Learn about MITA—Arizona's cannabis industry trade association. Education & advocacy drive this dynamic network of professionals.
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The federal war on marijuana has entered the end game.
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Signing a commercial lease can be an exciting step toward realizing operational goals in your Washington cannabis business. However, if a lease is not analyzed and completed correctly, the agreement can leave either the landlord or the tenant, or both, with additional headaches and liability. Understanding the nuances of the cannabis commercial agreements is crucial for both parties alike.
Whether you are a small business owner looking to secure your first retail or business space, or a property investor seeking to maximize your returns, having a firm grasp of the legal framework surrounding cannabis commercial leases can make the difference between a successful business venture and a costly endeavor. It’s important to note that usually, both parties have the same goal and that is to use the property for the stated purpose in a way that benefits both landlord and tenant alike. If the agreements are negotiated correctly, you’ll be left with a situation where when one succeeds, the other will likely succeed as well.
For the most part, commercial landlord-tenant relationships are governed by statutes and basic fundamentals of contract law in Washington state. More often than not, courts will defer to the Commercial Lease Agreement and other applicable agreements between the parties before looking to any statutory default provisions. This stance makes lease agreement negotiations and drafting more important than other instances such as residential lease agreements.
In order to ensure your Washington cannabis commercial lease is a mutually beneficial endeavor, here are some key points that both sides need to consider:
The lease term is the backbone of any commercial lease agreement. It outlines the duration of the lease and sets forth the rights and obligations of both parties during that period. In Washington state, lease terms are highly customizable and can range from short-term agreements to long-term leases spanning several years. Additionally, both parties should pay close attention to renewal options to ensure there is flexibility to extend their lease if desired and needed.
Negotiating rent and additional costs is often a sticking point in commercial lease agreements. Landlords typically seek to maximize their rental income, while tenants aim to keep costs manageable. It’s crucial for both parties to clearly define the base rent, any annual increases, and the allocation of additional expenses such as property taxes, maintenance fees, and utilities.
The use clause specifies how the leased premises can be utilized by the tenant. It’s essential for both parties to ensure that the intended use aligns with the zoning regulations and any restrictions outlined in the lease agreement. Additionally, landlords may include provisions to protect the integrity of the property and surrounding businesses.
The cannabis industry is well known for its regulatory oversight and compliance requirements. Both parties should be aware of applicable state and local regulations and compliance requirements. Many of these requirements can be specifically addressed in the lease agreement so there is no question as to the rights and obligations of each party.
Determining responsibility for repairs and maintenance can prevent disputes down the line. Commercial leases often allocate these duties between landlords and tenants, with landlords typically responsible for structural repairs and tenants responsible for interior maintenance. Clarity on these obligations can help avoid confusion and ensure that the property remains in good condition throughout the lease term.
Businesses evolve, and sometimes tenants may need to assign their lease or sublet the premises to another party. Landlords usually retain the right to approve or reject assignments and subleases to maintain control over their property and ensure the new tenant is financially stable.
Despite best intentions by both parties, lease agreements can sometimes be terminated prematurely due to unforeseen circumstances or breaches of contract. It’s essential for both parties to understand the conditions under which the lease can be terminated and the remedies available to each party in case of default.
Even though most commercial lease disputes are determined by the contract, commercial lease agreements must still comply with state and local laws governing landlord-tenant relationships. In Washington, lease agreements must be notarized to have their full force and effect. Additionally, other use-specific statutes and regulations should be considered and incorporated into the drafting of commercial leases. As noted above, one example is for licensed cannabis businesses in Washington. These businesses must have additional protections and oversight to remain in compliance with state and local laws and regulations.
Navigating the complexities of commercial lease agreements in Washington requires attention to detail and a thorough understanding of not only the legal landscape, but also the goals, aspirations, rights, and obligations of both the landlord and the tenant.
Negotiating and drafting a well thought out commercial lease can make the difference between a thriving business and a beneficial relationship between the landlord and tenant or a costly nightmare.
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For more on cannabis commercial leases, check out the following posts:
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Tyson 2.0 strains have all made a splash and now, thanks to Royal Queen Seeds, you can finally grow them for yourself.
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In the landscape of booming and busting cannabis markets, Arizona emerges as a standout success story. A naturally beautiful state that attracts a sizeable group of tourists every year, Arizona skyrocketed past $1 billion in total cannabis sales for 2023. Unlike its northern neighbor of Nevada, Arizona has exceeded $1 billion in sales for three consecutive years, with 4.9% increase from ‘22 to ‘23 to boot. (Nevada, conversely, suffered from a nearly $115 million shortfall from FY 2022 to 2023 despite several millions more tourists than Arizona.)
