Cannabis company insurer Admiral Insurance Co. filed a complaint with the U.S. District Court for the Northern District of Illinois stating that it should not have to cover a Shelbyville dispensary in a suit alleging that it mislabeled its products to get around the state’s limits on THC.
The case
Shelby County Community Services (Shelby) and SCCS Solutions Corp., along with other cannabis companies, were targeted in a series of lawsuits filed by attorneys Laura Luisi and Jamie Holz of Luisi Holz Law. The cases allege that these companies sell cannabis-infused products that are mislabeled to avoid state laws limiting the total THC that can be sold in such products.
Shelby is believed to be the parent, alter-ego and/or an affiliate of SCCS. The case against Shelby began in December 2024 when Stefania Morgante filed a complaint against the company alleging the company sold products that surpassed the legal THC limits in the state.
According to Morgante’s complaint, SCCS sells Rick Simpson Oil (RSO), a type of cannabis oil infused with THC, in 0.5-gram (500 mg) and 1-gram (1,000 mg) packages that are promoted as cannabis concentrate. Under Illinois law, the maximum limit for one package is no more than 100 milligrams, containing servings of no more than 10 milligrams each. Thus these packages with 100 milligrams of THC typically contain 10 individual servings containing 10 milligrams each.
Morgante is a cancer survivor who uses RSO as part of her cancer treatments. She purchased one or more of SCCS’ Cuvee RSO Products, which are allegedly advertised as cannabis concentrate. She claims the label indicated no serving size, and the syringe inside the label stated: “FOR ORAL/EXTERNAL USE.”
She also claims that the company knowingly and/or recklessly misclassified the products to avoid the regulations associated with cannabis-infused products, allowing them to sell more products on a per transaction basis, subject to the higher recreational purchasing limits allowed for cannabis concentrates.
Not covered
Admiral says it shouldn’t have to cover the claims because Morgante is not alleging she suffered any actual bodily or property injury but rather seeks compensation for the mislabeling of the products and the potential risk of injury.
Admiral argued that its policy does not apply to any bodily injury arising from any illness, sickness or disease that stems from the use of “marijuana product,” so even if Morgante claimed a bodily injury, Admiral would still have no duty to defend SCCS. The insurance company stated its insurance policy would pay damages because of “bodily injury” or “property damage.”
The insurer also said in its complaint that there was no “occurrence” or accident giving rise to Morgante’s claim, but rather the alleged injury was the natural and ordinary consequence of SCCS’ alleged mislabeling.
The company is asking the court to find that it “owes no duty to defend or indemnify SCCS Solutions Corporation or Shelby County Community Services, Inc. under the Admiral Policy with respect to the claims asserted in the Underlying Lawsuit.”
Serial suits
Luisi and Holz have targeted numerous cannabis companies with the same claims of potency issues. The latest case was filed at the end of February, in which they represent Alex Martinez against HDC Group, which produces a vape brand called Timeless. The case claims that HDC is selling improperly labeled vapable oils in single packages that universally exceed the legal THC limit imposed on individual packages of cannabis-infused products, as well as the personal possession limits imposed on Illinois residents and out-of-state consumers.
The lawsuit claims that vapes are not smokable concentrates they are not a combustible product and should be held to the limits of other cannabis-infused products, such as edibles.
The law firm has adopted a rinse-and-repeat approach to the cases as it swaps out various cannabis companies while using similar language in the complaints.
Law360 reported, “The firm has represented proposed classes in virtually identical suits against multistate operators Columbia Care, Verano, PharmaCann, Acreage and others, which recently moved to consolidate the cases.”
2306000-2306420-https-ecf-ilnd-uscourts-gov-doc1-067132068919 The case claims vapes are not smokable products because they don’t combust and should be held to lower THC limits. Read More
