What You Should Know Before Dabbing Into the Risks of Marijuana-Related Mergers and Acquisitions

Sunday, April 15, 2018
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

As public support grows for the legalization of marijuana in the U.S. and Canada, mergers and acquisitions lawyers should be studying up now on the ins and outs of cannabis compliance. In the U.S., there are 29 states, the District of Columbia, and the territories of Guam and Puerto Rico, which have all legalized medical marijuana.  In addition, there are nine states including Colorado and Massachusetts have recently legalized the drug for recreational use.  

As a result, there is expected to be a serious increase in marijuana-related mergers and acquisitions activity.  Now is the time for lawyers to research and prepare for the types of problems that may arise.


Regulatory Compliance.  

One of the most serious issues related to conducting business or providing legal services in the cannabis industry is regulatory compliance and, specifically, the increased legal risk. Currently, the steps needed to ensure regulatory compliance are different depending on the type of deal.

The most popular types of business ventures seem to be minority businesses and venture capital investments into ancillary companies. These include dispensary advertising and delivery systems such as vapor (vape) pens and electronic cigarettes (e-cigs).

It’s important for mergers and acquisitions attorneys to come to terms with rapid growing interest from clients. Typically, the first step is trying to outline the best practices for the client. An experienced attorney may be able to assist in developing compliance procedures to mitigate some of the risks.


Other Challenges.


Banks and insurers have so far been very unwilling to help with financing in the marijuana industry. The negative stigma attached to weed makes it far more difficult to wheel and deal as compared to other industries.

In January 2018, Attorney General Jeff Sessions issued a memo calling marijuana a “dangerous drug” and marijuana-related activity a “serious crime.” Click here to read the memo.  The current administration’s disapproval of the drug could have a negative effect on marijuana-related mergers and acquisitions.  Therefore, attorneys who have experience navigating the complexities of deals in the marijuana industry are expected to be in high demand for the foreseeable future.  To read one of my prior blogs on the status of legalized marijuana in the U.S., click here.


Contact Experienced Health Law Attorneys for Medical and Recreational Marijuana Concerns.

The Health Law Firm attorneys can assist health care providers and facilities, such as doctors, pharmacists and pharmacies, wanting to participate in the medical marijuana industry. We can properly draft and complete the applications for registration, permitting and/or licensing, while complying with Florida law. We can also represent doctors, pharmacies and pharmacists facing proceedings brought by state regulators or agencies.

To contact The Health Law Firm please call (407) 331-6620 and visit our website at www.TheHealthLawFirm.com.


Sources:

Horney, Benjamin. “Lawyers Needed To Cut Through The Weeds Of Pot M&A.” Law360. (March 2, 2018). Web.

Weinmann, Karlee. “Buzzing Pot Industry Poised For M&A Evolution Despite Risks.” Law360. (January 21, 2015). Web.


About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.


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4/15/2018

Comments:

Response to: What You Should Know Before Dabbing Into the Risks of Marijuana-Related Mergers and Acquisitions
Thursday, April 19, 2018
Christina Costa-Collins says:

I was wondering if the privacy of medical marijuana card holders is under HIPPA protection? And if it is, how can the federal government remain in the position to ignore its medical benefits, but yet protect the privacy of the patients? Also the DOH requires tracking of all centers that supply, will the tracking of this go into something like a prescription drug monitoring database? Thank you

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