Compared to other states with recreationally legal cannabis, Arizona packs a considerably lower tax rate, levied as a 16% excise levy. Compare:
As of FY 2022, the per capita rate for excise taxes is also incredibly lower in Arizona than other recreationally legal states, at only $18. The only two states as of FY 2022 that had a lower per capita rate were both Maine and Michigan. Ironically, the two states with the highest per capita rate are also the first two states to legalize cannabis recreationally, Colorado and Washington, which have rates of $61 and $67 respectively.
Recreational sales have become the life blood of the Arizona cannabis industry. Medical cannabis sales and the number of registered patients in the process are in decline. Whereas recreational sales accounted for only 45% of sales during the first year of retail sales in 2021, adult-use sales then increased to 70% in 2022. In 2023, recreational cannabis sales reached 72%, almost 30% larger than two years prior. Every month since July of 2022, the Arizona cannabis industry has exceeded $80 million in total retail sales.
Like Nevada, Arizona cannabis retail stores benefit from rules that allow cannabis sales after midnight, and allow dispensaries to operate 24/7. Interestingly, unlike e.g. Montana or Minnesota, Arizona doesn’t benefit from any geographic advantage and is mostly surrounded by states with recreationally legal cannabis. This means that out-of-state visitors and business that Arizona receives from Utah certainly wouldn’t be as much as what Nevada draws in its two biggest cities. Yet, the Arizona cannabis industry is outperforming their northern neighbor, despite not possessing all the glitz and glamor of Las Vegas.
While cannabis professionals in the not so prosperous states of California and Oregon are watching some of the biggest juggernauts of business fully exit from their respective states, the billion-dollar Arizona market is seeing no such industry exodus. In particular, Curaleaf has become the best known example of a multi-state operator exiting a state completely, announcing their departure of “the majority of its operations” in California, Oregon and Colorado in 2023 and other East Coast states as well. Yet, that same MSO company has found thriving success in the Arizona market.
“Arizona has been a strong success story for us, and has become one of the top markets in the country for Curaleaf.” explained Curaleaf Vice President of Real Estate Luke Flood. “Uniquely, Arizona offers one of the lowest prices per gram at the retail level in the country.”
Unlike other states which keep cannabis tax revenue allocations vague, Arizona specifically provides which causes and projects will benefit from the $172.8 million in 2023 excise tax revenue, and at what percentages.
Arizona’s cannabis industry stands as a beacon of success, breaking records and showcasing sustainable growth. The politically diverse state’s ability to surpass the $1 billion mark in sales for three consecutive years, despite having less tourists than adjacent Nevada, demonstrates the industry’s robustness. The state’s comparatively lower tax rates have also contributed to its success, making it an attractive market for both consumers and businesses. Finally, Arizona’s strategic location and regulatory environment have allowed it to thrive, even without the glitz and glamor of Las Vegas.
As the Arizona cannabis industry continues to evolve and expand, it will be fascinating to observe its future trajectory and impact on the broader cannabis landscape. Stay tuned.
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Former Minnesota Governor and ex-professional wrestler Jesse Ventura is the latest celebrity to start a cannabis brand. Ventura served as Governor of the Land of 10,000 Lakes from 1999 to 2003. One could say that no other Governor serving during the late ’90’s or early 2000’s had quite the extensive background in variously different forms of popular entertainment as Ventura, with the exception of a certain former bodybuilder from Austria and “Governor-nator” from California. Fun fact, both of those former Governors starred in the 1987 action blockbuster Predator.
Celebrities have been putting their hats into the further mainstream cannabis industry in droves by starting cannabis ventures, to greatly varying degrees of success. Some award-receiving cannabis brands such as Willie’s Reserve (by country music legend Willie Nelson) have become mainstays at dispensaries across the states. Legendary hip-hop artists and cannabis connoisseurs Snoop Dogg and Wiz Khalifa have each had multiple forays into the billion-dollar industry of their favorite plant. Athletes like Mike Tyson, who created the wildly popular Tyson 2.0 cannabis brand, have also found success in the space.
Long before Ventura became politically involved, he served in the United States Navy Underwater Demolition Team during the Vietnam War. After leaving the military, Ventura became a full-patched member of the Mongols Motorcycle Club in the early 1970’s. After leaving the bike club and attending North Hennepin Community College near his hometown of Minneapolis, Ventura served as a bodyguard for some of music’s greatest bands of the era, including The Rolling Stones and Grateful Dead.
Starting in 1975, Ventura began a career in professional wrestling that would see him win numerous championships across multiple promotions. He wrestled in memorable matches with some of professional wrestling’s greatest legends, from Cowboy Bob Orton to Macho Man Randy Savage and arguably the most famous wrestler of all time, none other than Hulk Hogan. After he retired from fighting in the squared circle, Ventura served as an animated, sometimes controversial commentator for both the WCW and the WWF, the two biggest wrestling promotions at the time.
