Lit & Legit Business Briefs – Week 3
In the cannabis industry, informal agreements or “handshake deals” can be one of the fastest ways to create costly disputes. Cannabis ventures often involve multiple partners, investors, and management roles, and the stakes are high because the business is heavily regulated. Verbal agreements leave critical details undefined, creating uncertainty around equity ownership, profit sharing, intellectual property rights, licensing control, and decision-making authority.
Regulators in most states, including those overseeing medical or adult-use cannabis programs, require full disclosure of ownership and financial interests. Failing to properly document ownership or management arrangements can jeopardize licenses, invite audits, or even trigger enforcement actions.
By formalizing agreements in writing, cannabis businesses protect everyone involved, reduce the risk of litigation, and establish a clear structure for managing the company. Written agreements also make it easier to attract investors, secure financing, and plan for growth because expectations are transparent and enforceable.
If the deal matters enough to build a cannabis business around it, it must be documented. Taking the time to create clear contracts early can save years of conflict, lost revenue, and regulatory headaches.
Whether you’re launching, growing, or navigating new challenges, Joshua S. Bauchner and Natalie C. Diaz are here to support your cannabis business.