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What is Cannabis Law?
For many years there has been debate in the U.S. as to if cannabis should be legalized. Recently, many states in the U.S. have legalized cannabis use for medicinal and recreational purposes, which opens a whole new set of business opportunities for U.S. citizens that were not available before. This being said, the cannabis industry is highly regulated by the government. There are specific U.S. Drug Enforcement Agency (DEA) guidelines that classify how much delta-9 tetrahydrocannabinol (THC) cannabis can contain before it is considered a Schedule I controlled substance. Additionally, only certain states have legalized marijuana use medically or recreationally, but consumption is still prohibited at the federal level. Any business-owner, financial or investment stakeholder, healthcare provider, or ancillary company that is involved in the cannabis industry will need to be on top of and comply with federal, state, and local laws as cannabis policies frequently change.
What areas of Cannabis Law does Blake Harris Law Offer?
The cannabis industry has allowed new business opportunities to flourish in many U.S. states. Despite exciting new business opportunities, any individual or company involved in cannabis-related markets or are tangentially involved will have to follow federal, state, and local laws and regulations. Each jurisdiction has its own set of licensing, compliance, labor, taxation, real estate, and regulatory issues (to name a few) that these cannabis-related businesses have to be aware of. It requires multidisciplined, experienced attorneys to advise on cannabis-related business issues and compliances.
At Blake Harris Law our strategic, cannabis attorneys can help businesses and investors sift through the legal regulations involving cannabis investments; cannabis international law; cannabis mergers and acquisitions; cannabis banking and regulatory compliance; cannabis corporate law; cannabis licensing; cannabis real estate, leasing and land use; and cannabis business development to ensure that your business is compliant and successful.
Cannabis Joint Ventures
Joint ventures do not always follow traditional business formations (i.e., LLC, C-Corporation) but it is rather a contract designed to share profits through joint activities between multiple businesses. We’re seeing an influx in joint ventures within the cannabis industry. Many of these investors have business savvy and a clear understanding of financing but they lack knowledge of the cannabis industry as a whole (e.g., manufacturing, distribution, regulations, sales, etc.). And, on the other hand, cannabis and ancillary businesses that have industry knowledge lack the capital or know-how to scale, and thus we see joint ventures as a popular partnership of successfully proven investors and businesses with cannabis operators.
Joint ventures are flexible and can be temporary. When a joint venture is contracted it allows both parties to remain individual entities yet partner with the goal of advancing the business activity and share expenses and profits resulting from the business activity. Joint ventures of this kind are attractive to cannabis operators because both parties share liabilities, each party gets to retain their own intellectual property, and capital is acquired faster than traditional fund raising, which enables the cannabis business to scale and enter new markets rapidly. Financiers find joint ventures attractive because they can get in and get out of the contract fairly easily, there is opportunity to expand revenue streams, and they do not have to enter into a business formation like a merger or acquisition would require.
Because joint ventures are flexible and don’t necessarily create one business entity, it is vital that the contractual agreement between all parties is thorough, negotiated appropriately, and specifically identifies each party’s operational expectations, liabilities, financial obligations and operational expenses, intellectual property ownership, and percentage of profits (among other things). Having a multidisciplined, marijuana business lawyer who understands how to negotiate and write joint ventures, and has an understanding of the cannabis landscape, will be useful when creating this kind of business deal.
Cannabis International Law
Not only has the U.S. begun to reform cannabis laws but other countries have as well and it’s not just for medical purposes. In Canada, for example, the government has federally legalized the wholesale of marijuana. With this being said some domestic cannabis businesses have begun to inquire about doing business internationally. To conduct cannabis-related business internationally is a detailed and intricate process where legal advisory is necessary. In order to do business internationally there needs to be an understanding of the laws specific to the country you are doing business in, an understanding of U.S. federal and state marijuana policies, corporate documentation, and a filing of the necessary paperwork to the appropriate international, federal, state, and local government entities. At Blake Harris Law, our marijuana business lawyers can assist with this. Listed below are some of the international cannabis legal services we offer:
- Business formation
- Cross-border and domestic financing
- Foreign direct investment
- International contract drafting and negotiations
- International employment contracts
- International fundraising
- International licensing
- International mergers and acquisitions
- International real estate
- Protecting international intellectual property
- Tax regulations domestic and foreign
Cannabis Mergers and Acquisitions
As the cannabis industry grows so do mergers and acquisitions (M&A) within the cannabis industry. And, as more states continue to legalize marijuana and the possibility of marijuana decriminalization at the federal level, there will be an increase in consolidation within the cannabis industry. While in the past few years, cannabis businesses and ancillary businesses may have experienced a merger or acquisition for cash flow and funding purposes, as more states adopt the legalization of marijuana, we’ll see an increase in strategic M&A for market expansion and consumer packaged goods business opportunities. No matter the reason for a M&A a legal advisor who is well versed in business law and the cannabis industry will be imperative to create a legal strategy favorable to both parties, assess regulatory risk, advise on negotiations, consider tax implications, obtain all necessary documentation (e.g., contracts, financing, operational agreements, employment contracts, etc.), strategize transaction structures, advise on securities, among a number of other issues depending on the structure of the merger or acquisition.