While he was still serving as a wrestling color commentator, Ventura decided to begin his foray into politics that would eventually span over a decade and lead him to the highest seat in Minnesota politics. For his very first election, Ventura ran as an independent candidate in the 1991 mayoral election of Brooklyn Park, Minnesota, where he not only won but beat the 18-year incumbent candidate. Running on a platform of “fiscally conservative and socially liberal”, Ventura might be considered either centrist or possibly even libertarian by today’s standards. He was vehemently against overspending and unnecessary taxes, but he supported drug sentencing reform and admitted on numerous occasions that the Drug War was a failure. He was a proponent for education reform and Second Amendment rights, while also supporting cannabis legalization and gay rights including marriage (this was at a time when both the majority of Republicans and even Democrats disapproved of same-sex marriage).
In the 1998 Minnesota gubernatorial election, Ventura made political history as one of the first third-party candidates to win such an important election, beating out career lawyers and politicians. During his tenure, Ventura operated on a platform that criticized the decisions of both parties, such as a lack of quality mass transit systems and condemning the previously held embargo on all Cuban products in 2002.
His most recent newsworthy event came in February of 2023 where he attended a Senate Environment, Climate and Legacy Committee meeting and passionately recounted the story of how cannabis saved his wife’s life from a debilitating seizure condition after four anti-seizure medications failed to do so. Despite cannabis being illegal in Minnesota at the time, the former governor knowingly broke the law to provide cannabis to his wife.
“Cannabis saved my life. Let that sink in. Not me personally, but the 38th first lady of Minnesota. And if I get choked up a little, bear with me. My wife took the first three drops under the tongue and has not had a seizure since. None. Marijuana cannabis stopped the seizures.” he told a Minnesota Senate committee.
Ventura’s testimony was clearly moving, as the former governor stood next to current Minnesota Governor Tim Walz when Walz signed House Bill 100 in May 2023, which legalized recreational cannabis for the state. Since then, Ventura has decided to enter into the newly legal Minnesota cannabis industry with the Jesse Ventura Farms brand in partnership with local cannabis company Retro Bakery.
“I can’t tell you how truly amazing this feels,” Ventura said in a blog post. “To finally be able to legally share with you, products from a plant that has had such an amazing impact on my life. Not to mention the historical significance of being the first U.S. Governor to officially put his name on a cannabis brand. Each step brings us closer to finally ending this tragic and dangerous war on drugs. Cannabis saved my family’s life.”
Although he’s sticking to only federally legal hemp-derived products for now, Ventura still fully supports cannabis reform to all extents. The products come in multiple forms too, from Maui Wowie Gummies to chocolates. And with a launch party scheduled for 4/20 at a local Minneapolis dispensary, the former Governor is showing his continued support for the newly legalized industry that’s on track to reach over $1 billion in annual sales in just a couple years.
Even as the Minnesota cannabis industry expands into a several hundred million-dollar industry, Ventura will undoubtedly use his platform and public advocacy for the plant that saved his family’s lives for the betterment of the health of Minnesotans. Ventura’s entry into the market signifies a significant moment in the state’s history and reflects a broader shift in societal perceptions of cannabis.
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Day One takeaways on Germany legalization from the International Cannabis Business Conference.
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Last week, California’s Department of Cannabis Control (DCC) released illegal market enforcement data for quarter 1 of 2024. It’s become a new tradition of mine to compare this quarterly data and see whether the state is actually doing anything to fight the illegal market (for example, see my posts for Q4 2023, Q3 2023, and Q2 2023).
Below is a side-by-side comparison of the enforcement data published by the DCC from Q1 2024 as compared to Q4 2023:
| Q1 2024 | Q4 2023 | |
| Search warrants served | 18 | 24 |
| Pounds of Cannabis Seized | 31,866 | 13,393.65 |
| Retail Value of Cannabis Products Seized | $53,620,600** | $22,294,571.41 |
| Cannabis Plants Eradicated | 54,137 | 20,320 |
| Firearms Seized | 11 | 26 |
| Money Seized | $34,858 | $35,195.25 |
| Arrests | 4 | Not published |
[**Note that the DCC’s Q1 2024 data does not have the same chart as prior data sets, and some of the data points were characterized differently. For example, the amount of cannabis allegedly seized was referred to as the “retail value” in Q3 2023, but not in Q1 2024. It is therefore unclear exactly what DCC means and how it reached these value calculations.]
Q1 2024 saw an increase in seizure of plants and pounds of harvested cannabis. I don’t think we can extrapolate too much from the agency’s valuation, but the numbers certainly increased. So by that metric, the needle has moved a bit.
