Dear Californian cannabis entrepreneurs,

As you prepare to open your cannabis businesses under the MAUCRSA, perhaps with a few lifelong friends, you may be tempted to think “we’re friends, we don’t need to get the lawyers involved.” We don’t mean to be blunt, but you need to get it in writing regardless of the current camaraderie.

Cannabis contracts
Cannabis contracts. Because they make sense.

Failing to properly paper your company or your company’s transactions is a recipe for trouble in any cannabis state. In the rush to license, many Oregon and Washington State entrepreneurs skipped these vital steps. The result is that a few years after Oregon and Washington legalized recreational cannabis, we are seeing a rise in litigation among formerly friendly service contractors and marijuana businesses and especially between partners of marijuana businesses fighting over percentages, control, and responsibilities.

With the classic marijuana business ownership dispute, you have a case that makes attorneys, judges, and litigants pull their hair out. Two people start a business with the basic understanding that they are 50/50 partners. A third partner is introduced and they agree to give that person a stake but they never specify the amount of that stake nor whether the original partner shares will be equally diluted. The parties do not even know if they have entered into a binding contract. Nothing specific is in writing, but various emails and phone calls reference slightly different versions and iterations of the same deal. There is no right answer in a case like this, but everyone knows that if they do not settle, litigation will be expensive and contentious and risky.

Compare this to when a licensed marijuana business orally agrees on the basic terms for a future cannabis product transaction. We have written before about the Uniform Commercial Code (the “UCC”), which applies to transactions for the sale of goods. Though the lack of a written document in the business ownership matter (as discussed above) leads to all sorts of difficulties, in a sale of goods situation, the lack of a written contract can (but does not always) work out just fine. The default provisions in the UCC exist to protect parties with reasonable contract terms where they fail to bargain on those terms, even if there is nothing in writing. In other words, the UCC will fill in with clear-cut default provisions whatever the parties failed to agree upon. Nonetheless, having clearly worded and detailed contracts avoids any need to rely on the default provisions of the UCC, which may not be to your benefit if left ignored.

Without written agreements, these fights devolve into often intractable (and nearly always expensive) court battles over who said what and when. In many cases, these disputes would never occur if the parties could had a clearly worded set of bylaws, an operating agreement or services agreement. And if the dispute must go to litigation, it is often cheaper to argue over the meaning of a written contract, than to argue over what the parties orally agreed to in the first place.

Cannabis businesses need to take the same ordinary business steps as other business do to properly memorialize their business relationships. Please, take it from our lawyers who have operated in other highly regulated cannabis states–just get it in writing. You won’t regret it.

Sincerely,

Our Oregon and Washington cannabis lawyers

 

Cannabis lawyers on social media
Please check out our cannabis posts

Our cannabis business lawyers are always getting emails from blog readers asking them where they can be found on social media. This blog is our attempt to respond to those emails and to let all of our readers know about the full extent of our social media presence. If you cannot get enough of Canna Law Blog, you can find more of us in the following places:

Facebook. We have an exceedingly popular and perpetually growing Facebook page here. We are nearing 175,000 likes/followers there and we regularly get more than a million visitors weekly there. Our goal with that page is to widely disseminate and initiate discussion on a wide swath of uber-topical cannabis issues. That site is meant to be a less serious than this one and the range of cannabis topics we address there is considerably wider than on here, which is much more focused on legal issues. We allow for a wide range of views on our Facebook page and we delete only those comments hateful of others, but we do not delete comments that are anti-cannabis. We also delete comments that involve the selling of anything.

Twitter/Publications.  Our blog and a number of our cannabis lawyers have the following twitter accounts, with posting frequencies all over the map:

  1. @cannalawblog We use this account to tweet 2-4 times a day, mostly on important cannabis issues of general interest.
  2. @cannabizlawyer. This is Hilary Bricken’s account. Hilary tweets pretty regularly and as head of our Los Angeles cannabis practice, many of her tweets have a California/Los Angeles flavor. Hilary also authors a once-a-week column for Above the Law on all things cannabis law and policy across the United States. And Hilary writes the occasional piece for Culture Magazine, too.
  3. @vince-sliwoski. This is Vince Sliwoski’s account. Vince heads up our Portland cannabis business practice and he tweets pretty regularly on general interest and Oregon cannabis issues. Vince also writes a bi-weekly column for the Portland Mercury called Ask a Pot Lawyer.
  4. @alison-malsbury. This is Alison Malsbury’s account. Alison focuses on cannabis intellectual property law and she splits her time between our Seattle and our San Francisco offices (with a bit of Los Angeles also). Her tweets reflect this, as they usually are on California or Washington or IP issues.
  5. @dshortt90. This is Daniel Shortt’s account. Daniel is based in Seattle and he tweets regularly about general interest and Washington State cannabis issues. Daniel Shortt also frequently contributes to The Fresh Toast, writing about cannabis legal issues.
  6. @jghunthb. This is Jim Hunt’s account. Jim focuses on federal and state taxation as they relate to cannabis businesses and his posts often relate to cannabis taxation issues.
  7. Will Patterson, an attorney in our Portland office and he too writes bi-weekly for the Portland Mercury’s Ask a Pot Lawyer column.

