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Our cannabis business attorneys regularly handle transactions involving the purchase and sale of licensed cannabis businesses. These deals often move fast, with brokers rushing both sides toward closing—frequently without regard for applicable diligence and cannabis regulations. The worst-case scenario is when a company comes to us after executing a seller drafted purchase agreement without having done any due diligence on the purchase. Buyer due diligence is not a luxury—knowing exactly what assets and liabilities you will be acquiring is essential.
While we can’t cover everything in this blog post, below are vie key due diligence items you must understand to help protect yourself and your investment.
This is the number one priority. Laws and compliance obligations for cannabis businesses can vary widely by state, county, and city. As with any business, but especially a cannabis business, it is essential to know the state and local licensing/permitting requirements for acquiring, operating, and locating a license. As we have seen many times over the years, buyers sometime discover too late that:
Before buying a cannabis business, at a minimum, you should confirm that:
Failing to verify these items could leave you owning a cannabis business that can’t legally operate.
Cannabis businesses are heavily regulated and there are usually onerous regulatory procedures in place for changes in ownership. Generally, sellers must disclose the buyer (including, buyer’s members, officers, shareholders, etc.), and those individuals must be vetted and approved by regulators. Sometimes these regulatory approvals must occur before a license can be transferred. This can often take weeks or even months, which is why understanding this timeline is important. Closing a transaction before the license transfer is approved could lead to buyer paying for a license it won’t receive. To prevent such a situation buyers should, at a minimum:
Never rely solely on what a broker or seller says—always confirm the process with your cannabis attorney.
Disputes over ownership and authority are all too common in this industry, often due to outdated or nonexistent governing corporate documents. We often see buyers who enter into purchase agreements based on nothing more than the word form a single member/shareholder in a multi-owner entity. Generally, the sale of a multi-owner business will require more than just one member/shareholder to approve of the sale. To ensure the sale is authorized by the seller—for both asset and equity sales—buyer must review the corporate records, including, at a minimum, the businesses’:
It is not enough to accept only what is given to you. You must also receive written confirmation from seller in the purchase agreement that the documents provided are current, valid, and everything that exists. By reviewing these document a buyer will better understand (among other important things):
Ignoring seller’s corporate governance can lead to a legally defective transaction—one that other owners of seller may challenge or refuse to honor.
When buying a business, buyers sometimes overlook the real estate—whether owned or leased—that will be acquired in the transaction. As part of diligence, buyers should request a full list of all real property interests, to understand, at a minimum whether the:
If a buyer’s goal is to relocate the business, the lease terms could prevent that—or impose serious penalties. Boilerplate leases often don’t meet cannabis compliance standards, so a careful review is critical.
Cannabis businesses, particularly those that started informally, often lack proper documentation. This makes it crucial to vet the company’s financial obligations thoroughly—especially if you’re buying the company itself, not just its assets. Require the seller to disclose all contracts and agreements—written or oral—and include strong representations and warranties in the purchase agreement. This helps ensure:
Even the best-drafted purchase agreement can’t uncover every risk. Ensuring you conduct diligence on the five topics discussed above will help but will still likely miss important information. That is why involving a knowledgeable cannabis attorney early in the process can save you significant time, money, and heartache in the long-run.
Choosing the Right Business Entity in the Cannabis Industry
One of the most fundamental questions facing any entrepreneur – whether in the cannabis industry or elsewhere – is:
“What type of business entity should I choose?”
This is a deceptively complex question, although we’ll try to make it seem simple here. When you ask your lawyer or accountant, their first response will likely be “it depends,” and that’s because it does in fact depend. They’ll follow up with a series of at least ten follow-up questions designed to uncover your goals, your business model, your partners’ expectations, and the nature of your financing. Some of these questions are tax-related, others are regulatory, and still others revolve around investor relationships, control, or operational flexibility.
First, though, let’s address a foundational question many new entrepreneurs ask:
“Is it really necessary to form a business entity?”
