Cannabis Contracts: 3 Big Picture Tips

Drafting and negotiating cannabis contracts requires can be difficult due to how heavily regulated the industry is. Cannabis contracts must not only observe traditional drafting principles, but also must contemplate relevant cannabis law. Here are 3 tips to consider when it comes to cannabis contracts:

1. Clarity

Despite all the complexity that comes along with cannabis contracts, the reader should not have to be a cannabis industry expert to understand your contract. This is particularly true with the definition of key industry-specific terms. For example, the meaning of industry terms such as “Full Spectrum” or “Broad Spectrum” must be clearly outlined so that there is no confusion down the road.

It’s not just for the parties’ benefit, either. If there’s a contract dispute over the interpretation of a term down the road that needs to be litigated, who will be the ultimate decision maker? Answer: A judge that probably knows little to nothing about cannabis. A confused judge will only delay a resolution and cost both sides more money in the process. Make everyone’s life easier and make sure all key terms are clearly defined.

2. Administration

Executing a contract and not having a plan in place to monitor the contract’s administration is sort of like an entrepreneur celebrating raising capital before they make any money. In both situations, the end goal has not been reached.

There must be a process in place to ensure compliance with the terms of the contract. Make sure key stakeholders are aware of the terms of a given contract and what is expected of them. Stress the importance of complying with confidentiality and non-disclosure provisions.  

3. Hop on the Phone

Call me old school, but hopping on a phone call to discuss contract terms is invaluable. Emails and track changes have their place, but as we’ve seen in everyday text messaging, meaning can often be lost in translation. Hop on a call to ensure that everyone is on the same page before signing the dotted line.

It can be really easy to get bogged down in the minutia of cannabis contracts and miss the forest for the trees. These three big picture tips should help parties to a cannabis contract not lose sight of the big picture.

© RYAN T. KOCOT, ESQ. 2021

DISCLAIMER: THIS INFORMATION IS STRICTLY EDUCATIONAL AND DOES NOT CONSTITUTE LEGAL ADVICE.