At the same time, we saw a 25% decrease in the number of warrants served. That means that the locations that were raided (1/3 of which were in Orange County) had a lot more cannabis and plants than those raided in Q4 2023. I interpret this to mean that most or all of these 18 warrants were served on illegal grows, warehouses, or manufacturing operations, and not on retail facilities. While that may be a slight disruption in supply to the illegal market, it is undoubtedly just a drop in the bucket.
I’ll keep this post relatively brief for today. There isn’t much else to report on the enforcement front. There are a host of potential cannabis-related bills making their way through the legislature, some of which may do good (see here and here for example), and some of which may make life even harder for licensed businesses.
It’s worth noting for the trillionth time that anything the state does to make life harder for legal operators will make things better for the illegal market. And the state seems to be aggressively committed to making things as difficult as possible for people who invested years and endless amounts of money to get licensed.
Then there are these crazy stories we sometimes hear about people who did nothing wrong and got penalized, or who followed all the rules and got in trouble regardless. Here’s an example of an alleged crazy fact pattern I recently say a lawyer write about on Twitter:
Joined my @IJ colleague Jared McClain in San Francisco this morning for oral argument before the Ninth Circuit (screenshot of the argument below).
We’re representing a group of property owners in Humboldt County, CA, who are facing massive fines imposed because other people… pic.twitter.com/hv2gQHzSJz
— Rob Johnson (@FreeRangeLawyer) April 9, 2024
I’ll be back next quarter to report on the state of affairs with California’s so-called enforcement against the illegal market. I hope to have better news, but doubt I will.
The post California Gives Up on the Illegal Cannabis Market: More of the Same appeared first on Harris Sliwoski LLP.
Including Blue Lobster, Toad Venom, and Banana Zoap.
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California’s cannabis market is renowned for its quality and innovation, especially in the realm of premium brands that cater to both connoisseurs and casual consumers alike. As we navigate through 2024, Leafly’s experts have meticulously reviewed and tested various products to bring you the top selections that stand out for their excellence in the Golden […]
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As Massachusetts continues to flourish as a hub for premium cannabis, Leafly’s experts have delved deep into our database to recommend numerous products to bring you the finest selections for 2024. From aromatic flowers to savory edibles, here are the top cannabis products across the Bay State that promise unparalleled quality and experience. Exploring Massachusetts’ […]
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Michigan’s cannabis landscape is teeming with innovation and quality, spanning a diverse range of products that satisfy both recreational enthusiasts and medical patients alike. After meticulously searching our comprehensive database and personally field-testing numerous offerings, Leafly’s experts have curated a list of four standout products that epitomize the best of the Great Lakes State’s cannabis […]
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Arizona’s cannabis market is blooming, offering a variety of top-tier brands that cater to discerning enthusiasts. Whether you’re looking for potent flowers, innovative vapes, or gourmet edibles, the Grand Canyon State has it all. Here’s a quick hit list of the best cannabis brands and products you should try in 2024. Exploring Arizona’s Cannabis Excellence […]
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Spring has sprung and with it fresh veggies in the garden. High season has also kicked in for cannabis gardeners: clone and seed sellers are doing brisk business as growers big and small ramp up for the 2024 full-sun outdoor run. You can grow a pound of AAA-grade buds off a single outdoor plant if […]
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Commemorate weed’s biggest day with Cloud Cover’s finest. 420 is here, and High Profile and Cloud Cover have a present, just for you. Now through 4/21, if you spend at least $25 on Cloud Cover’s line of premium flower, pre-rolls, vapes, and concentrates at your local High Profile Cannabis Shop, you’ll receive a pack of […]
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Live resin and live rosin carts and pods across the US.
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See our list of the best cannabis seed companies 2024. Find quality seeds you can count on with this roundup of some of our favorite banks.
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Cannabis investments are difficult enough when the investor is a U.S.-based person or entity. But things can get immensely more complicated when foreign investment is on the table. Today I want to highlight some of the top considerations for foreign investors and U.S. cannabis companies alike.
To this day, cannabis remains federally illegal. State legality has zero effect on federal law. Even the possible rescheduling to schedule III of the Controlled Substances Act (CSA) will not make cannabis federally legal. Things are clearly a mess.
In our cannabis team’s experience, a huge number of foreign investors do not appreciate the nuances between state and federal law and how it could effect them. For example, federal tax laws are unforgiving and don’t allow standard deductions for marijuana businesses. Additionally, federal illegality means that businesses will be siloed without interstate commerce, can’t get access to banking, can’t get access to basically anything for market rate, and so on.
