Counseling a Cannabis-Related Business Overview

Practical Law 04/24/2019

This article provides an overview of the regulation of cannabis and considers the top legal issues faced by a cannabis-related business, focusing on the conflict between federal law and state laws where medical or adult use recreational marijuana is legal.

The emerging industry of cannabis continues to be one of the more intriguing in recent memory. With more states and countries legalizing cannabis in varying forms, the industry is likely to continue to expand. Many companies are moving into the cannabis business or expanding already existing businesses to meet the needs of the quickly growing cannabis industry.

Whether it is the harvesting of hemp for use in health products and clothing, the extraction of cannabidiol (CBD), one of cannabis' non-psychoactive cannabinoids with its proven health and wellness benefits, the cultivation and dispensing of different strains of tetrahydrocannabinol (THC)-containing marijuana for medical or adult recreational use from smoking, vaping, or ingesting edible products, or the multitude of ancillary cannabis-related companies, many of which need an infusion of capital from willing investors, the business opportunities in the cannabis world are vast.

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However, cannabis remains an illegal drug at the federal level, presenting numerous challenges for cannabis-related companies and their counsel. This Note examines the top legal issues that practitioners must consider when counseling either a plant-touching cannabis company or a more indirect cannabis-related business. This Note reviews:

  • Federal regulation of cannabis
  • State regulation of cannabis
  • The challenges arising from the conflict between federal and state laws in the following areas: banking,tax, employees and workplace considerations, bankruptcy
  • Specific challenges in the areas of real estate, intellectual property, and dispute resolution
  • Business structuring considerations
  • Divergent state and local laws

Read the full article published by Practical Law here.

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