As public support grows for the legalization of marijuana in the U.S. and Canada, mergers and acquisitions lawyers should be studying up now on the ins and outs of cannabis compliance. In the U.S., there are 29 states, the District of Columbia, and the territories of Guam and Puerto Rico, which have all legalized medical marijuana. In addition, there are nine states including Colorado and Massachusetts which have recently legalized the drug for recreational use.
As a result, there is expected to be a serious increase in marijuana-related mergers and acquisitions activity. Now is the time for lawyers to research and prepare for the types of problems that may arise.
One of the most serious issues related to conducting business or providing legal services in the cannabis industry is regulatory compliance and, specifically, the increased legal risk. Currently, the steps needed to ensure regulatory compliance are different depending on the type of deal.
The most popular types of business ventures seem to be minority businesses and venture capital investments into ancillary companies. These include dispensary advertising and delivery systems such as vapor (vape) pens and electronic cigarettes (e-cigs).
It’s important for mergers and acquisitions attorneys to come to terms with rapid
growing interest from clients. Typically, the first step is trying to outline the best practices for the client. An experienced attorney may be able to assist in developing compliance procedures to mitigate some of the risks.
Banks and insurers have so far been very unwilling to help with financing in the marijuana industry. The negative stigma attached to weed makes it far more difficult to wheel and deal as compared to other industries.
In January 2018, Attorney General Jeff Sessions issued a memo calling marijuana a “dangerous drug” and marijuana-related activity a “serious crime.” The current administration’s disapproval of the drug could have a negative effect on marijuana- related mergers and acquisitions. Therefore, attorneys who have experience navigat- ing the complexities of deals in the marijuana industry are expected to be in high demand for the foreseeable future.
George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. To contact The Health Law Firm, call (407) 331-6620 and visit the website at www.TheHealthLawFirm.com.