applicant to include with its filing of proof of financial responsibility for liability an attestation of compliance; and
  • Require the Marijuana Regulatory Agency to suspend a licensee's license until the licensee provides the required proof of financial responsibility if the licensee fails to maintain it.

To meet the requirements, cannabis business owners must secure a liability insurance policy that:

  • Is issued by a state-licensed or captive (an insurance company that is owned and managed by its insureds) insurance company;
  • Covers qualifying injuries; and
  • Does not include a stipulation that relieves insurers from liability from payment of the claim for which the policy holder is liable.

It is important to note that policies provided by non-admitted or surplus insurance carriers are not acceptable under this law. A licensed or admitted insurance company has submitted rates and forms with the Michigan Department of Insurance and Financial Services and is strictly regulated.

Help is available

The business attorneys at O’Reilly Rancilio are available to answer questions regarding cannabis law. For more information, please call 586-726-1000 or visit our website at

Categories: Business