The rest of our cannabis lawyers either do not post on cannabis for social media, or post so seldom as to not be worthy of mention above, at least not yet.

Please follow us and enjoy!

 

california-webinar (1)

Today at noon Pacific time, three of our Los Angeles and San Francisco attorneys, Hilary Bricken, Alison Malsbury, and Habib Bentaleb, will be putting on a FREE webinar on California’s new MCRSA rules. These rules came out less than a month ago and they now make up the bulk of the regulatory standards for California cannabis licensing.

Our speakers will discuss these new rules and give you the information you need to secure a California medical cannabis business license.

This webinar will cover cannabis licensing issues for California Retailers, Distributors, Transporters, Manufacturers and Cultivators.

The presenters will take audience questions both during and at the end of the webinar.

To register for this free event please go here. But don’t wait because we will close down orders before the webinar.

We’ll see you there.

california-webinar (1)

In exactly one week, on June 1, starting at noon Pacific time, three of our Los Angeles and San Francisco attorneys, Hilary Bricken, Alison Malsbury, and Habib Bentaleb, will be putting on a FREE webinar on California’s MCRSA rules. These rules came out less than a month ago and they now make up the bulk of the regulatory standards for California cannabis licensing.

Our speakers will extensively discuss these new rules and give you the information you need to secure a California medical cannabis business license.

This webinar will cover cannabis licensing issues for California Retailers, Distributors, Transporters, Manufacturers and Cultivators

The presenters will take audience questions both during and at the end of the webinar.

To register for this free event please go here.

We’ll see you there.

How to choose your cannabis business lawyerThis blog and our Facebook page (which is nearing 175,000 likes) have given our law firm a national and even a global reach. On top of this, our cannabis attorneys have spoken on cutting edge cannabis legal issues in around half of our states. But we do not have a national cannabis practice. No firm does. To practice law in any given state, the lawyer should be licensed in that state. And though our lawyers are frequently retained by lawyers in states in which we are not licensed, the bulk of our cannabis work is in California, Oregon and Washington, where we have our offices and multiple lawyers with a host of specialized cannabis law expertise.

Yet cannabis businesses constantly contact us for legal help in states where we do not usually practice. We are not the right law firm for a cannabis dispensary in Maryland that needs a lawyer to tell it what must do to operate legally there. We are not the right law firm for a marijuana grower in Alaska that wants to make sure it is complying with local zoning laws. We are not the right law firm for a group that wants legal help in structuring a cannabis investment fund for Nevada. And yet we constantly get calls like these due to the dearth of established cannabis business law firms in most newly legalized states.

When one of our existing clients is seeking the right law firm to represent them in states we don’t cover we help them track down the best firm for them. But when a non-client asks us what law firm they should use in one of those states, we are reluctant to provide names. So we instead usually ask them a few questions about their situation and then we suggest a few things they should consider in choosing the best law firm for their company. This post is intended to answer the question of how to choose the right cannabis law firm for your cannabis business. How should you go about choosing a cannabis business lawyer who is both a good business lawyer and the right lawyer for you?

1. Unless you are a really big company for whom money is almost no object, we recommend you avoid “nationwide” legal behemoths with 100+ attorneys. These firms typically have all sorts of minimum fee requirements and all sorts of hourly billing requirements for their attorneys and these things conspire to drive their legal bills into the stratosphere. Why pay for nationwide legal coverage if you have no plans to operate in Massachusetts, Michigan, Texas and Alaska? But if you know that you will be taking your business into both Michigan and Ohio, it might be a good idea to retain a law firm that covers both states.