The short answer is yes. A properly formed and maintained business entity is quite literally what puts the “limited” in “limited liability company.” These entities, whether LLCs, corporations or others, help shield your personal assets from the liabilities of your business(es). But liability protection doesn’t stop there—you also need proper insurance coverage and capitalization, in addition to well-drafted contracts. These are essential tools for managing risk and sleeping well at night.
Some industries are relatively low-risk (spoiler: cannabis is not one of them). Some entrepreneurs may be “judgment-proof” (meaning they have few personal assets at risk), but that’s not usually the case when launching a serious business. And some business owners like to operate without legal or financial safety nets—but they rarely last long. The bottom line is this: forming a business entity is an inexpensive and vital foundation for building a strong, credible company. Don’t skip this step.
Let’s walk through some of the key questions that will shape your entity selection:
Tax-Related Questions
Regulatory Questions
Mission and Purpose Questions
Financing-Related Questions
Control and Flexibility Questions
Your answers to these and other questions will guide your legal and tax advisors in helping you choose the best business entity and structure. For example, just because you’re using an LLC doesn’t mean you can’t elect to be taxed as an S or C corporation. You just need to understand the implications, make the election in a timely manner, and coordinate closely with your attorney and accountant.
Key Considerations for Cannabis Businesses
Choosing a business entity isn’t just a legal formality—it affects everything from how you pay taxes to how you raise money and protect your assets. In the cannabis space, these issues are even more critical due to:
Now let’s look at the actual entity types you can choose from, along with their pros and cons in this highly regulated and risk-intensive industry. Below is a breakdown of the most commonly used business structures, how they function, and how they align—or conflict—with cannabis business needs.
Summary: This is the default business structure for anyone doing business without forming a legal entity. It is not a separate legal entity from the individual owner.
Pros:
Cons:
Bottom Line: Not advisable for cannabis businesses, which face high liability and regulatory risks.
Summary: Two or more people conducting business together without forming a separate entity.
Pros:
Cons:
Bottom Line: Like sole proprietorships, general partnerships lack liability protection and structure—making them generally unsuitable for cannabis ventures.
Summary: A flexible, hybrid entity that offers liability protection with pass-through taxation by default.
Pros:
Cons:
Bottom Line: LLCs are a top choice for cannabis operators due to their flexibility, liability protection, and compatibility with both simple and complex ownership structures. However, they can leave the owners exposed to unexpected tax bills, and this problem is especially acute in the cannabis industry thanks to IRC §280E. Cannabis businesses should use LLCs cautiously.
Summary: A corporation that elects pass-through taxation under Subchapter S of the Internal Revenue Code.
Pros:
Cons:
Bottom Line: Can be useful in smaller cannabis operations with simple ownership and limited capital needs, but often too restrictive for multi-owner or investor-driven models. Like LLCs, they can leave the owners exposed to unexpected tax bills thanks to IRC §280E, and should be used cautiously.
Summary: A standard corporation taxed separately from its owners.
Pros:
Cons:
Bottom Line: Best suited for cannabis businesses that plan to scale quickly, raise significant capital, or eventually go public. Also well-suited for cannabis businesses that might have a sizeable number of non-deductible expenses under §280E and/or want to avoid any unexpected tax bills for their owners.
Summary: A mission-driven entity that reinvests profits, if any, to further its stated purpose rather than distributing them to owners.
Pros:
Cons:
Bottom Line: Only appropriate in very narrow circumstances, such as state-mandated medical cannabis collectives. Not a fit for most modern cannabis businesses.
Final Thoughts
There’s no one-size-fits-all solution. An LLC taxed as a partnership may be perfect for a small, family-run dispensary, while a C corporation may be the best choice for a multi-state operator planning to go public. You can often change your tax election or convert your entity later, but doing so requires careful planning and timing.
That’s why it’s essential to work closely with legal and tax professionals who understand the cannabis industry and your long-term goals.
