The cannabis industry is growing rapidly, and with that growth comes new opportunities and challenges. Cannabis businesses need to be prepared for the unique legal landscape they operate in. While the need for experienced legal counsel is a given, some cannabis businesses question whether they need a cannabis-specific attorney. The answer is almost certainly yes.
The following video comes from our Buzzkillas series of cannabis educational videos for business owners and key decision makers in the industry. Mia Getlin of Lotus Law answers the question: Do Cannabis Businesses Need A Cannabis-Specific Attorney?
A lot of a lot of people ask, "Do I really need a cannabis-specific attorney or a cannabis specific CPA?" And the answer is, if you have a cannabis business, yes, absolutely. You know, there are very unique issues that this industry faces. It is a highly regulated, federally illegal industry.
Everything we do from an operating agreement to a lease, most commercial leases say that the tenant can't violate any law, or they'll be in default of the lease. And I've seen leases like that for cannabis businesses. Well, I guess the client's immediately in default.
So it's things like that that jump to our attention, where we're going to modify the definition of applicable law to exclude federal law related to the status of marijuana under the Controlled Substances Act. Similarly, licensing and compliance issues. There are agreements for a transaction. For example, an asset purchase agreement might not look all that different from one for a non cannabis business. But there are some really key differences. We need to wait for OCC approval to close and you're going to have that in most states. You need the regulators to approve the transaction. You need to comply with licensing requirements.
If you have a cannabis business and one of your partners is arrested and charged with a felony that makes them ineligible to hold an interest in a licensed entity in your state, does your business's governing documents allow you to remove them from the company? And if so, what does that look like? And was it drafted to minimize the risk if you now end up in a dispute with bad owner?
And so there are a lot of things that really are unique to this industry. Additionally, in a lot of states, including Oregon, there's a lot of unwritten policy that the OCC for example, in Oregon follows, and if you don't work with the agency regularly, you simply are not going to know those policies. You're not going to know who to call when there's an issue.
Just as a cannabis business should not use a CPA that doesn't specialize in the industry, because of 280E implications, a cannabis business really should have a cannabis-specific business law attorney to work with.