Kathryn McCall joins panel in “Structuring Enforceable Contracts in the Cannabis Industry: Managing Risk Under State and Federal Law” for Strafford

March 2019

The expansion of marijuana’s legal status nationwide has positioned the cannabis industry for massive growth and fueled a surge in cannabis-related business opportunities.

Besides individual entrepreneurs, many large and mid-sized companies have sought to tap into new revenue streams by pursuing contracts with businesses that have established cannabis-related operations. Contracting with such MRBs can be lucrative, but marijuana’s federal criminal status–and the patchwork of conflicting local, state and federal laws–means doing business in this industry triggers a highly distinct set of legal issues, particularly relating to contract validity and enforcement.

These issues give rise to contract challenges unlike those in any other industry. And while some courts show a trend toward robust enforcement of cannabis-related contracts, uncertainties persist on the enforceability of these agreements. Whether cannabis distribution engagements, company acquisition contracts, or third-party equipment-supply agreements, the risks of entering into a contract in the cannabis industry because of enforceability issues predominate.

But multiple innovative options are available for informed counsel representing companies contracting with MRBs, including specific contractual provisions addressing marijuana illegality, subject matter description, contract invalidation, choice-of-law and venue, severability terms, and mediation or arbitration.

Listen as our veteran panel of practitioners explains the unique considerations and legal risks facing MRBs and their partners, identifies specific techniques counsel should consider when entering into marijuana-related contracts, and provides hard-earned insights for drafting contractual terms that lead to high-yield, low-risk cannabis business arrangements.