Is my Cannabis Business Lawyer Undertaking Enough for My Marijuana Business?

Posted by Thomas Shaw on February 22nd, 2019

A client lately asked me to get a lawyer referral inside a state where we do not have an attorney around the ground. It was for any real estate and marijuana license acquisition deal with each of the usual complications: getting approval from state licensing authorities and regional authorities, having money into escrow from many sources, engaging in (very) final minute face to face negotiations, and recording property and security interests together with the state and county. It’s the kind of deal exactly where the client wanted boots on the ground, which makes sense. So, I gave our client the name of a regional attorney we know and respect. Regrettably, that attorney just occurred to be representing the other side with the deal and so he was conflicted out. The client asked for a various referral, and, based on what we saw on the market, we basically couldn’t come up with one we trusted to do more than just undergo the motions on our client’s behalf. Get a lot more details about marijuana attorney

Far also numerous lawyers with small to no business law experience are branding themselves as “cannabis lawyers” as of late basically simply because cannabis is a “hot” legal location. And really couple of of those so-called cannabis lawyers meet what we contemplate the minimum requirements to supply competent business counsel in the legal cannabis space. Listed below are some factors we feel any person hiring a business lawyer for their marijuana operations should be searching for:

Criminal vs. Corporate Viewpoint: There’s nothing at all stopping a criminal attorney from understanding a new set of expertise and transitioning to a predominantly corporate practice, but seasoned criminal lawyers have a tendency to possess a very diverse perspective than commercial lawyers when it comes to corporate clients, and in particular when it comes to transactional perform. In Washington and California, as an illustration, several attorneys with criminal backgrounds advised their clients to not pay state taxes simply because they didn’t want their clientele “to incriminate themselves” by admitting to cannabis sales on tax types. That tips could make sense when your target will be to hold your client from confessing to federal crimes, but it led to a sizable quantity of marijuana companies incurring massive interest and penalties plus a number at some point had to shut down for the reason that of it. We nonetheless see the influence of this poor tips when we get a new client who failed to spend its taxes within a timely matter be precluded from securing a license either in its home state or in yet another state. Lots of what very good business lawyers do will be to add transparency to cannabis organizations that is now needed by most states. For much more on this, verify out Marijuana Business Self-Policing.

Boilerplate Bonanza: All attorneys have boilerplate templates. If a client wants a sales contract, I have many diverse sales documents I use to begin the transaction. That mentioned, I then heavily customize these documents for each and every individual deal since each deal normally demands unique terms and conditions. As well lots of instances I’ve noticed documents drafted by opposing counsel who did absolutely nothing more than “find and replace” for the parties’ names on a key document and then ship it out for signature. People do not hire severe corporate attorneys to acquire that type of contract, they employ Legal Zoom. And, for marijuana businesses, that boilerplate contract is unsafe since nine times out of ten it's going to not accomplish the objectives with the parties and it can set the parties up for imminent failure in the deal. People use real corporate lawyers since they want a contractual connection certain to them and to their situation, which could be wildly complex provided the continuous modifications to marijuana regulations. In case you get the feeling that your lawyer is just filling out boilerplate types, you might have an issue.

Scriveners: Equivalent to boilerplate contracts, customers must also be on guard for “scriveners.” These are attorneys who merely translate a client’s requests, bar none, into legalese. Even though that may perhaps appear like what a client wants, the client is not obtaining the complete benefit of actual counsel in that interaction. Your attorney needs to be asking you questions and/or pushing back on you, letting you understand regardless of whether your deal points appear fair or unfair, irrespective of whether they comply with regulations, what the liability will be to you for all those terms, and irrespective of whether the requested terms are typical or our from the ordinary course of business. Most importantly, your lawyer need to have done countless deals like yours that he or she can tell you regarding the business and legal options you might have missed and about other similar deals he or she has handled. Attorneys that practice in the corporate space day in and day out have a unique viewpoint that could add worth in negotiating the deal. In case your lawyer is just transcribing your every single want devoid of question or simply acquiescing to all of your demands, you should be worried.

So, do not just undergo the motions along with your attorney and consider you’re protected in your marijuana dealings. Your lawyer should be taking an active corporate part as your protector and crafter of safeguards for the marijuana business. If they’re not, it'll only be a matter of time ahead of it comes back to bite you and your business.

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Thomas Shaw

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Thomas Shaw
Joined: March 17th, 2018
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