14 November 2019 Reed Smith Client Alerts Warning: Broad definition of “cannabis” calls into question “hemp exception” to new ISO cannabis exclusions

14 November 2019 Reed Smith Client Alerts Warning: Broad definition of “cannabis” calls into question “hemp exception” to new ISO cannabis exclusions

Warning: Broad definition of “cannabis” calls into question “hemp exception” to new ISO cannabis exclusions Insurance Services Office, Inc. (ISO) recently released five new cannabis-related endorsements, each of which, when included as part of a business owner’s policy (BOP), would exclude coverage for either “cannabis property” or “cannabis liabilities.” Three of the five endorsements include what purports to be a carve-out to the exclusion that ostensibly affords coverage for losses or claims involving “hemp” – a term that the endorsements do not define. Despite an explicit promise in those three endorsements that the exclusions do not apply to “goods or products containing or derived from hemp,” be warned: all five of the endorsements, as written, may still be read to exclude coverage for hemp. Authors: Michael H. Sampson George L. Stewart In each of the endorsements, “[c]annabis” is defined to mean “[a]ny good or product that consists of or contains any amount of Tetrahydrocannabinol (THC) or any other cannabinoid, regardless of whether any such THC or cannabinoid is natural or synthetic.” Notably, “cannabis” is further defined to include “[a]ny compound, byproduct, extract, derivative, mixture or combination, such as … [h]ash or hemp” that contains “THC or any other cannabinoid ….” Paradoxically, “hemp”…