Have questions about how to structure your cannabis business or ready to form an entity? Reach out—we’re here to help.
| Feature | LLC | S Corporation | C Corporation | Nonprofit Corporation |
| Liability Protection | Yes | Yes | Yes | Yes |
| Taxation | Pass-through (default); can elect C or S tax status | Pass-through (must file IRS Form 2553) | Double taxation (corporate and dividend levels) | Exempt from federal income tax; must operate for charitable purposes |
| Ownership Flexibility | Unlimited members; no restrictions on nationality or residency | Up to 100 shareholders; must be U.S. citizens or residents | Unlimited shareholders; no restrictions on nationality or residency | No shareholders; governed by a board of directors |
| Stock Classes | Unlimited | One class of stock | Multiple classes of stock | No stock; members have voting rights |
| Ideal for Cannabis Industry | Yes; offers flexibility and liability protection | Yes; suitable for small, closely-held businesses | Yes; preferred by investors and for scaling operations | Only for specific purposes; not suitable for profit-driven cannabis businesses |
| Investor Appeal | Moderate; depends on structure and state laws | Moderate; less appealing to venture capital due to restrictions | High; preferred by venture capitalists and for public offerings | Low; primarily for donors and grantmakers |
| Management Structure | Flexible; member-managed or manager-managed | Managed by board of directors and officers | Managed by board of directors and officers | Managed by board of directors; no owners |
| Regulatory Compliance | Moderate; varies by state and business activities | High; must adhere to IRS regulations for S corporations | High; subject to corporate governance and tax regulations | Very high; must comply with nonprofit laws and regulations |
| Profit Distribution | Flexible; can allocate profits and losses disproportionately | Based on stock ownership percentage | Based on stock ownership percentage | Profits must be reinvested into the organization’s exempt purposes |
| Formation Complexity | Moderate; requires state filing and operating agreement | High; requires incorporation and IRS election | High; requires incorporation and adherence to corporate formalities | High; requires incorporation and compliance with nonprofit laws |
Cannabis businesses are usually structured as limited liability companies (LLCs)—and for good reason. LLCs offer far more flexibility than corporations, which are bound by rigid governance rules. To take advantage of this flexibility (and for many other reasons), LLC owners—called members—need a well-drafted operating agreement. Below, we look at a few critical reasons why cannabis LLCs shouldn’t operate without one.
Cannabis entrepreneurs often worry about legal costs, especially in the early stages. The good news is that LLC operating agreements don’t need to be overly complex or expensive. Unless the business has a highly customized structure or multiple classes of equity with distinct rights, a straightforward agreement is usually sufficient. For simpler businesses, the cost of preparing an operating agreement can be quite manageable.
That said, trying to draft an agreement without legal counsel is risky. Many entrepreneurs attempt to piece together documents on their own, but this often leads to mistakes that can cause significant legal and financial problems down the line. LLC law contains subtle legal nuances—particularly in the highly regulated cannabis industry—that require professional insight to navigate properly.
Starting a cannabis business is costly, and it can be tempting to skip “optional” documents like operating agreements. But that’s a major misstep. Without an operating agreement, cannabis LLCs can face serious issues:
Banks and financial institutions may refuse to open accounts without basic governance documents.
Regulators may require licensees to provide operating agreements as part of compliance.
In some states operating agreements are required by law.
In states where operating agreements are optional, companies without them are governed by default state law, which may not reflect the members’ intent, is often much more rigid, and may lead to uncertainty in situations not exactly addressed by state law.
Ownership and management confusion is common. Without an agreement, it’s hard to prove who owns what percentage, who controls what decisions, and how profits or losses are allocated.
These are just a few examples of why skipping an operating agreement is a bad idea.
One of the most common failure points for cannabis businesses is equal ownership without a plan for resolving disagreements. When two members each own 50% of a company, deadlock becomes a real threat—and without a clear decision-making structure or tie-breaker, the business can grind to a halt. This kind of deadlock has sunk more cannabis companies than you might think—and it’s completely preventable.
