A client not too long ago asked me for a lawyer referral in a state exactly where we don’t have an lawyer on the ground. It was for a real estate and marijuana license acquisition deal with all the usual complications: finding approval from state licensing authorities and local authorities, receiving money into escrow from quite a few sources, engaging in (extremely) last minute face to face negotiations, and recording property and security interests using the state and county. It’s the type of deal exactly where the client wanted boots on the ground, which tends to make sense. So, I gave our client the name of a neighborhood attorney we know and respect. Unfortunately, that attorney just happened to become representing the other side of the deal and so he was conflicted out. The client asked to get a different referral, and, depending on what we saw available, we basically couldn’t come up with one we trusted to accomplish additional than just undergo the motions on our client’s behalf.
Far too a lot of lawyers with small to no business law experience are branding themselves as “cannabis lawyers” these days just mainly because cannabis is often a “hot” legal region. And pretty few of those so-called cannabis lawyers meet what we contemplate the minimum needs to supply competent business counsel within the legal cannabis space. Listed below are a handful of points we think everyone hiring a business lawyer for their marijuana operations needs to be hunting for:
Criminal vs. Corporate Perspective: There’s practically nothing stopping a criminal attorney from studying a brand new set of abilities and transitioning to a predominantly corporate practice, but seasoned criminal lawyers have a tendency to possess a really various point of view than commercial lawyers in relation to corporate consumers, and in particular with regards to transactional perform. In Washington and California, for instance, many attorneys with criminal backgrounds advised their clientele to not spend state taxes since they didn’t want their clients “to incriminate themselves” by admitting to cannabis sales on tax types. That advice may possibly make sense when your target would be to keep your client from confessing to federal crimes, nevertheless it led to a large variety of marijuana enterprises incurring enormous interest and penalties as well as a number at some point had to shut down simply because of it. We nevertheless see the impact of this poor advice when we get a new client who failed to pay its taxes inside a timely matter be precluded from securing a license either in its home state or in one more state. A lot of what fantastic business lawyers do should be to add transparency to cannabis firms which is now essential by most states. For far more on this, check out Marijuana Business Self-Policing.
Boilerplate Bonanza: All attorneys have boilerplate templates. If a client wants a sales contract, I’ve several different sales documents I use to start the transaction. That stated, I then heavily customize these documents for every person deal due to the fact every deal usually demands various terms and situations. Too a lot of instances I’ve observed documents drafted by opposing counsel who did nothing more than “find and replace” for the parties’ names on a key document and after that ship it out for signature. People do not employ significant corporate attorneys to get that type of contract, they employ Legal Zoom. And, for marijuana corporations, that boilerplate contract is harmful simply because nine instances out of ten it’s going to not achieve the targets with the parties and it may set the parties up for imminent failure inside the deal. People use true corporate lawyers due to the fact they will need a contractual connection certain to them and to their circumstance, which is usually wildly complex given the continuous modifications to marijuana regulations. When you get the feeling that your lawyer is just filling out boilerplate types, you have an issue.
Scriveners: Equivalent to boilerplate contracts, clients really should also be on guard for “scriveners.” These are attorneys who basically translate a client’s requests, bar none, into legalese. Even though that may possibly appear like what a client desires, the client is not having the full benefit of actual counsel in that interaction. Your lawyer need to be asking you inquiries and/or pushing back on you, letting you know whether your deal points appear fair or unfair, no matter if they comply with regulations, what the liability is always to you for those terms, and whether the requested terms are typical or our on the ordinary course of business. Most importantly, your lawyer should really have carried out a great number of deals like yours that he or she can let you know in regards to the business and legal options you may have missed and about other comparable deals she or he has handled. Attorneys that practice inside the corporate space day in and day out have a one of a kind point of view that may add worth in negotiating the deal. If your lawyer is just transcribing your just about every want with no query or simply acquiescing to all your demands, you ought to be worried.
So, do not just go through the motions along with your lawyer and think you are protected inside your marijuana dealings. Your lawyer need to be taking an active corporate role as your protector and crafter of safeguards for the marijuana business. If they’re not, it will only be a matter of time just before it comes back to bite you and your business.
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