All of these things mean that investments are simply unlikely to net big returns. Sadly to say, lots of investors end up writing off their investments. While federal legality alone isn’t the only reason that businesses, and by extension foreign investments, fail, it’s certainly a big one.
This is actually probably more important than point 1. Cannabis is still illegal in most places in the world. There are still places where possession of cannabis can lead to the death penalty. While possession in a such a country is different from investing into the U.S., the governments in those countries may not see eye to eye, and such investments could lead to a host of different penalties. I’ve spoken with attorneys and business people from other countries who have said that foreign investment directly into a cannabis company is simply not possible.
What this can often lead to is investment into adjacent or ancillary companies in overly complicated deals. And when something is ancillary to the industry and/or a deal is overly complicated, netting a healthy return on investment is even more unlikely.
Probably the first issue that comes up when looking at foreign investment is immigration and visa status. Immigration law is the province of the federal government. That means that it does not mix well with cannabis. If you’ve been in this space long enough, you’ll have heard of things like denial of naturalization petitions, denial of visas, arrests, and even lifetime bans on entry into the states. So for foreign investors who plan on relocating to the U.S. or even visiting to see the company they are investing in, there are huge risks.
All states with legal cannabis markets require disclosure of certain people affiliated with a cannabis business. In many states, this includes investors, lenders, or people with other financial interests. Sometimes, the disclosures can be relatively benign, and in other cases much more aggressive.
For reasons expressed in points 2 and 3 above, a lot of foreign investors aren’t exactly thrilled to learn that they have to give personal data (and maybe undergo background checks) over to a state agency. This is yet another reason why foreign investments are often made into ancillary companies — to avoid disclosures. But even that isn’t always likely to fix the issue, and again, overly complicated investments into ancillary companies aren’t necessarily great.
Foreign investors often make a critical mistake in assuming that their targets know what they are doing. I’m not talking about operational issues — though a lot of companies clearly need help there — but about legal structures. It’s not unheard of for an investor to want to invest into a company that promises something it legally cannot do — like sell stock to a foreign investor in a state with a residency requirement. Yet things like this do happen from time to time, and once a foreign investor gives money over, it’s a lot harder to get it back.
Foreign investors who know what they are doing usually work with lawyers or other professionals experienced in their target jurisdiction, not only to diligence the target’s operations, finances, etc., but also to make sure that the fundamental aspects of the investment won’t trigger massive legal liabilities.
For some of our older posts on foreign investment in the U.S. cannabis industry, see below:
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Royal Queen Seeds, one of the most forward-thinking and innovative seedbanks around, is out to help streamline the process and reduce analysis paralysis. They’ve developed an online seedfinder tool to help growers search Royal Queen Seeds’ huge library for the strain that best fits their needs
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As adult-use cannabis legalization sweeps across the country and America confronts the toll of previous, draconian cannabis policies, one of the best attempts to right abject wrongs is social equity programs within state cannabis industries. Unfortunately though, social equity programs are easily exploited and “loopholed.” Licenses have even been discreetly purchased by multi-state operators (MSOs) in some cases, or other entities that should not qualify as social equity applicants. Regulators are getting wise. One such example is Missouri, where concerns have been raised about the authenticity of social equity applications, leading to the revocation of several licenses. This highlights the need for robust oversight and accountability to ensure that social equity programs fulfill their intended purpose of fostering diversity and economic empowerment within the cannabis industry.
One example of a state regulatory agency having to revoke a considerable number of social equity licenses is Missouri, one of the newest states to legalize cannabis. Based on sales figures, the Missouri cannabis industry has already become a raging success, selling over $1.4 billion in the first year. Moreover, the Missouri Department of Health and Senior Services created an innovative micro license program to serve as a smaller scale, but expedited, process for social equity business ownership. Nearly 150 guaranteed micro-business licenses are guaranteed over the next three years.
Concerns have arisen among certain Missouri legislators though, most notably State Senator Karla May. In October of 2023, May sent a letter to the Director of the Missouri Division of Cannabis Regulation formally requesting that the authenticity of the social equity program be investigated by regulators. May’s concerns were well founded, as the 2023 Activity Report from the Chief Equity Officer confirmed that an astonishing number of social equity applications were connected to multi-state operators or other out-of-state business entities or LLCs.
The widespread ramifications of Missouri’s damning report are coming to fruition, as the Missouri Division of Cannabis Regulation recently announced that 9 of the initial 48 social equity applications would be unconditionally revoked. Not too surprisingly, the series of licenses that were ultimately revoked were due to the exact, defined list of issues documented by the 2023 Chief Equity Officer report. In December, the Missouri Division of Cannabis Regulation also issued eleven Notices of Pending Revocations (NOPR) to social equity licensees.