Operating agreements should include deadlock resolution provisions and other clear governance rules. Beyond that, they define who manages the company, how profits are distributed, what happens during capital calls, and more. Having these rules in place from the beginning reduces the likelihood of costly internal disputes later on.
Picture a cannabis company that starts with two friends and a handshake. Later, more investors and team members come in, and the company grows. Suddenly, that informal or barebones agreement isn’t enough. But by then, making changes requires unanimous member approval, and not everyone may agree—especially if changes would alter ownership rights, profit distribution, or control.
This is why cannabis companies need strong operating agreements from day one. The effort and investment up front can save immense legal costs, delays, and member disputes down the road.
While no operating agreement needs to cost a fortune, getting it right is a long-term investment in the company’s future. A solo entrepreneur might not need a complex structure—but someone planning to raise capital or expand their team certainly does. Taking the time to align your agreement with your business vision from the beginning is one of the smartest moves a cannabis founder can make.
Find the best high-potency hemp products of 2025. Leafly reviewed popular hemp products & chose the top picks for different needs & budgets.
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A breakdown of the situation regarding hemp, cannabis, and THCA—courtesy of The Hemp Doctor.
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There are many ways to set up a cannabis business, and we like to think that we’ve seen them all. But there’s probably no worse category than 50/50 ownership of a business– a recipe for all sorts of disasters. Let’s look and why that is, and some ways to avoid it.
When I talk about 50/50 ownership, I mean two people or entities who own all of the voting rights in a business. For example, this would mean two people who each own half of the voting shares in a corporation; or half of the membership interest or units in an LLC. This is an extremely common set-up for smaller companies where two partners may want to have equal control of a business (I may use the term “partner” in this post for ease of reference, even though they’d be referred to as shareholders in a corporation or members in an LLC). But we’ve even seen bigger or more established companies propose 50/50 joint ventures.
50/50 ownership means that any decision that must be put to a vote effectively needs unanimous approval. Most partners are aligned at first, but over time a business will have its ups and downs. This is when partners’ visions for the company often drift apart– especially where a company is underperforming or has taken on a lot of debt. If partners disagree, votes won’t succeed and the company will grind to a halt.
In cannabis, it’s common for someone with zero cannabis experience but lots of money to link up with someone with tons of experience and no money. Inevitably, some big decision will need to get made. The “experience” partner will want to go one way and justify it with their years of experience in the industry. The “money” partner will think the decision is too risky or not smart and will say “I’m the one putting in the cash, I want to call the shots.” This isn’t just a problem in money v. experience partnerships. It happens in all forms of 50/50 partnerships.
What will inevitably happen is one of the partners will lawyer up and ask a lawyer to help them fix the issue. The first thing any (good) lawyer will do is ask to see all corporate governance documents of the company–things like bylaws or a shareholder agreement for a corporation or an operating agreement for an LLC. Here are the three most common scenarios:
The good news is that there are a lot of ways to avoid this scenario, such as:
You may be thinking this is all overly dramatic. It’s not. Our cannabis litigators have seen partnerships fail countless times, where issues could have been avoided with a little diligence and investment.
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For many cannabis brands, licensing their trademarks can be a savvy business move (for more information on cannabis trademarks generally, check out our webinar, Trademarking Cannabis: Cutting Through the Legal Haze). But it also comes with its own set of challenges. Unlike in most industries, cannabis operates in a complicated legal gray zone — which means you can’t just grab your standard trademark agreement and call it good.
Here’s what you need to know if you’re thinking about licensing your cannabis brand.
Under federal law, cannabis with more than 0.3% THC (that is, marijuana) is still classified as a controlled substance. Even some products with 0.3% THC or less — including those derived from hemp — may run afoul of the Federal Food, Drug, and Cosmetic Act (FDCA), particularly if they’re sold as food, beverages, or dietary supplements. As a result, the U.S. Patent and Trademark Office (USPTO) won’t register trademarks used on federally unlawful products, even if those products are fully legal in certain states.
