Hazy Coverage: Analyzing The Duty To Defend Newly Insured Marijuana Businesses Under Standard CGL Provisions

Producing or selling marijuana remains illegal under federal law, but on the first day of 2018, California joined six other states—Alaska, Colorado, Massachusetts, Nevada, Oregon, and Washington—and the District of Columbia in legalizing the production and sale of marijuana for recreational use. Casualty insurers that are selling policies to producers and sellers of marijuana, however, may not have anticipated that, in some of these states, neighbors of the insured businesses would sue the insureds for damages caused by marijuana fumes and the stigma of having a neighbor whose activities remain illegal under federal law. These plaintiffs are utilizing nuisance and trespass causes of action, and, more surprising, they are also suing under the Racketeer Influenced and Corrupt Organizations Act, more commonly known as the RICO Act.