At Manzuri Law, our California corporate and business law attorneys cannot stress enough how essential well-drafted corporate documents are to the success of cannabis and hemp businesses.
Not only does the proper and legally binding paperwork provide a solid foundation for future growth, but it also develops the framework to withstand and resolve partner disputes and protect shareholders from personal liability.
Solid corporate documentation underpins the success of all types of companies, and is especially crucial to cannabis and hemp businesses, as the commercial, regulatory, and operational environment is exceedingly complex and challenging.
Due to the outright conflict between state and federal law and the labyrinth of state and local regulations in this space, experience and perspective are critical. That is where Manzuri Law excels.
Corporate structure has a direct impact on tax liability and legal liability for shareholders if the company becomes involved in any disputes with third parties, or if there are disputes among partners. Diligent corporate governance practices will only become more important with the growth of the industry, as both potential investors and regulatory agencies will pay more and more attention to corporate governance matters.
Comprised of a cross-disciplinary group of attorneys who are skilled in a full range of business-related needs, Manzuri Law can manage each aspect of your cannabis company’s foundation, pivoting structure, and growth.
Entity Selection and Business Formation
Corporate contracts establish a company’s relationships with the outside world, and define the rights, risks, and opportunities they face.
Many operators have traditionally relied on “hand-shake” deals with their suppliers, customers, and other third parties along the supply chain. While such deals can initially appear convenient and low-cost, unfortunately they offer little to no legal protection. As the cannabis and hemp industries become more mainstream and deal sizes increase, it is important to document all third-party agreements in binding, written contracts.
Well-drafted contracts provide a level of certainty to operators that allow them to plan and grow their business while limiting the downside. One popular type of contract in the cannabis industry is the management agreement, which gives an unlicensed consulting company authority to manage the operations of a licensed entity. This agreement must be carefully drafted to adequately protect the rights and interests of the licensed entity.
When business relationships are going well, contracts do not seem overly important; but when unexpected events challenge the mutual understanding of the parties or things take a turn for the worse, it is critical that a business be prepared. A contract not only sets expectations for each party’s actions, but also can protect a business from its counterparties’ misconduct, negligence or incomprehension.
Contracts typically include several protective sections, including representations and warranties, where each party promises that certain things are true; indemnification clauses, where a party protects the other from legal liability for bad acts; and an “entire agreement” clause, stating that any previous communications between the parties are superseded by the written contract. Each of these sections, and many others, mitigate risks for contracting parties, provide clarity and stability and enable businesses to conduct operations with confidence.
We have experience drafting the full range of contracts that a cannabis or hemp business may need, including:
Whether you are just getting started or would like to take a fresh look at what types of protection your current business structure and corporate documentation provide, our California corporate and business law attorneys provide end-to-end legal solutions for your cannabis and hemp industry needs.
Over the past decade, all too often clients have come to us later in the business cycle only for us to discover holes in their corporate structures that may present a myriad of issues down the line, from potential shareholder liability for the debts of the company, to missed financing opportunities from investors who backed out of a deal after getting a look at the poorly maintained records.
While it is best to establish a company with strong documentation right from the outset and maintain this trajectory throughout the growth cycle, currently operating companies that have not upheld proper governance practices can still remedy the situation and should ensure their corporate documentation is in good order.
Our knowledgeable cannabis business law attorneys will review your existing paperwork, assess your current corporate structure and operations, and update your documents to provide protection and help develop additional opportunities and growth in this highly regulated industry.
Whether you are just getting started, or are fully restructuring, contact one of our California cannabis and hemp law firm specialists at Manzuri Law today by phone at (310) 912-2960 or online to ensure your corporate documents are providing the proper protection and growth opportunities.
It is not required that a California cannabis or hemp business hire a lawyer to ensure their corporate structure and partnership agreements are properly formed. However, when businesses use online forms or non-attorneys to draft important corporate documents, they risk creating ambiguities or other situations that lead to litigation instead of providing the certainty and guidance that was intended by the parties.
There are many exceptions to verbal contracts being enforceable, as they can sometimes be difficult to prove because the evidence of their existence is less certain. Our experienced corporate and business law attorneys in California can advise on the potential enforceability, defenses, and litigation strategies available for oral contract disputes.
Corporate structure has a direct impact on tax liability and legal liability, whether your California cannabis or hemp business is run by just you or includes partners or shareholders. Whether you anticipate growth, or are simply happy with your existing operations, you will need to protect your business and personal property from liability from the start by organizing your corporate structure properly.
One of the main reasons cannabis and hemp companies incorporate is to shield the owners of the business from the debts and creditors of the business. In general, a properly formed and maintained entity will act to shield its owners from liability.