A Nationwide insurance subsidiary told an Illinois federal court that a cannabis company is not entitled to coverage for a proposed class action accusing it of misrepresenting the safety and labeling of cannabis-infused products, according to ClassAction.org. The insurer argues that the cannabis company’s liability policies do not cover allegations of fraud, misrepresentation, or deceptive practices.
The underlying lawsuits allege that certain cannabis products—including vape oils marketed as concentrates—were mislabeled to bypass Illinois’ stricter THC limits and misled consumers about potency and safety. Plaintiffs argue the practices violated state consumer protection laws and exposed buyers to unsafe products.
The Nationwide filing underscores the growing challenges cannabis firms face in securing reliable insurance protection as litigation risks mount. If the court agrees, the cannabis company will be forced to bear defense costs itself, a potentially costly outcome in an industry already grappling with regulatory complexity.