The rapid expansion of legal medical and recreational cannabis in numerous states across the U.S. has opened up significant opportunities for new business ventures and investments. However, this highly regulated industry is subject to stringent licensing and compliance requirements, impacting such diverse areas as employment, agribusiness, capital markets, financial services and banking, land use, health care and intellectual property law.
Armstrong Teasdale’s Cannabis and Hemp Law practice area has significant experience advising and assisting companies in securing and keeping licenses to cultivate cannabis, manufacture cannabis-infused products, and dispense flower and infused products. The majority of Americans live in states with laws authorizing the cultivation and sale of medical cannabis, and a number of other states have commercial recreational cannabis industries. Almost all the remaining states authorize the production of hemp for commercial, research or medical purposes, including the manufacture of cannabidiol (CBD) to treat certain medical conditions such as epilepsy. Opportunities in the hemp space have multiplied with the passage of the 2018 federal Farm Bill, which excludes hemp from the Controlled Substances Act’s definition of cannabis. The United States Department of Agriculture has published rules governing state and federal licenses to lawfully grow hemp.
Along with the potential for new jobs and revenue, these expanding industries present numerous federal and state compliance burdens, which are often implemented through multiple regulatory agencies. In addition to direct regulatory oversight from licensing authorities, Armstrong Teasdale lawyers help clients comply with other regulators in this space, such as the Food and Drug Administration and the Federal Trade Commission. Our lawyers have experience in the following areas:
Application and Pre-Operational
- Advise on regulatory and competitive licensing requirements
- Prepare and submit competitive applications for business licenses, certifications and permits (state and local government)
- Procure land use entitlements and permitting
- Negotiate and draft real property leases and/or purchase agreements
- Advise and assist clients with choosing and organizing business structures and drafting governing documents
- Advise on ancillary business operation permitting (e.g. fire, building and health permits)
- Prepare operating policies and procedures
- Assist with pre-operational regulatory inspections
- Assist with legal due diligence, analysis and documentation of investments
- Handle legal due diligence, negotiations and preparation of contracts with business owners, banks, insurance companies, vendors and other business partners
Operational and Regulatory Compliance
- Prepare pre-inspection submissions (e.g. facility modifications, changes of ownership)
- Provide due diligence and compliance support including conducting facility pre-inspections/audits and readiness checks
- Schedule and attend regulatory inspections
- Prepare responses to statements of deficiency or regulatory corrections
- Representation in administrative hearings and proceedings for citations, fines and penalties
- Interface with local, state and federal governments on tax, securities and other regulated issues
- Advise on ongoing regulatory compliance questions and matters
Capital Raises, Financing and Banking
- Advise and assist with private placement memoranda (PPM), other offering documents, subscription agreements, and other documents to help protect clients from securities fraud claims
- Conduct audits and prepare compliance and legal opinions for financing and banking
- Confirm and author annual information statements for publicly traded companies
- Provide guidance on federal law and state banking regulations, including BSA/AML compliance requirements as they relate to cannabis-related business accounts and ancillary businesses that indirectly work with cannabis licensees
- Capital markets
Intellectual Property Protection
- Counsel on intellectual property matters with respect to state trademark applications, as well as trade name and patent registrations
- Negotiate and prepare branding, licensing and white-labeling agreements, as well as consulting, process or know-how licensing agreements
Employment and Vendor Matters
- Prepare and negotiate employment and independent contractor agreements
- Develop training programs and related policies
- Representation in employment matters (e.g., labor disputes, OSHA complaints)
- Negotiate and prepare vendor and supply agreements
Mergers, Acquisitions and Restructuring
- Assist with acquisitions, sales, mergers and joint ventures involving cannabis facilities, enabling portfolio growth across state lines
- Negotiate and prepare financial restructuring agreements and buyouts, as well as representation in insolvency proceedings
Litigation
- Representation in arbitration, mediation and/or litigation
- Advise clients in closely held business disputes over ownership and corporate control
Government Relations and Lobbying
- Lobby and represent our clients’ business interests to elected officials and administrative agencies charged with regulating the industry
- Promote/schedule tours with legislators of client facilities
- Track/monitor legislation pertaining to the cannabis industry
Real Estate
- Handle property leasing or purchasing contract negotiations
- Secure zoning, land use and other local government approvals
Crisis Management and Investigations
- Advise on crisis issues including interfacing with regulators, coordinating communications strategies, including media statements and press releases, and leading sensitive and confidential investigations
- Team approach to review compliance structures to identify problem areas and to help revamp policies, practices, procedures and cultures
Insolvency and Receivership
- Advise on non-bankruptcy business workouts, financial restructuring and distressed mergers
- Represent debtors and creditors in state receivership litigation
