Key Legal Considerations for Cross-Border Cannabis and Hemp Agreements

Key Legal Considerations for Cross-Border Cannabis and Hemp Agreements
Key Legal Considerations for Cross-Border Cannabis and Hemp Agreements
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AUTHOR: LAUREN ESTEVEZ Esq
PUBLISHER:  CANNABIS LAW REPORT

Cannabis companies have gone global, and with that expansion comes additional legal considerations. Canadian cannabis company Aurora cannabis just announced that they will now be operating in Germany, Italy, and Australia, expanding their current international portfolio. Tilray distributes its products globally across Canada, Europe, Australia and Latin America. This post will explore some of the key legal provisions to include in an international cannabis (or hemp) contract — whether it be for supply, consulting services, or a joint venture.

Due Diligence

Due diligence is an essential step in any cannabis agreement — a brand new industry and a rapidly expanding market mean that opportunities abound. That being said, it’s essential to conduct thorough due diligence of any potential business partner, and if anything, international deals should be subject to even further review since you will often be dealing with legal regimes that differ from your own. As a start, make sure you have visited the facility, met with the business owners in person, thoroughly reviewed all company documents produced, and communicated with local regulatory agencies.

Choice of Law & Dispute Resolution

When you are pursuing a joint venture or supply agreement across borders, you will need to choose which country’s laws will govern the contract. Perhaps most important, you need to decide on a forum where any potential disputes arising out of the agreement will be resolved. You can take a blended approach and have the laws of both states govern and allow for resolution in either state. Consider this carefully as you are in the beginning stages of negotiation and make sure the clause is clearly drafted.

Conflict of Law

Given that operations will be held in different states, conflict of law provisions should clarify which laws govern which operations. If for example, you are one of the seven licensed Canadian producers setting up shop in Colombia, you will want the greenhouse operations to be governed by Colombian law first and foremost and perhaps additionally you will require certain regulatory standards that comply with Canada’s laws as well.

Waiver of Sovereign Immunity

Sovereign immunity is a legal doctrine which varies between countries but which as a general principle states that nations are protected from lawsuits, unless they have waived their immunity. The difficulty here arises when you have a company that acts like a private one, but which when a lawsuit is presented after a breach of contract, claims to be a state actor that cannot be sued. This is a simple clause to include in your international agreements and can become especially important in cases of breach or insolvency.

When negotiating or drafting international agreements for cannabis corporations, as with any contract, you should ensure that the agreement is valid, enforceable, and clear. Ultimately the negotiation of many of these terms will come down to the bargaining power of the parties, but some of the international considerations should be given additional attention so that the contract does end up in fact being enforceable in a practicable way.

Lauren Estevez is a Los Angeles based attorney advising cannabis and CBD companies, investors, and brands.

Lauren Estevez, Esq.
Attorney & Founder

(c) 617-945-8032
4470 W. Sunset Blvd., Los Angeles, CA 90027

Cannabis Law Journal – Editorial Board Members

Editor – Sean Hocking

Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild