Avoiding Cannabis Litigation in Uncertain Times

Are there legal tensions brewing at your cannabis business?

The cannabis industry seems to be in constant flux, and this uncertain regulatory environment can breed disputes that can simmer over into expensive litigation.  However, it can be difficult to determine if you have legal tensions brewing at your cannabis business.  Here are some questions you should ask yourself to identify any potential issues.

• Do your business partners agree with what’s in your company’s formation documents?

Most cannabis companies are limited liability companies (LLCs).  Your LLC agreement and other key contracts should accurately express what you and your business partners are responsible for as well as how profits will be split.  If these documents do not accurately reflect reality, then this could be a major source of legal trouble down the line.

• Are your business investors happy?

If your business has investors, then it’s important that you communicate with them to gauge their satisfaction levels.  By being open about how your business is doing and any challenges you are facing, you can ensure that your investors feel included in your business’s proceeding.  Additionally, by opening yourself up and inviting their advice, you can simultaneously help your business while also ensuring that your investors feel like they have a say in how your company is being operated.

• Do you have informal business arrangements that need to be made official?

If you have so-called “handshake deals” with vendors or suppliers, then you need to convert these agreements into formal written contracts.  This will ensure that these parties do not flake out on your company or make previously undiscussed demands of you.  Written agreements will hold both your business and other parties accountable to the terms of the contract, reducing the chance of disagreements that can lead to legal issues.

These are some of the questions that you should ask yourself to help you determine if there are legal tensions brewing at your cannabis business.  Do you have additional questions regarding the cannabis industry or your commercial or industrial real estate needs? If so, contact the experts at California Commercial Realty Advisors, Inc.  Our dedicated team is ready to assist you today.