In total, eight of the revoked licenses were originally in possession of out-of-state entities. As the social equity program heavily focused on Missouri-based residents and aspiring business owners, all the out-of-state entities were excluded and licenses revoked. The startling number of applications that these groups were connected to was troubling. Notably, 118 of the 1,625 total applicants were entities from California, while another 110 social equity applications were filed from operators hundreds of miles north, in Michigan– a state with an a robust program.
Most egregious of all, an Arizona-based entity called Cannabis Business Advisors filed 400 social equity applications in Missouri. All six licenses that the group received have been revoked. Apparently, the application listed majority business owners that had little knowledge of who was operating these licenses, and who couldn’t recall the true applicants’ names who applied on their purported behalves. The Director of Division of Cannabis Regulation, Amy Moore, explained in a March 27, 2024 press release:
“While owning and operating a license may include contracting for management services or consulting services, the lack of knowledge, control, agency or decision-making demonstrated by the individuals whose information was used to meet eligibility does not meet even the most generous interpretation of owning and operating a business. These circumstances do not meet the intent or meaning of the requirement in Article XIV that microbusinesses are operated by eligible individuals.”
The implementation of social equity programs in state cannabis industries represents a crucial step towards rectifying the injustices of the past. However, as demonstrated by the challenges faced in Missouri and other states, these programs are often subject to exploitation and loopholes. The case of Missouri highlights the need for stringent oversight and accountability to ensure that social equity programs truly benefit those they are intended to help. While the road ahead may be fraught with challenges, addressing these issues is essential to ensuring that the cannabis industry becomes a force for positive change, fostering diversity and economic empowerment for all.
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In the heart of New England, Massachusetts’ cannabis culture thrives, offering a rich palette of strains that cater to a myriad of preferences and needs. From the soaring heights of Blue Dream to the comforting embrace of Wedding Cake, the Bay State’s cannabis aficionados have made their preferences clear. As we navigate through 2024, let’s […]
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As the Garden State’s cannabis culture continues to blossom, enthusiasts from Hoboken to Atlantic City have spoken, and their preferences are as diverse as New Jersey itself. From the blissful highs of Lemon Cherry Gelato to the surprising ascent of LA Kush Cake, let’s explore the strains that are defining New Jersey’s cannabis scene in […]
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Michigan, known for its robust automotive industry and beautiful Great Lakes, is also carving out a significant niche in the cannabis market. As we explore the state’s top cannabis strains in 2024, we see a mixture of steadfast favorites and surprising shifts, including the astronomical rise of Gazzurple. Let’s delve into the strains setting trends […]
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See how the No. 1 city stays a mile-high.
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Wiz Khalifa, Gucci Mane, and our own senior editor David Downs are in the mix this 420.
The post America’s top cannabis events of 4/20 2024 appeared first on Leafly.
After a long legal battle, Amendment 3 will appear on the 2024 ballot. It needs the support of 60% of Florida voters in order to pass.
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Cannabis contracts are – in the simplest sense – binding agreements between two parties. But how you get to something being “binding” can be complicated. And in the cannabis industry, where things move a mile a second and people often overlook basic contract requirements, the results can be disastrous. Today I want to focus on a concept known as “authority” and explain why I think it is so critical for the cannabis industry.
When an individual who is (a) an adult, (b) not under duress, and (c) of sound mind enters into a contract, there is almost no question it is binding. [Yes, we are talking about cannabis contracts and federal illegality is an issue, but let’s put that to the side for a second.]
But what about contracts with entities as parties? While you’ve probably heard of things like corporate personhood, and seen contract definitions of “person” to include entities, in reality entities are legal creations and cannot physically sign contracts or do anything else. Companies act through employees or other authorized people, commonly referred to as “agents.”
The thing about agents is that they need to be authorized to take certain actions on behalf of a company. If they are not so authorized, then they have no legal ability to bind the company and their signature on a contract is not binding — with some key “catches” that I discuss below.
There are a few ways that agents are given authority to act on behalf of a company. Officers of a corporation are given authority by the shareholders in governing documents like bylaws. A president or CEO, for example, will usually have broad authority to sign contracts on behalf of a company. Other people, like employees or contractors, will be given authority (if at all) in their employment or other contracts.
Generally, the lower one gets on the corporate hierarchy, the less authority one has. A person working in procurement may be given authority to execute purchase agreements, but not to enter into a merger agreement. So a good employment agreement will clearly limit an employee or agent’s actual authority.
Even CEOs and presidents are often restricted in what kinds of things they may do. For example, shareholders or directors of a company may not want a CEO to purchase Lamborghinis with company funds, so they may require that the CEO obtains consent of the shareholders or directors prior to making purchases over $X. The shareholders may even place additional restrictions on the board of directors so that there is a hierarchy of consents that must be obtained before the CEO is authorized to pull the trigger one or (usually) many types of contracts.
