Handshake deals trigger the vast majority of the cannabis litigation seen across the country. Partnership disputes pop up on a daily basis due to a lack of proper documentation that clearly defines rights and responsibilities, and operators throughout the supply chain waste time and resources debating rights and responsibilities in a given transaction. It is critical that cannabis businesses document transactions in a clear and legally enforceable way. Observing sound contract drafting principles is critical, but do not overlook relevant state and local regulations when drafting a contract. Cannabis regulations typically outline ownership and financial interest parameters which may affect how owners structure a business, as well as place limitations on returns, re-testing product that has failed regulatory compliance testing, etc. that should be contemplated when drafting vendor contracts. Save yourself the headache down the road and take the time to properly memorialize cannabis deals.
DISCLAIMER: THIS INFORMATION IS STRICTLY EDUCATIONAL AND DOES NOT CONSTITUTE LEGAL ADVICE.