Grupo Flor CEO Shares 5 Takeaways From SoCal Investors Forum on Attracting Investors

Grupo Flor’s CEO, Paul Henderson, was a panelist at the Southern California Cannabis Investment Forum where he and top industry leaders shared their collective wisdom with 250 plus people. Now with legal adult-use cannabis sales in California less than three weeks away, Paul Henderson shares his top 5 Takeaways from the SoCal Cannabis Forum for those cannabis companies looking to attract investors:

  1. Proof is in the Pudding
    Raising money from a business plan is very difficult, especially if you are asking for a high valuation.  Get started and bootstrap your business so you can provide “proof of concept” in your business model.
  2. Bring on Legal Eagles
    Get lawyers involved early and often. Fundraising adds a layer of complexity and the way the businesses are set-up from a legal standpoint matters. Securities laws can easily be compromised without owners realizing it, putting themselves and the company at risk.
  3. “Touch” vs. “No-Touch” Companies
    “No-Touch”companies are generally involved in providing a product or service to the cannabis industry, but are not directly involved with the cannabis plant itself. Investors are typically more comfortable with investing in these types of businesses that provide soil, technical support, testing labs, hydro shops and more. However, more and more investors are getting comfortable investing in “Touch” companies.  These are the cultivators, distributors, producers of concentrates, or any company that “touches” the plant in some way.
  4. Due Diligence is to be Expected
    Many investment groups are entering cannabis from other industries and you’re not going to get a pass because you’ve been operating a cannabis business. Term sheets, investment decks, historical financials, local and state licenses, pro-formas, use of proceeds budgets, PPM, appropriate disclosures, and offering paperwork prepared by law firms are all examples of what it’s going to take to complete a deal.  Start this process as early as possible to make sure you have a complete packet to present. Most operators wait too long before they realize they need financial backing, or discover that they don’t have the necessary paperwork, putting their companies at risk.
  5. Don’t set out to build a business to quickly sell it.
    This is not a get-rich-quick deal.  Many of these operations are capital intensive and require strong fundamental management skills.  Focus on efficient and low cost operations.  There will eventually be consolidation and successful companies will get acquired.

Cannabis Attorney and Industry Expert, Hilary Bricken, Talks Emergency Cannabis Regulations

California’s Bureau of Cannabis Control (along with its Departments of Public Health and Food and Agriculture) dropped their much-anticipated emergency rules (see herehere, and here) to fully implement the Medicinal and Adult-Use Cannabis Regulation and Safety Act in California. The agencies kept a lot of what we saw from the withdrawn rules under the Medical Cannabis Regulation and Safety Act (MCRSA) (see hereherehere, and here), but there are also some new, notable additions and some interesting gap-fillers that now give us the foundation for operational standards across cannabis license types.

Though I can’t cover every single change or topic from these rules in one post (and because I’ll be covering the license types and application details in other posts in the coming days and weeks and at our SoCal Cannabis Investment Forum), I will instead focus on the following highlights of the emergency rules:

