Cannabis business litigation is largely the same as other types of civil litigation: a pleading is a pleading, and a deadline is a deadline, regardless of your client’s profession. There are, however, a few nuances worthy of note. Should your firm join the growing number of firms that represent the businesses that cultivate, manufacture, distribute, and sell cannabis, there are several things with which you or your paralegal can expect to contend.
Cannabis clients have varying levels of business sophistication and there are pros and cons on each side of the scale. For example, a well-heeled investor lacking cannabis know-how might be able to provide corporate formation documents and other necessary files, but fail to appreciate how selling weed is different than selling widgets. Such a client may need an explanation of, for example, how the shelf life of cannabis affects a party’s settlement demand or why it matters that harvest season is approaching. On the other hand, a different cannabis client might not have their documents in order but be much more helpful than the investor in parsing the facts of the case.
A unique challenge arises in cannabis cases with respect to arranging for service of a summons and complaint. Rather than list an attorney or registered agent services company as their agent for service, cannabis companies often list a person from the company. Unsurprisingly, many who work in the industry—sometimes having done so since legal recreational cannabis was a pipe dream—are well-practiced at making themselves scarce. Furthermore, a business might be wholly inaccessible for a process server, such as dispensaries and secured processing facilities. A creative approach may therefore be key. You might be able to determine when and where service should be attempted through social media and Google searches, or by locating proofs of service on the same defendant in other cases.
Fact-gathering in cannabis cases is more likely to require a review of the client’s text messages than in other cases. Handshake deals were historically the standard approach to a cannabis transaction and remain common in the industry. Text messages may be the only source of information such as when a partnership formed or when it broke down. It may take some finesse convincing the client to relinquish their cell phone to an e-discovery vendor to extract the files, but it will likely be well worth the effort. Requests under California’s Public Records Act can also assist with fact-gathering and are especially fruitful in cannabis cases since many agencies collect data for regulatory and enforcement purposes. Note, too, that there is sometimes utility in demonstrating an agency lacks records pertaining to an adverse party.
When their business transactions go awry, cannabis companies are now able to seek relief in the judicial system. Much can be at stake when they do so. The ubiquity of cannabis in California (and, increasingly, the world) means that many in the legal profession here will benefit from familiarity with the foregoing issues and other issues affecting cannabis businesses.
About the author:
Kate Morin is a paralegal at Ad Astra Law Group, a civil litigation firm that focuses on real estate, employment, and cannabis-related business disputes.