That makes federal trademark protection tricky for most cannabis goods. You might still get some coverage under state trademark laws, or for federally legal products like hemp-based cosmetics or branded merchandise — but it takes a strategic approach.
Since federal trademark law offers limited protection in the cannabis space, state law becomes the key player — at least for marijuana-related products (some hemp products are federally lawful). Each state has its own rules, and they vary widely.
Some states require trademark license agreements to be disclosed. Others may treat the licensor — the trademark owner — as a “true party of interest” in the cannabis business, especially if the licensor receives royalties or has any operational involvement. That can trigger licensing obligations, background checks, or other compliance requirements.
Before finalizing a licensing arrangement, get clear on the cannabis regulations in the state where the licensee operates, and work with counsel who knows that terrain.
Cannabis regulators in many states will want to review your license agreement, and possibly your compensation terms, ownership structure, and even background information on key executives. This isn’t a file-it-and-forget-it process.
Depending on the jurisdiction, disclosure might be required before or after execution of the license. Some states mandate disclosure no matter what, while others require it only if specific thresholds are met (like receiving a percentage of profits or revenue). Know what triggers disclosure — and when and how to submit it — to avoid unnecessary delays.
A big part of licensing is brand protection. You want to make sure your trademark is only used on products that meet your quality standards. But in the cannabis space, too much control over the licensee’s day-to-day operations can cause problems.
In some states, that kind of oversight can make you look like you’re actually part of the cannabis business, which could trigger licensing requirements or even liability. To reduce risk, focus on quality control terms that protect your brand — like requiring testing, packaging approval, and the right to inspect — without dictating how the licensee runs their business.
Licensing fees can be structured in many ways — flat fees, royalties, tiered payments based on performance. But in states like Washington and Oregon, receiving a percentage of the licensee’s cannabis revenue may make the licensor subject to cannabis licensing laws.
To avoid triggering “true party of interest” status, many licensors opt for flat fees or capped variable fees instead. Some states, such as New Jersey, may also require that the deal reflect fair market value, adding another layer of compliance.
And don’t forget: many cannabis businesses still operate on a largely cash basis due to banking restrictions. Be sure your agreement spells out acceptable payment methods and includes solid recordkeeping and audit provisions.
Due diligence matters on both sides of the agreement.
If you’re the licensor, make sure the licensee is fully licensed, operating legally, and in compliance with applicable cannabis regulations. Any slip-up on their part could damage your brand — and your trademark rights.
If you’re the licensee, confirm that the licensor actually owns the trademark and has rights to license it. Look at registrations, usage history, and whether the mark is in good standing. Also watch out for potential conflicts — like another party using a confusingly similar mark in the same space.
Contracts Need to Be Tailored
Generic licensing templates don’t work here. Cannabis trademark licensing agreements need to be built with the industry’s risks and regulatory realities in mind — from quality control to disclosure obligations to compensation structures.
It’s also wise to include cannabis-specific provisions, like a waiver of the federal illegality defense — a clause stating that the agreement remains enforceable even though cannabis remains illegal under federal law. Courts in some states have upheld such provisions, giving your agreement a better chance of surviving legal challenges.
Licensing a cannabis trademark can be a powerful tool for brand expansion or collaboration. But it’s not plug-and-play. The regulatory framework is evolving, and the risks are real.
With thoughtful structuring, sound legal advice, and a well-drafted agreement, you can create a licensing deal that protects your brand and respects the rules — while helping your business grow.
Need help navigating the cannabis licensing landscape? We’re here to help.
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Live resin and live rosin carts and pods across the US.
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As economists overwhelmingly question the Trump Administration’s tariff policy, one has to wonder if there is a deeper strategy behind his seemingly chaotic moves?