  1. We now have a revised definition of “canopy,” which is “the designated area(s) at a licensed premise that will contain mature plants at any point in time.” In addition, canopy shall be calculated in square feet and measured using clearly identifiable boundaries of all area(s) that will contain mature plants at any point in time, including all of the space(s) within the boundaries. Canopy may be noncontiguous, but each unique area included in the total canopy calculation shall be separated by an identifiable boundary which includes interior walls, shelves, greenhouse walls, hoop house walls, garden benches, hedgerows, fencing, garden beds, or garden plots; and if mature plants are being cultivated using a shelving system, the surface area of each level shall be included in the total canopy calculation.
  2. “Nonvolatile solvent” has been further defined to mean “any solvent used in the extraction process that is not a volatile solvent,” which “includes carbon dioxide (CO2) used for extraction and ethanol used for extraction or post-extraction processing.”
  3. Temporary licensing has now been fully detailed to include online applications, the personal information for each owner that must be disclosed, contact information for the applicant’s designated point of contact, physical address of the premises, evidence that the applicant has the legal right to occupy the premises for the desired license type, proof of local approval, and the fact that the temporary license (which is good for 120 days) may be renewed and extended by the state for additional 90 day periods so long as a “complete application for an annual license” has been submitted to the state. No temporary license will become effective until January 1, 2018.
  4. For the full blown “annual license,” the application requirements are pretty much the same as under the MCRSA rules except that you must disclose whether you’re applying for an “M License” or an “A License” and you have to list out all of your financing and financiers which include: “A list of funds belonging to the applicant held  in savings, checking, or other accounts maintained by a financial institution, a list of loans (with all attendant loan information and documentation, including the list of security provided for the loan), all investment funds and names of the investors, a list of all gifts, and a list with certain identifying information of anyone with a “financial interest” in the business. “Financial interest” means “an investment into a commercial cannabis business, a loan provided to a commercial cannabis business, or any other equity interest in a commercial cannabis business.” The only exempt “financial interests” are bank or financial institution lenders, individuals whose only financial interest is through an interest in a diversified mutual fund, blind trust, or “similar instrument”, and those shareholders in a publicly traded company who hold less than 5% of the total shares.
  5. As part of your licensing application, you will still need to submit a premises diagram drawn to scale along with all of your security procedures and inventory procedures (and pretty much all corresponding operational SOPs). A $5,000 bond is still required for all licensees (as well as mandatory insurance) and all owners must submit their felony conviction criminal histories as specifically enumerated in the regulations, as well as rehabilitation statements.
  6. Several new licenses have been created (and/or brought back from the dead from MCRSA): the cannabis event organizer license (to enable people to take advantage of the temporary cannabis event license), the distribution transporter only license (which allows this licensee to only move product between licensees, but not to retailers unless what’s being transported are immature plants or seeds from a Type 4 nursery), the processor license (a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis and non-manufactured cannabis products), the Type N and P manufacturing licenses are back, and there’s now a Type 9 delivery only Non-Storefront Retailer license.
  7. We also now have the non-refundable licensing fee schedules and though they vary depending on the license type they mostly are nominal, though some increase with increased gross receipts, and small and medium-sized growers will have to pay pretty robust fees.
  8. If you want to make changes after the fact to your premises or to your ownership structure, you first must secure state approval to do so.
  9. All growers are again limited to one Type 3 medium cultivation license each, whether it’s an M License or an A License.
  10. A retailer can sell non-cannabis goods on its premises so long as their city or county allows it (this excludes alcohol, tobacco, and tobacco products). Retailers can also sell non-flowering, immature plants (no more than six in a single day to a single customer). M-licensed retailers and micro-businesses can also give cannabis away free of charge to qualified patients or to their caregivers.
  11. Notably, until July 1, 2018, licensees may conduct commercial cannabis activities with any other licensee, regardless of the A or M designation of the license.
  12. The renewable energy requirements for cultivators have been revamped hopefully to the satisfaction of cannabis growers.
  13. Again, the licenses are NOT transferable, so we’re looking at folks only being able to purchase the businesses that hold them.
  14. Distributors will be able to re-package and re-label flower, but not infused cannabis products unless they hold a manufacturing license. Distributors also cannot store any non-cannabis goods at their premises. The state has laid out what must take place during a distributor’s quality assurance review and the chain of custody protocol with third party labs for testing.
  15. We have a detailed list of all permissible extraction types, including that any CO2 extractions must be done within a closed loop system.
  16. The prohibited products list is pretty much the same as it was under the  MCRSA rules (so, no nicotine or caffeine infused cannabis products).
  17. In regards to “premises,” the Bureau’s regulations mandate that a licensee may have up to two licenses at a given premises of the same license type so long as they’re owned by the same company and one is an A-License and  the other is an  M-License.
  18. In addition to other relatively onerous advertising requirements, licensees must “[p]rior to any advertising or marketing from the licensee involving direct, individualized communication or dialog, . . .  use age affirmation to verify that the recipient is 21 years of age or older.” Direct, individualized communication or dialog, may occur through any form of communication including in person, telephone, physical mail, or electronic. A method of age verification is not necessary for a communication if the licensee can verify that “the licensee has previously had the intended recipient undergo a method of age affirmation and the licensee is reasonably certain that the communication will only be received by the intended recipient.”
  19. Retailers and micro-businesses are now required to hire third-party security to protect and watch their premises.
  20. To hold a micro-business license, a licensee must engage in at least three of the following commercial cannabis activities: cultivation, manufacturing, distribution, and retail sale. There are also now a slew of regulations surrounding each activity a micro-business can undertake.
  21. Live entertainment is now allowed at a licensed premises so long as it follows the bevy of regulations regarding content and presentation.