Where the rubber can often hit the road is when a company’s employee or agent enters into a transaction for which they had no authority. For example, say the CEO of a company enters into a purchase contract for a distribution van costing $75,000, but the company’s governing agreements required board approval for purchases over $50,000. Say the CEO didn’t get board approval and the board wants to unwind the transaction. The van’s seller understandably won’t want to unwind the transaction and litigation will probably ensue.
So who wins in these cases? The answer depends on a concept known as “apparent authority,” where a third party reasonably (the key word) infers that the person is an authorized agent of the entity they are trying to bind. In the example given above, the van seller will argue it inferred that the CEO of the company had authority to buy a van. And the seller will argue that its inference was reasonable since CEOs are the highest corporate officers and generally have such authority. And unless the seller had knowledge of the CEO’s restriction in the company’s governing documents — which, for private companies, are not public records — he’ll have a pretty good chance of prevailing.
The policy behind apparent authority is self-evident. We don’t want a system where a transacting party with no reason to believe the other signor lacked authority to suddenly be forced to unwind transactions.
Both sides of a transaction can take steps to avoid the issues mentioned above. A company can make sure that its agents are fully aware of an understand the limits on their authority. This of course won’t completely eliminate the risks when it comes to high-level officers, but it will at least help.
On the other hand, the other side to a contract can:
None of these issues are ironclad, but they can help avoid some painful issues later down the road.
To address one last point, what happens if someone without authority signs a contract on behalf of a company, and the company wants to remain “in” the contract despite the signor’s lack of authority? In that case, the company’s board of directors, shareholders, or other persons with authority can “ratify” the agreement. This is usually done via a written resolution or at a meeting.
You might be asking whether this is strictly necessary or just overkill – i.e., why can’t the company just leave things where they stand and move forward without yet another piece of paper? Proper ratification is a critical step in the corporate governance process, and can avoid a lot of pitfalls down the road. Ratification also helps to clarify what the signing employee or agent can and can’t do, and to reinforce the limits of their authority.
Even something as simple as who should sign a contract for a company can be extremely complicated. But thinking critically through these issues can avoid expense, wasted time, and even litigation.
The post Cannabis Contracts 101: Authority and Why it Matters appeared first on Harris Sliwoski LLP.
On April 1, 2024, the Florida Supreme Court gave the green light to a ballot initiative to legalize adult-use marijuana. The court’s 5-2 opinion, penned by Justice Grosshans, brings an end years of judicial hairsplitting that saw earlier legalization proposals derailed. At long last, Florida voters will have their say on whether recreational marijuana should be legal in the Sunshine State.
As Justice Grosshans explained, the court’s role was limited to assessing “whether the amendment conforms to the constitutionally mandated single-subject requirement, whether the ballot summary meets the statutory standard for clarity, and whether the amendment is facially invalid under the federal constitution.” With regard to the first consideration, the court found that the initiative’s components “have a natural and logical connection,” hence meeting the single-subject requirement.
The court then turned to the ballot initiative summary, which must use “clear and unambiguous language.” According to the summary, the proposed amendment “allows Medical Marijuana Treatment Centers, and other state licensed entities” (emphasis added) to sell marijuana. Opponents of the initiative argued that this language is misleading, as it would suggest that “other state licensed entities” would immediately be allowed to sell marijuana, when in fact they would have to undergo licensure. The court shot down this argument, noting that “the most natural reading of the word ‘allow’ suggests that other entities will be permitted to enter the market, subject to a state-licensing process” (emphasis added).
Finally, the court turned to a recent amendment that required it to consider “whether the proposed amendment is facially invalid under the United States Constitution.” In the court’s view, “in order for a facial challenge to succeed, we must find that a law would be unconstitutional in all of its applications,” (emphasis in original). Declining to make such a “broad finding,” the court noted that “a detailed analysis of the potential conflict between sections of this amendment and federal law is a task far afield from the core purpose of this advisory proceeding under the Florida Constitution.”
The court’s pronouncements in the present case (and similar recent ones) have no doubt helped engross the state’s jurisprudence on the subject of ballot initiatives — though one wonders if future initiatives on subjects far less controversial than cannabis will trouble justices as much. For now, though, constitutional law issues can take a backseat, as Florida gears up for Election Day. While getting the initiative on the ballot has been no small task for supporters, as the judicial history demonstrates, an electoral challenge now lies ahead. For the amendment to pass, it must obtain 60% of votes, with polls suggesting it will go down to the wire. Yet, no matter what happens, and despite the best efforts of cannabis opponents, democracy has won this battle.