While President Trump’s recent push for sweeping tariffs and saber-rattling on global trade might look like bluster or protectionism on the surface, there’s a theory that it’s something far more calculated—a deliberate market destabilization that could further benefit the wealthy and consolidate power.
Here’s how the theory goes: by pushing policies that trigger investor fear—such as unpredictable tariffs, fiscal brinkmanship, or policy paralysis—President Trump could be intentionally rattling the markets. That fear, and related administrative actions (i.e. erratic tariffs) are causing stock prices to fall. And when that happens, those with excess cash, hedge funds, and other market players are ready to swoop in and buy assets at fire-sale prices.
It’s capitalism’s version of disaster profiteering. And if you have the liquidity to play the game, there’s massive upside. The losers? Everyday investors, 401(k)s, small business owners, and workers.
But this tactic isn’t new. It echoes strategies used by private equity firms for years: break the system, buy the pieces, and rebuild it in your image—with greater control and profit.
Nowhere might disaster profiteering end up being more devastating—or more opportunistic—than in the cannabis industry.
The U.S. cannabis sector has long been caught in limbo: legal in most states, but still a Schedule I substance federally. That classification means cannabis businesses are blocked from traditional banking, prevented from listing on U.S. stock exchanges, burdened by Section 280E tax rules, and viewed as risky by institutional investors.
While the FDA has recommended moving cannabis to Schedule III, and the DEA has been reviewing that recommendation for months, the process is currently stalled. Many expected movements in 2024—but the delay has stretched into 2025 and it appears likely to extend into 2026.
Many cannabis companies—especially multi-state operators (MSOs)—have massive debt maturing between now and the end of 2026. As much as $3 billion in debt will come due for major U.S. Cannabis operators by the end of 2026. We are already seeing some if this play out:
Most debt-strapped cannabis companies are banking (pun intended) their survival on cannabis moving into schedule III. Such a move would provide relief from 280E and immediately increase a cannabis operator’s bottom line. Improved margins could provide cannabis companies the ability to cover debt payments, seek new investors, and restructure current debt. But if the DEA fails to act, and soon, leaving 280E in place, a wave of insolvencies could follow.
Disaster for current operators, but an opportunity for savvy investors.
If rescheduling is materially delayed—or worse, outright denied—the fallout would create a flood of distressed cannabis assets. Licenses, equipment, inventory, intellectual property, and operating entities could go up for sale at a fraction of their former value. And state regulators would need to aid facilitation in such sales and transfers. Otherwise, they risk these assets (mainly marijuana inventory) flooding the black market.
Not the pioneers who took the risks entering the state-legal market. Not the social equity mom-and-pop shops trying to compete with well-capitalized players. Instead, it will likely be private equity firms and wealthy individuals looking to consolidate power in one of the fastest-growing industries in America.
Marijuana will be federally legalized at some point. So, if you can buy current operations for pennies on the dollar, waiting out 280E won’t be as burdensome as it is for current debt-strapped operators. The risks associated with cannabis could further be hedged by those who also capitalize on the stock market instability.
Whether or not these unfolding scenarios are the result of deliberate strategy, one thing is clear: the cannabis industry is on the brink of a major shake-up. For some, this could mean painful exits, loan defaults, or restructuring. For others, it may represent the buying opportunity of a lifetime.
If you’re a cannabis operator facing mounting debt, stalled growth, or an uncertain future due to the rescheduling delay, you’re not alone—and there are still paths forward. From asset sales and strategic partnerships to financial restructuring, there are ways to exit gracefully or reposition for the next wave.
On the flip side, if you’re an investor, fund, or entrepreneur looking to acquire distressed assets, build a portfolio, or position yourself for the post-rescheduling boom, now is the time to start identifying deals and creating strategic entry points.
We’re here to help both sides of the equation—those who need a lifeline, and those who see the opportunity on the horizon.
Let’s connect. Whether you’re ready to sell, restructure, or invest, we can help you navigate the next chapter of cannabis. Reach out today, and let’s talk strategy.
