A medical cannabis grower and distributor in Arkansas is suing its insurance company for $300,000 after the insurer denied the cultivator’s claim.
Fort Smith-based River Valley Production said in the lawsuit it filed Monday that it was owed coverage after chilling technology that hadn’t been set properly in the company’s cultivation facility caused significant damage to plants, Law360 reported.
River Valley bought the insurance policy from New York-based Obsidian.
According to the complaint, the chillers were supposed to turn off when the outside temperature reached 0 degrees Fahrenheit.
However, the chillers had been set by third-party technicians to turn off at 40 degrees, resulting in the damaged plants.
River Valley, which said it had 5,000 plants under cultivation at the time, told the U.S. District Court for the Western District of Arkansas that it’s “owed the upper limit of the policy,” Law360 reported.
Obsidian’s third-party agent, Tennessee-based Avant Specialty Claims, denied River Valley’s claim because equipment breakdowns, crop loss and temperature changes aren’t covered by the policy, according to the complaint.
River Valley’s suit disputes the denial, arguing that there wasn’t an equipment breakdown but, rather, the equipment hadn’t been set properly by the third-party technicians.
The company also claims the policy does cover plant cultivation.
Representation for River Valley and Obsidian were not available to provide comment to Law360.