Overall, we have a close-ish copy of the withdrawn MCRSA rules that will lead us into 2018. Be sure to read the rules again and again before pursuing your California cannabis license. Applicants will have their work cut out for them on both the state and local levels.

Hilary Bricken is an attorney at Harris Bricken in Los Angeles, and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog.


Grupo Flor Expands Its Executive Team

Steve Podell joined Grupo Flor to oversee the retail and distribution of the dispensaries and licensed product. In addition, Steve is focused on developing strategic sales plans based upon company goals and ensuring customer satisfaction in all brand touch points. Prior to joining Grupo Flor, Steve was an executive at Cypress Consulting where he helped his clients implement customized solutions for key business challenges such as revenue growth, cost reduction, technology utilization, process improvement and profitability enhancement.
David Hessler joined Grupo Flor’s manufacturing company, 710 Combinator to lead all manufacturing and engineering activities to ensure effective and efficient use of facilities and personnel so that the best practices are in place. David has over 20 years of global experience in Supply Chain Management in the tobacco industry (Europe, Russia, Asia-Pacific) working with Japan Tobacco Intl, RJ Reynolds Intl and Phillip Morris Intl. With eight overseas assignments in executive management and operations in Europe, Russia, and Asia, David gained a deep understanding of global and regulatory challenges and played a key role in developing strategies to defeat or mitigate those challenges.

From Silicon Valley To Salinas Valley – Grupo Flor Hires Former Apple Finance Manager As CEO

Grupo Flor and its family of cannabis companies, announced the appointment of Paul Henderson as Chief Executive Officer. Prior to joining Grupo Flor, Paul served as the Chief Financial Officer at Indus Holding Company, a cannabis manufacturer where he helped guide them through a vertical integration strategy. Prior to Indus, Paul served as the Worldwide Financial Services Manager at Apple, where he was instrumental in establishing the global Enterprise and Educational financial structuring teams.

“I am very excited to join Group Flor. The company has built an incredible business based on real estate assets and cannabis licenses that is unmatched in California,” said Paul Henderson, CEO of Grupo Flor. “Our leasing company, Grupo Properties is the springboard for the vertical integration of our other business units as well as our strategic partnerships that allow us to operate in a very efficient way. You can expect to see our flagship dispensary, East of Eden, open in Salinas by January 2018.”

Paul has spent the majority of his career successfully launching new initiatives and business units within larger enterprises. Immediately after graduate school, Paul joined GE Capital in their globally acclaimed leadership development program where he worked on the most challenging projects with senior leadership. Prior to graduate school, Paul spent five years at the prestigious investment banking firm, Goldman Sachs, where he led the global team responsible for building their private bank that grew to become a $25 Billion entity.

Paul received an M.B.A. in Finance, Strategy, and Entrepreneurship from the Tepper School of Business at Carnegie Mellon University and a B.A. from Brigham Young University. He and his wife and son live in Morgan Hill, CA. Paul spends most of his free time cycling and trail running. He has completed several half Ironman triathlons and trail ultra-marathons.