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By: LMC Legacy to licensed is the motto for authentic New York brands entering the legal market. Two years ago, I sat with some of NYC’s top legacy pioneers from the New York market. Many of them are now licensed to operate legally as brands or retailers. Every time a state legalizes cannabis, there is […]
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We always say we aren’t giving legal advice on this blog. Here’s some, though: don’t use or sign a contract given to you by a broker for a transaction, unless that broker is a real estate broker, and unless the form is a real estate purchase agreement. Even then, you almost certainly want lawyer eyes on it.
If a broker is giving you a business agreement to use or to consider using in a cannabis business transaction—even as a template; even with disclaimers—the broker is either a) unscrupulous, or b) naïve, and most definitely c) creating a hazard.
What’s the hazard? For the broker, it’s a somewhat typical penalty here in Oregon: a fine of up to $600, or up to six months in county jail, or both. You can throw in possible professional discipline and/or a lawsuit by the damaged client. For the client, the parade of horribles may include transaction failure, loss of large sums of money, litigation, etc. Damages may also be more insidious, the likes of which the client may never fully appreciate.
In most (all?) states, a broker—or any non-lawyer—providing a contract for a party to use in commerce is too-often engaged in the “unlawful-” or “unauthorized practice of law” (“UPL”). States have consumer protection websites warning about UPL, which is the act of providing services that may only be provided by licensed attorneys. These websites typically say blunt, serious things, such as: “UPL is a crime” and “the State Bar [of California] works with law enforcement to investigate those who engage in UPL.”
Is there some nuance in the UPL consideration? Of course! But generally speaking, UPL statutes are broad because they are designed to protect consumers. Here in Oregon, for example, the State Bar advises that even someone who “drafts or selects legal documents” or “advises others of legal rights” engages in UPL.
What about that broker who is just trying to help you save costs, by giving you a “template form” for a transaction? A template with bold disclaimers, no less? Sorry, that is UPL. As the Oregon Supreme Court held in State ex rel Oregon State Bar v. Wright, 280 Or 713, 573 P2d 294 (1977):
Where defendant recommended particular legal forms to persons who were enrolled in his course in legal self-representation, defendant gave legal advice and was engaged in unauthorized practice of law.
Why am I writing this today? It’s not because we need the work. We have plenty, especially given all the cannabis lawyer attrition here in Oregon. I’d also wager that this post could cost my firm work, because some of what we have is cleaning up UPL messes (more on that below). Happy to lose that work.
I’m also not writing this because I don’t want people to use brokers (I refer people to brokers all the time), or because deals need to be complex or unduly expensive. As I wrote last month:
Most business deals are not particularly complex. If they are, you may be doing it wrong. The longer I persist as a lawyer, the more I lean on clients to keep it simple. You want agreements that are strictly necessary, bespoke, not overbuilt, and totally bombproof— or as close as you can get.
And, I might add, you want agreements that are drafted or reviewed by a lawyer. Your lawyer. (PRO TIP: nine times out of ten, it will be cheaper and faster for the lawyer to generate the agreement from that lawyer’s library, and tailor it to you needs; as opposed to fighting with some template sourced by non-lawyer parties.)
I digress. Ultimately, the reason I’m writing this because we keep seeing cannabis clients and potential clients being exposed or damaged by business or real estate brokers engaged in UPL. Here are three specific examples from just the past few months:
If I had the fortitude to go back several years, this list would be much longer. We’re interested in what comes next, though. I care about my clients and the industry I so often work in (and am getting old and surly, and suffer fools poorly); so I have written or called all three cannabis brokers listed above. I don’t ascribe bad motivations to any of them, but I do resolve to clean this up one way or another in Oregon cannabis. And believe I will succeed.
In the meantime, wherever you are, if a broker gives you a contract, or some other form of legal advice, stop. Remember that you would be following that advice, or using that form, at your very real peril. That is why the rules against UPL exist.
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