Will a Court Enforce a Cannabis-Related Business Contract?

In the United States, federal law states that selling cannabis is illegal. Since 2012, however, almost half of the country has legalized it at a state-wide level, including (very recently) New York state. With that legality comes a quasi-legitimate new business industry and everything that accompanies it, such as contracts, investors, and stocks. At the same time, the federal/state divide over cannabis sales makes for some fascinating legal issues.

Cannabis is one of the fastest-growing American industries, no pun intended, with annual sales projected to hit $30 billion by 2025. So what should someone who has been legally wronged by a cannabis company do? 

Where you are filing your lawsuit and what specifically you are asking for from the court are important considerations when a dispute arises concerning a cannabis-related business contract. One of the classic tenets of contract law is known as “illegality.” Generally, it states that if any part of a contract is illegal, the whole thing is entirely void and indefensible.

The cannabis industry finds itself in an interesting spot: it is illegal at the federal level but legal at the state level. So, if a plaintiff brings a breach of a cannabis-related business contract action in a Federal Court, a Federal Judge may not enforce the contract on the grounds that it involves illegal activity. Yet, since cannabis is now legal in New York, a New York State Court Judge may rule differently.

One way to potentially avoid this issue is to commence an arbitration instead of running to the courthouse. In fact, the trend is for contracts made with cannabis-related companies to include an arbitration clause. Canales PLLC has participated in litigation concerning cannabis-related business disputes in the courthouse and before arbitration tribunals.

If you have a cannabis-related business dispute, you need the help of an experienced attorney. For more information, contact Canales PLLC.

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Canales PLLC

As a minority-owned law firm with experience across a broad range of industries and subject matters, Canales PLLC understands the importance of creating diverse, client-centered solutions that cater to each client’s particular needs.

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