The Grupo Flor family of cannabis companies is shaping the future of the market, by inviting visionary entrepreneurs to participate in all aspects of the cannabis industry. They have developed a vast ecosystem of private equity, real estate leasing, cultivation, manufacturing, distribution, equipment financing and retail operations, providing necessary resources throughout California’s regulated market. Grupo Flor has emerged as leaders in the local cannabis industry.

Grupo Flor’s Co-founders added to the Upstart 50 List of Bay Area Top Business Creators

The San Francisco Business Times and Silicon Valley Business Journal will honor Grupo Flor’s Co-founders, Mike Bitar and Gavin Kogan as part of the Bay Area’s Upstart 50, which celebrates innovative, disruptive and creative business professionals. The Upstart 50 Event will be held the evening of Tuesday, September 12, 2017, at the Nasdaq Entrepreneurial Center.

Cannabis visionaries, Bitar and Kogan are in good company as the Upstart 50 honorees are comprised of the Bay Area’s top inventors, creatives, backers, and masters – all of whom are driving the creation of the worlds new innovation capital.

Mike Bitar is paving the way for this emerging industry by helping entrepreneurs lease over 2,600,000 square feet of properties in cannabis permitted zones throughout Monterey County. Bitar leverages his extensive experience managing and owning real estate companies, to create Grupo Flor Leasing, a subsidiary company of Grupo Flor that provides cannabis tenants and partners access to extensive political, regulatory, legal, financial and commercial agriculture resources.

“It truly is a great honor to be selected as part of this prestigious group of accomplished innovators,” said Mike Bitar. “I feel fortunate to have this unprecedented market opportunity to shape the landscape of commercial cannabis real estate and work closely with policy makers to help guide the industry forward.”

Gavin Kogan, commercial cannabis attorney, and founding member of California Cannabis Manufacturers Association (CCMA) pioneered the concept of the canna-business ecosystem that connects entrepreneurs to the entire supply chain. Kogan also recognized that industry lacked access to capital and investors lacked a clear path to invest. Hence, the Ag Pistil Fund is born, a subsidiary of Grupo Flor.

“I am exceedingly honored to be included in this cohort of the Upstart 50 business professionals,” said Gavin Kogan. “I’ve been long attracted to solving problems arising from seismic culture shifts. Cannabis presents a virtual bounty of such opportunities. Grupo Flor is designed to stabilize an entirely incoherent, fractured and regionalized California cannabis supply chain.”

The Grupo Flor family of cannabis companies is shaping the future of the market, by inviting visionary entrepreneurs to participate in all aspects of the cannabis industry.  They have developed a vast ecosystem of private equity, real estate leasing, cultivation, manufacturing, distribution, equipment financing and retail operations, providing necessary resources throughout California’s regulated market.  Grupo Flor has emerged as leaders in the local cannabis industry.

Why Ag Tech?

“To a hammer, everything’s a nail,” goes the saying. The problem with the deep focus on a subject is that everything starts to filter through that lens. On the upside, however, is that unexpected connections arise that before weren’t immediately obvious.

Such was the case at the end of June 2017 when 50 or so agriculture technology evangelists from around the world walked off the Forbes Ag Tech Summit tour bus onto Grupo Flor’s cannabis production facilities near Salinas, California. The Forbes Ag Tech Summit is an invitation only event bringing together more than 600 of the most entrepreneurial minds in agriculture to tackle the global food production crisis. The City of Salinas sponsors this summit in hopes of marketing itself the epicenter of thought leadership on this critical and expanding subject.

Grupo Flor, a Salinas based cannabis enterprise of which I am a founder, chose this site because it gave attendees a unique opportunity to tour the entire cannabis wholesale supply chain at one site, from nursery and bloom to processing and extraction, and finally packaging and distribution. Grupo Flor’s attendees, from far-off places like Japan and Poland, were about to get first-hand exposure to processes that easily 90% of California legislators have never witnessed; but that’s a complaint for another blog.