2. We recommend you avoid solo practitioners and micro-firms (5 or fewer attorneys) as your only source for all your legal advice because they cannot sufficiently cover and address all of the things required to represent a cannabis business, including the following:

  • Corporate law
  • Contract law
  • Intellectual property law
  • State licensing
  • Local zoning issues
  • Real estate law
  • Intellectual property law
  • Government relations
  • Administrative law
  • Compliance law
  • Employment law
  • Litigation
  • Insurance

3. Avoid law firms that do only cannabis law. How good can a law firm be if it does only one thing and that thing only recently came into existence? If they are now nothing but cannabis law, what were they doing before cannabis became legal? How much experience do they really have with representing companies on complicated business transactions or bet your company litigation matters?

4. Avoid law firms essentially made up of lobbyists and/or criminal defense lawyers. Lobbying lawyers are great for lobbying and criminal lawyers are great if you are facing jail time. But if cannabis is legal in your state and you are looking for a law firm to represent you on your cannabis business or your cannabis litigation matters, you need a law firm with experience handling business and civil (not criminal) litigation matters. You need lawyers who above all else know business law and work exclusively in that realm and lobbyists and criminal lawyers need not apply. Whenever we say this, we get a slew of complaints from lobbyists and criminal lawyers who are trying to make the transition to doing business law.

5. Closely review the credentials of the lawyers at the law firms you are considering. Did they go to top tier law schools? Do they have lawyers from a variety of law schools, not just those local to the law firm? Do their lawyers get plum speaking engagements on cutting edge legal issues? Do their lawyers speak before other lawyers (sorry, but speaking at cannabis conventions and teaching at cannabis “schools” should not count for anything but a demerit)? Do their lawyers speak and write on legal issues relevant to your cannabis business? How do their lawyers rank on various lawyer ranking sites? These sites are not definitive, but they can be a good indicator of the law firm’s reputation among the legal community.

6. Speaking of the legal community, if you know and trust any lawyers in the community in which you are seeking cannabis law help, ask them what lawyer they suggest you use.

7. Make sure you like your lawyer. We know most people don’t “like” lawyers, but because the lawyer you choose now may be your lawyer ten years from now, you really should choose someone who is a good fit for you. This means that before choosing the person or law firm that will be representing your business you should be sure you are comfortable communicating with them. If your gut is telling you not to hire a particular lawyer or law firm, you shouldn’t. If their views on cannabis make you uncomfortable because they are too “corporate” or too zealous or too much or too little anything for you on something important to you, move on. The attorney-client relationship should be built on trust and compatibility, and this is even more important when wading into the murky waters of legalized marijuana.

Choose wisely.

Benefits of Cannabis

This comment from AG Sessions is truly laughable, especially where he says “maybe science will prove I’m wrong.” Sessions either does not pay attention to scientific research on cannabis or he is aware of the scientific evidence that proves him wrong and completely ignores it. Sessions is a smart guy so we think he is just being deceptive. Lying. Alternative facts. Whatever it takes to suit his own narrative.

We’ve been writing for two weeks now on the recently published high level scientific findings on the efficacy of cannabis in reducing opioid abuse and addiction. Sessions’ statement about how the opiate abuse argument is a “desperate attempt to defend the harmlessness of marijuana” is also untrue. Those of us defending marijuana’s harmlessness (with or without the opioid argument) are not doing so desperately, we’re doing so because marijuana is actually harmless. We are doing so because we respect science.

We get it Mr. Sessions if you do not like cannabis and believe it is bad for America. That is your right in a free country. But it is corrosive to our democracy and to our legal system to have our top law enforcement officer lie and lie and then lie some more.

Are we asking too much to expect our top law enforcement officer to be straight with us? Should Sessions be impeached?

leah-heise

Heise, the new CEO of Women Grow, makes an astute observation here regarding an injustice of the legal cannabis industry. Though having state-legal cannabis greatly reduces marijuana-related arrests in those states, it doesn’t erase prior arrests and the discrimination that goes with that. And in many states, having a prior criminal record (even if it is for cannabis) is reason enough to prohibit someone from securing a cannabis business license.

As Heise states here, these types of limitations need to go. Why not let people who have been a part of the industry for a long time benefit from it? Why not allow those who have fought for the industry’s very existence continue fighting the good fight?

What are your thoughts?

 

Cannabis Lawyers
Happy New Year from all of us at Canna Law Blog!

We wish a happy new year to all of our readers! We will continue to write about cannabis law and business in 2017.

Please let us know with your comments below the topics you wish to see us cover in the upcoming year.