An insurance company is asking a federal court to rule that it has no obligation to defend or indemnify Cresco Labs in two class action lawsuits accusing the marijuana company of misleading consumers about the health and therapeutic effects of cannabis.
Palomar Excess & Surplus Insurance Company filed the complaint in August in the U.S. District Court for the Northern District of Illinois. The insurer says Cresco is covered under general liability and products liability policies running from October 13, 2025, through October 13, 2026. The policies carry a $5 million limit per claim, while plaintiffs in the underlying litigation have made a multimillion-dollar demand.
The dispute stems from two class actions filed May 4 against Cresco Labs, Green Thumb Industries, Verano Holdings and related entities. One was brought on behalf of Illinois consumers, while the second includes consumers in Arizona, Massachusetts, Michigan, New York and Ohio.
Plaintiffs in the underlying cases allege Cresco and the other companies engaged in a pattern of false or misleading statements about marijuana’s health and medicinal benefits while failing to adequately warn consumers about alleged risks. The consumers say they suffered economic losses because they either would not have purchased the products or would have paid less had they been given different information.
Those allegations have not been proven, and the new case filed by Palomar does not determine whether they are true. Instead, it centers on whether Cresco’s insurance policies require Palomar to cover the company’s defense or potential liability.
Palomar argues they do not. Among other reasons, the insurer says the class actions seek economic damages rather than damages arising from bodily injury or property damage covered by the policies. It also points to a specific cannabis liability exclusion covering certain claims involving the furnishing of cannabis or statutes and regulations governing its sale, distribution or use.
The insurer is also relying on exclusions covering punitive and multiplied damages, alleged intentional conduct and claims involving the Racketeer Influenced and Corrupt Organizations Act. The multistate lawsuit includes a RICO claim against Cresco, which Palomar says is expressly excluded from coverage under both relevant policy provisions.
Palomar says Cresco maintains that the insurer is obligated to defend and indemnify it, creating a legal dispute for the court to resolve. The company is asking the judge to declare that it has no such obligation in either class action and to award other appropriate relief, including costs.