“Yes, that’s correct,” Mark said, in a matter of fact way, wearing a surfer t-shirt and standing in front of an indoor field of stout plants, trichomes glistening, “we recycle 100% of our water; we use the same water 4-7 times before we replenish.” It was little flourishes like this that amazed the attendees, who knew not what to expect, but clearly not detailed attention to sustainability and energy conservation. I’m not exaggerating when I say that after the Grupo Flor tour, cannabis was the belle of the Forbes Ag Tech ball; however, the “why” might surprise.

You see, agriculture works on amazingly small margins, making it extremely difficult to deploy new technologies desperately needed in food production. Black market cannabis, on the other hand, enjoys massive margins, but these fat margins actually retard the need for innovation. Enter regulated cannabis, threatening fat black market margins with taxes, regulations and defined competition. To my surprise, what Grupo Flor’s attendees saw was not just a crop inviting innovation, but actually, a crop maybe having enough margin to encourage adoption.

And there’s the unexpected connection, cannabis offers ag tech entrepreneurs a novel opportunity to deploy innovations critical to global food crisis management. While some saw the Salinas sponsored Summit as little more than a political boondoggle, fostering creativity and unexpected results is not math, it’s risk calculus. Risk calculus is what makes California a top 6 global economy; it’s what enacted Prop 215 and it’s what undergirds our state’s new experiment with regulated cannabis. Is it too much to imagine that in some strange way, regulated cannabis can actually improve our world in ways not immediately obvious today?

Please Send Money

Coming immediately around the bend at California’s cannabis operators is a massive onslaught of regulatory detail that will require millions of dollars to navigate to compliance. Regulators seem to think there’s plenty of cash in cannabis to make this happen from the “starting line” regulations they have crafted. To be honest, I’m not so sure.

Marijuana Business Daily’s Factbook 2016 reports less than 25% of cannabis businesses are funded by outside money; that leaves 75% of all cannabis businesses as self-funded! And more than 50% report they need capital within the next year to survive. While news media insists on showing fluttering cash machines with each cannabis story, it’s my opinion that our industry is gravely underfunded to meet “starting-line” regulation. There is a clear disconnect between the perception of this industry’s wealth and reality; the reality is money is scarce and difficult to shepherd into this industry.

The lack of investment is hardly surprising; here’s a sneak-peak at what investors face: Few cannabis companies have historical performance data (in a black market, data is evidence of illegal activity.) Few cannabis operators use contracts (in a black market, the courts won’t enforce them.) Similarly, few have expertise in scaling business growth (in a black market, scaling invites law enforcement attack.) Say, did I mention the abject lack of banking or credit line access? It’s easy to see why capital is not just pouring into our state’s industry.

Sadly, the fact is that investment capital is critical to the success of our industry meeting “starting-line” regulations. The lack of capital to meet regulatory burdens just reinforces the continued proliferation of the black market. Period. End of sentence. Full stop.

Our government leaders must learn that “more carrot, less stick” is the smarter policy choice for an industry that has for years blossomed in the dark under threat of intense criminal prosecution. What we need are policies that encourage a new investor class; policies that acknowledge investor economic risk is critical to our state’s successful transition from a policy of “ban and imprison” to “tax and regulate.”

There is a clear disconnect between the perception of this industry’s wealth and reality; the reality is money is scarce and difficult to shepherd into this industry.

Some Pre-Dawn Advice

Just before the dawn of California’s regulated cannabis environment a lot remains uncertain, but one thing is dead certain, a great number of today’s operators will not survive these next few years of transition – not because they can’t produce great product, but because they don’t know how to meet the administrative demands of a regulated industry.

While California’s operators are cannabis production leaders par excellence, one thing we are not is administratively prepared. Regardless of how the Sacramento battles resolve over issues of self-distribution, vertical markets or the definition of “ownership” – our industry veterans are just months away from the harsh reality of triplicate forms, detailed process standards and arrogant inspectors. Let me give you a little example of what’s in store for you:

Sometime in 2015, after I had co-founded a high profile California cannabis company, we boldly invited a public health regulator to tour our multi-million-dollar edible manufacturing plant, designed and created to meet the highest food manufacturing safety standards. Before the tour, our industrial chef co-founders stapled an 8.5×11 sheet of paper on a big empty wall. I asked him, “what’s that?” to which without a smile he responded, “our visitor’s policy.” I laughed thinking it absurd. So later, this regulator comes, and tours the facility – seeing state of the art food manufacturing equipment at work producing highest quality cannabis edibles. We were so proud. At the end of the tour as we’re seeing him to the door, he stops and coyly asks if he can take a photo. We say, “sure.” And what’s he do? He shyly walks right over to that silly piece of paper on this huge empty wall and takes a photo of our “visitors policy.” That’s what excited him.

So how do we adequately prepare for this Kafkaesque future of ours? Along with legal counsel, hire administrative support immediately – and I don’t mean your ex-partner’s sister’s friend who just finished a business class at community college. I mean hire an expert in business processes – someone with experience in how to build business processes, how to document those processes and most importantly, how to implement those processes. Processes (a.k.a “SOPs” or Standard Operating Procedures) are critical because at a minimum processes and systems ensure consistency, which in turn promotes employee and consumer safety.

The good news about compliance processes is that it’s not hard. The bad news is that it’s painfully tedious and is a cost center that won’t drive revenue. For those reasons it’s so is often ignored until it is too late. Remember – regulators could give a rat’s ass about your revenue, your high quality product or your marketing brilliance. What excites regulators are written processes that are well implemented. To their mind, if your processes are in place and followed, their departments goals of promoting employee and consumer safety is accomplished.

The reason I seize on processes is because above all else, thinking about processes will force you to think in a way that regulators think, which is the first step to maturing into the post regulation environment.

If you don’t know anything about business processes, you would do well to read up on the subject now – as they take a lot of time to develop, and you don’t have a lot of time. Here are a few resources to orient you to this subject that will be so critical to your surviving this transition to a regulated market:

For Entrepreneurs

Most cannabis entrepreneurs share three core desires: (a) to further compassionate care & patient marijuana access, (b) to pursue social justice goals, such as dismantling the violent Prison Industrial Complex, and (c) to play a meaningful part in building an entirely new American industry from scratch. All of us share these desires and each core desire shows up as primary at different times in our entrepreneurial lives, as well as at different times in the evolution of our industry.

It’s critical to understand how our industry is decidedly different and why it attracts a different breed of entrepreneur. Our industry did not arise from the easily understood commercial desire for wealth or technological evolution. Rather our industry was born from the activism of the LGBT community’s response to the institutionally ignored AIDS epidemic of the 1980’s and 90’s. Medical Marijuana was and is instrumental in easing the suffering of Americans living with HIV and AIDS. This tragedy energized California’s Prop 215 and became the catalyst to opening up the conversation on bringing an end to the long failed drug war waged against the American people.

These roots characterize our emerging industry, inform how we treat each other and with compassionate intelligence guide our future endeavors. Few of us will again likely have an opportunity to build an entire industry from the ground up. Therefore, it is imperative we do so thoughtfully and with conviction. Along this path, we are fortunate to have business leaders and professionals to support this difficult effort and tremendous growth.


Criminal lawyers are different from Commercial Lawyers. Criminal lawyers assist individuals caught up in law enforcement actions. Commercial lawyers assist entrepreneurs build sound business structures to avoid personal liabilities. Due to the drug war, Criminal lawyers were the first on the scene and instrumental in carving out the court cases that defined the early shape of our California industry. Commercial lawyers came later, Gavin being one, and helped early entrepreneur’s efforts survive law enforcement encounters and legitimize their commercial endeavors for the benefit of patient collectives.