Cannabis Banking and Regulatory Compliance
Cannabis banking is highly complex and has to abide by regulatory compliance from the Financial Crimes Enforcement Network (FinCEN), the Federal Deposit Insurance Corporation (FDIC), as well as other federal agencies. Within the U.S., there are only a couple hundred banks and credit unions that will work with the legal cannabis industry. Not only are there very few banks that work with cannabis businesses but not every bank will work with every sector of the cannabis industry. For example, some banks will only work with CBD businesses while other banks may require very specific THC licensing and other banks may only work with businesses specific to medical marijuana. Depending on the operations of your cannabis business your banking options will be limited. Because of the few banking options available it is best to get some financial and legal advice on where to start and how to move forward. At Blake Harris Law, we offer a number of cannabis banking services including:
- Advise on compliances with the Financial Crimes Enforcement Network
- Advise on federal, state, and local filings
- Assist in finding the appropriate bank or credit union that is federally compliant to work with
- Assist in real estate transactions
- Counsel cannabis business owners on federal, state, and local cannabis law related to banking
- Counsel on anti-money laundering (AML) and Bank Secrecy Act (BSA) policies
- Following and interpreting federal legislation that impacts banking in the cannabis industry
- Review of loan structuring
Cannabis Corporate Law
The foundation of any successful business begins with well-drafted contracts, legal and financial documents, and funding. This type of foundation is especially important in the cannabis industry due to its inherent regulatory, operational, and commercial complexities as well as murky state and local policies that clash with federal law. In order to stay in legal compliance and avoid financial risk, it is best to have a cannabis business lawyer who is cross disciplined in business law. At Blake Harris Law we offer such cannabis-related business services from the start of your cannabis business throughout the business’ lifecycle. Cannabis corporate law services we offer include:
- Business formation
- Corporate restructuring
- Cross-border and domestic financing
- Employment contracts
- Fund formation and administration
- Joint venture
- Mergers and acquisitions
- Private equity
- Protecting intellectual property
- Securities law compliance
- Startup law
- Tax regulations
- Venture capital
Cannabis Real Estate, Leasing and Land Use
Purchasing real estate, leasing, and land use for any cannabis grower, broker, processor, or retailer requires legal counsel as there are many specific guidelines to follow under local, state, and federal regulations. Additionally, a traditional commercial or residential lease will not do. Depending on the sector of the cannabis business that your operations fall under (e.g., manufacturer, retailer, grower, etc.) the lease will be different. When it comes to cannabis real estate, leasing, and land use, our cannabis lawyers can offer legal assistance in the following areas:
- Compliance with local zoning ordinances
- Contract negotiations
- Differentiations between cannabis, marijuana, and hemp leases
- Grower registration, licensing, renewals, and permits
- Land leasing negotiations and agreements
- Land or real estate subleasing negotiations and agreements
- Land use water and power review
- Lease and contract terminations
- Lease provisioning on types of marijuana (medicinal or recreational), land use (e.g., selling, growing, processing, transporting, etc.), product (e.g., hemp, resin, marijuana, cannabidiol (CBD), etc.), among other necessary details that need to be added to a lease
- Legal due diligence
- Real estate and land purchase, including title and deed reviews
The cannabis industry is quickly expanding as more states and jurisdictions legalize marijuana. With that, licensing for cannabis business operations is changing regularly. At Blake Harris Law, our marijuana business lawyers keep abreast of changing state and local marijuana licensing and regulations that cannabis businesses need comply by to operate successfully. Legal services we offer include:
- Cannabis banking
- Cannabis business formations
- Cannabis real estate, leasing and land use licensing and permits
- Cannabis regulatory compliances
- Cannabis securities compliances
- City/county licensing and permits
- Licensing renewals
- Registering cannabis-related intellectual property
- State cannabis business licensing applications
Cannabis Business Development
Cannabis business development requires business formation, multiple licensing, legal operational contracts, and intellectual property protection. When considering your cannabis business or ancillary business you need to take into consideration how much ownership or control in a partnership you want to have of the business. This will indicate if you register for a LLC, S-Corp, or C-Corp. Once you’ve decided on that registration it will impact taxes, ownership of the company to raise funds, and other legalities.
Once the entity formation is established, this is a good point (if not sooner) to engage with an experienced cannabis business lawyer. A cannabis business lawyer will be able to assist you in licensing. Whether the company is growing, manufacturing, transporting, distributing, or selling cannabis there could potentially be multiple licenses needed per operational structure and each state and city/county will have different policies. Cannabis business attorneys are familiar with the types of licensing required for each operation and have a keen understanding of how to interpret the laws in the jurisdiction your cannabis company operates in so that your company can stay in compliance.
Once licensing is obtained, a cannabis business attorney can assist in contractual agreements necessary to operate your business (e.g., employment contracts, operating agreements, leasing and land use agreements, vendor agreements, etc.) as well as protecting any necessary intellectual property (copyright, patents, trademarks, and trade secrets) used to run your business.