MJBizMag February 2021 - 39

L
awsuits that can cripple or shutter
cannabis businesses represent a
growing problem for executives.
Ditto for lawsuits that can force an
executive out of a company after a
partnership with colleagues or investors
goes sour.
Lawsuits are not a new problem, to be
sure. But as the industry and individual
marijuana and hemp businesses succeed
and grow, so does their visibility,
which can attract admiration as well
as attention from unscrupulous rivals
willing to destroy companies in the
courtroom rather than compete with
them in the marketplace.
" The more popular and well known
these companies become, the more
they will get sued, " said Rachel Gillette,
who chairs the cannabis law practice at
Greenspoon Marder in Denver.
Of course, not all lawsuits are
frivolous. Cannabis businesses, like their
mainstream counterparts, often face
legal attacks because of genuine mistakes
relating to product manufacturing,
ignorance of labor and marketing laws
as well as failure to comply with state
regulations, among other issues.
In the following pages, we address
the most common litigation categories
that marijuana companies need to be
concerned about. They include:
* Product liability.
* Business partner and investor
disputes.
* Breach of contract.
* Employee relations and labor law.
* Workplace safety.
* Racketeer Influenced and Corrupt
Organization Act (RICO) lawsuits.
* U.S. Food and Drug Administration
and Federal Trade Commission
violations.
There are strategies to win these
specific types of legal battles. It's less
costly and damaging, however, to avoid
the legal battles in the first place-and
there are strategies for that, too.
One of the growing pains of a
maturing industry such as cannabis
is increased litigation. But marijuana
executives can work to prevent
litigation with some basic strategies:
* Keeping abreast of regulatory
changes and manufacturing
compliant products is far more
cost-effective than cutting corners
and paying for it later.
* Many cannabis executives and
investors still don't draft contracts
and other paperwork, leaving
them exposed to lawsuits or other
business claims. Always have
a lawyer review contracts and
other legal documents before
signing them.
* Cannabis companies need
insurance coverage for issues such
as product liability to help handle
losses in the event of a claim. The
insurance industry is getting better
at serving the cannabis industry.
* RICO lawsuits aren't as common
as they were a few years ago, but
they remain a threat to marijuana
companies. Opening your business
in a cannabis-friendly location is
one way to avoid such legal actions.
* The U.S. Food and Drug
Administration and Federal Trade
Commission increasingly are
cracking down on producers of
CBD products for making health
and disease claims. Avoiding
certain language can help keep
authorities at bay.
Companies that take steps to limit
their liability can avoid having to open
their wallets to settle lawsuits and pay
penalties-as some cannabis companies
have been forced to do.
Strategies for avoiding and winning
lawsuits are presented in the following
pages with the intention of providing
companies with a guide to establish
legal policies and defenses to protect
themselves.
- Omar Sacirbey
February 2021 | mjbizdaily.com 39
http://www.mjbizdaily.com

MJBizMag February 2021

Table of Contents for the Digital Edition of MJBizMag February 2021

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