The post Florida Court OK’s Canna Initiative appeared first on Harris Sliwoski LLP.
Take us to stank town.
The post Dinner before dessert: GMO Cookies is April’s Leafly HighLight appeared first on Leafly.
Diving into New Jersey’s cannabis market feels a bit like stepping into a garden of endless possibilities. Here, every leaf tells a story, and every brand brings its own flavor to the table. With a landscape as diverse as the Garden State itself, cannabis enthusiasts and curious newcomers alike are spoiled for choice, navigating a […]
The post Discover New Jersey’s premier cannabis brands: Top picks for 2024 appeared first on Leafly.
Though the cannabis industry is one of America’s most lucrative new industries — with estimates that it will reach approximately $58 billion in sales by 2028 — the markets in several recreational states are suffering severe financial harm. In states like Oregon, the problems have gotten so out of hand that businesses are even pulling out of the state. And these problems are far from over.
California is probably the best example of such a problematic state, as I wrote last week. Last year, reports from the California Department of Tax and Fee Administration showed that the California cannabis industry’s total sales went down by a total of over eight percent from 2021 to 2022, which means approximately $400 million less of annual sales in a market as gargantuan as California’s — at least that was the case with the legal market, which California is doing little to protect. And according to recent sales figures for 2023, it looks like the total financial loss was even more substantial. Whereas nearly $5.4 billion in total sales occurred in 2022, a full $250 million less in overall sales when compared to the already troubled year of 2022. Unfortunately though, California’s problems are only a microcosm of the greater issues that the other states face or will soon face.
Oregon is not much better off. Its cannabis industry has been experiencing its own significant financial issues. Along with freefalling retail prices, Oregon’s cannabis industry has experienced a very similar pattern of two consecutive years of declining sales — just like California. And although Oregon’s market isn’t as vast as California’s, the proportionate financial losses are still just as observable.
Outright, the Oregon cannabis industry only broke $1 billion in total annual sales once, that being during the aftermath year of the pandemic that was 2021. In that year, the Oregon cannabis industry’s total sales peaked at a staggering $1.2 billion. Since then, total sales have continuously and noticeably dropped throughout the state. In total, licensed cannabis retailers in Oregon sold approximately $944 million worth of cannabis products in 2023, down a considerable $39 million from 2022, which itself was already a year of declined overall sales.
While the usual suspects are at play when it comes to the continuing decline of the Oregon cannabis industry, such as their own illicit market issues to big cannabis companies exiting the state, a then-progressive decision made during the state industry’s infancy may be a major culprit in the current widespread problems and struggles plaguing that very industry. While other states such as Nevada and Washington put a limit on how many recreational cannabis licenses could be allocated, Oregon didn’t implement any such restriction.
Although this was a unique regulation at first, the aftermath was a gross market oversaturation seen in almost no other state of its size. In total, Oregon has approved an astonishing 3,000 licenses for cultivation, production, or retail sales of cannabis. For a state with a population of 4.2 million and a tourism industry that doesn’t reach the magnitude of other west coast states, it shouldn’t require an economics degree from an Ivy League school to see why this would cause significant issues. This fierce imbalance of supply and demand made overall retail prices decrease to historic lows also not seen in any other state’s legal industry, with the average item price dropping $15.01 in February 2023 to $13.93 in February 2024 according to data aggregate site Headset.io.
From both a total sales and simultaneously a job creation standpoint, Oregon has suffered tremendously over the past year due to many high-profile exits from the state’s slumping industry. We expect to see even more exits, downsizing, and restructuring in the coming months as businesses struggle to stay afloat and make ends meet.
The oversaturation of Oregon’s cannabis industry is on the front end of problems the state and interested parties are trying to address. Moratoriums have been set up over the years starting in 2018 to cease from assigning further licenses, and the Cannabis Industry Alliance of Oregon (CIAO) is requesting that lawmakers and officials with the Oregon Liquor and Cannabis Commission continue this most recent moratorium set to expire in April. The bill has already passed through both houses and CIAO believes it will be signed by the Governor.
While there’s no way to directly address and possibly remedy the millions in total lost annual revenue, the moratorium on licenses may provide a small but assured remedy to the substantial problems that the Oregon cannabis industry has continuously been facing. Or at least it might be a first step. Oversaturation is certainly not the only problem facing Oregon’s cannabis industry, but if it is not addressed it could be devastating.
The post Saving Oregon’s Cannabis Industry appeared first on Harris Sliwoski LLP.
As the first sign in the zodiac, Aries leads—and this April promises high-octane cosmic action, including an eclipse and Mercury retrograde. Here are the best cannabis strains for each sign to make the most of this month.
The post Star signs and cannabis strains: April 2024 horoscopes appeared first on Leafly.
