Cannabis and Live Events: How to Manage Risk

In addition to concertgoers and entertainers, live events and outdoor events this summer may have additional “guests:” social distancing, masking and vaccination guidelines — and for some events, cannabis sales.

California is the first state to grant permits to distribute cannabis in multiple forms at music events. It’s not a free-for-all, however, as California has enacted several rules and regulations for licensed cannabis businesses and event organizers.

While only California permits sale of cannabis at live events, other state regulators and cannabis operations are watching closely as they anticipate the practice spreading.

What it takes to sell

A permit to sell cannabis at a live event requires signoff from local and state police, in addition to fairgrounds and event management. County and state alcohol and drug boards or cannabis governing agencies must approve the permit request as well.

The permits require cannabis to be sold and consumed in a restricted area. In addition, cannabis business permits are location specific — each part of a transaction may need a separate permit and (potentially) an insurance policy, including manufacturers, transportation companies and sellers. These permits and coverage must be secured for product transport to and return from the event.

Cannabis businesses wanting to sell at live events in California and event management considering permitting cannabis sales at shows should consider the following:

1. Get help from experts. Events should consult with an expert in local, state and county cannabis laws and regulations. This will help the event and the cannabis business meet all requirements, of which they may not fully understand.
2. Confirm insurance coverage. Both events and cannabis businesses will need to know what their product and liability policies cover. Event organizers need copies of cannabis vendors’ product policy and share the policy information with their brokers. A cannabis operation should be aware that its products liability policy may carry an exclusion for “mental capacity.” For instance, if someone purchases cannabis and alcohol at an event, uses them both, and subsequently gets hurt or damages property, the cannabis operation could be held liable.
3. Coverage may not be portable. Cannabis businesses may have coverage exclusions for transporting and selling cannabis in different locations. Generally, cannabis product coverages are intricate and don’t necessary cover product transport. When transporting cannabis, it’s the equivalent of transporting cash. It’s important to know when and where a crime policy applies.
4. Have strong security measures. As cannabis is an easily transferable, moveable and sellable commodity, vendors will want to bring their own security to an event or concert. And because transactions are mostly conducted with cash, a cannabis operation faces increased risk of theft when in a less-secure location like an event garden. Event management should employ staff trained to recognize the signs of acute cannabis intoxication.