Court Rules Liberty Mutual Not Liable for Cannabis Facility Explosion

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A federal court in Oregon ruled that Liberty Mutual's insurance subsidiary, Ohio Security Insurance Co., is not required to provide defense coverage for a lawsuit stemming from a butane leak and explosion at a cannabis product manufacturing facility operated by Primordial Mountain LLC. The court determined that a marijuana exclusion in Primordial's commercial general liability policy precluded Ohio Security's duty to defend the underlying case.

Why it matters

This ruling highlights the challenges cannabis businesses can face in securing adequate insurance coverage, as many major insurers continue to exclude marijuana-related activities from their policies. The decision underscores the importance for cannabis operators to carefully review their insurance policies and exclusions to understand the scope of their coverage.

The details

Primordial Mountain operated a cannabinoid extraction lab at an industrial warehouse in White City, Oregon that was owned by Mary Laurent Leach. In 2025, a butane leak at the facility led to an explosion, prompting a lawsuit against Primordial. Ohio Security, which had issued Primordial's commercial general liability policy, argued that a marijuana exclusion in the policy barred its duty to defend the company in the underlying case. The federal court agreed, ruling that the exclusion clearly applied to the cannabis-related activities at the facility.

• The incident and subsequent lawsuit occurred in 2025.
• The federal court ruling was issued on March 6, 2026.