If you are starting a marijuana business or are considering it, there are critical legal considerations to take into account. Despite marijuana licenses being available here in Colorado for over a decade —medical in 2010 and retail in 2014—marijuana law and the associated license applications remain in constant flux. For example, the Colorado Marijuana Enforcement Division (“MED”) adopted new rules implementing major changes at the end of 2019. Starting in early 2020, a whole new set of license applications were implemented.

Most licensed marijuana businesses understand the importance of engaging a law firm that is well-versed in marijuana regulatory laws, especially one that remains on the forefront of this ever-changing legal landscape. At the same time, licensees should be cognizant of the fact that this remains only one piece of the growing puzzle when it comes to operating a licensed cannabis business in Colorado, and that marijuana laws cannot be interpreted in isolation. Licensees need attorneys who specialize not only in marijuana laws, but also in corporate and real estate transactions, taxation and general business planning—the interaction among these matters keeps a licensee efficient and agile in a dynamic business environment.

Issues Marijuana Businesses Should Consider

The following is a list of issues you may need to consider as you establish and run your marijuana business:

  • Does your operating agreement address marijuana licensing issues? For example, are owners required to maintain their licenses throughout ownership to ensure entity compliance with MED laws? Does it contemplate that you are operating a business that is legal under state law but illegal under federal law?
  • Do you have proper services agreements and restrictive covenants in place to cover employees and independent contractors? In many cases, senior employees should be engaged by way of an employment agreement that outlines pay, duties, roles, and termination procedures. These employment agreements may include certain conditions to employment. For instance, you may be able to require employees to maintain appropriate badges with the MED so that you, the licensee, are not engaged in an unauthorized business. You should also have “at-will” employment agreements for employees without a specific employment term.
  • Do you have restrictive covenant agreements with workers to protect your valuable intellectual property?
  • Does your lease allow for the premises to be used by a marijuana business?
  • Have you issued any profit interests that need to be disclosed to the MED? Or any revenue shares or payments based on a percentage of revenue or profit?
  • Do you have any convertible debt that needs to be disclosed to the MED? Do you have any options or warrants or other synthetic equity?
  • Are you considering additional third-party funding, and do you need to know what forms of funding may require MED pre-approval (such as equity)?
  • Have you adequately disclosed the licensure responsibilities to proposed investors, such as background checks, financial status, and work history?
  • Are you a grower looking to purchase land? If so, you will need someone well-versed in real estate law to ensure the property can support your grow facility.
  • Do your financing documents require compliance with the MED?
  • Do you have state law governing your materials, and have you included language for no avoidance based on federal law?

These are complex considerations, which is why it is essential to speak with a Colorado-based, experienced cannabis business attorney about your marijuana business as soon as possible.

Contact a Cannabis Business Lawyer Near Me

If you have questions about establishing or running a marijuana business or need assistance, an experienced cannabis business lawyer can help. Contact Accretive Law to learn more about how we can assist you when it comes to running or growing your marijuana business.