Contact us if you are seeking a commercial attorney with cannabis related expertise or want a referral to a criminal attorney with cannabis related expertise in your area.


Again much like lawyers accountants are often specialists, and those who are well versed in the intricacies specific to our industry are better able to serve cannabis entrepreneur needs. First and foremost is circumventing the application of Internal Revenue Code Section 280(e), a left-over from the cocaine-high days of the 1980’s. Section 280(e) essentially strips cannabis entrepreneurs from being able to write off their expenses, thus rendering such business endeavors in the red and leaving entrepreneurs financially crippled. IRS Code Section 280(e) and the Federal government’s threat to banks willing to handle cannabis financial transactions are the two key weapons used to injure and inhibit the inevitable growth of the cannabis industry. Like commercial attorneys, accountants can manage your needs remotely.

Contact us for a referral to a qualified cannabis accountant serving your needs.


Consultants generally have expertise in specific areas of our industry and thus require a bit more care in selection. For example, an indoor cannabis grow expert may not be the best fit for an endeavor seeking to build out greenhouse operations. Similarly, a business start-up has different needs than an established company solving growth problems. We’ve assembled a team of consultants in different areas that commonly serve my client’s needs:

  • Banking
  • Indoor, outdoor and hybrid grow operations
  • Business plan development & implementation
  • New business financing
  • Edible development & production
  • Extraction business models
  • Marketing
  • Political Advocacy

Contact us if you would benefit from consulting services in any stage of your business development.

Cannabis Conflicts 101

With our industry roaring forward into 2016 under the new Medical Marijuana Regulation & Safety Act (the “Safety Act”), there is a literal frenzy of partnerships, licensing relationships, distribution deals and all manner of business relationships being struck throughout the state. I know because I’ve struck some of those deals, and guided others.

With lovers, friends and business partners, you are first met with a “best face” and over time – true faces are revealed. Unfortunately, the disappointment arising from such revelations can lead to conflicts. These conflicts aren’t just between cannabis operators, they are often between cannabis operators and non-cannabis businesses like landlords or vendors.

READ THIS: no matter how righteous your position in a dispute – a cannabis operator cannot count on a fair shake in our judicial system at this time in history.

Prohibitionist ideology is absolutely up there among the black birds sitting on the wire watching our “pot” frenzy below – just waiting for a dispute to bubble up to their courts. How fair do you think your fight would be in a court battle with your traditional commercial business? Also, It is well known among attorneys that judges and juries can often punish both sides of a dispute if they don’t like either of them. The way that looks is both parties spend in excess of $100,000 each fighting a court battle and in the end the winner is granted $1.00 in damages.

The point is important for two prime reasons: (1) your business interests could be unjustly crushed because of prejudice at court; and (2), judges often follow decisions made by judges in other courts concerning similar disputes. Put differently, prejudiced courts not only threaten you unfairly, they unfairly threaten our burgeoning industry in its infancy.

So, my form of advocacy on the subject is to encourage us all to add mediation and arbitration clauses in our business contracts until our culture and its judiciary matures on the subject of cannabis.

A mediation clause in a contract requires the disputing partners to submit the dispute to a professional (usually a retired judge or lawyer) skilled in the art of helping disputing parties come to a settlement between themselves. This professional does not decide who is right or who is wrong; rather, the professional helps the parties negotiate between themselves an agreement that avoids court. Mediation is successful 90% of the time, so it’s worth considering.

A “binding” arbitration clause in a contract requires the disputing partners to submit the dispute to a professional private judge (usually a retired judge or lawyer). In arbitration, the parties elect and privately pay for the professional judge – and in that way, can ensure their judge is not prejudiced against cannabis. The decision of the professional judge becomes a judgement that the courts must then enforce. While courts can exercise their prejudice at that stage, I believe the risk is greatly reduced, at least certainly in terms of influencing other court decisions down the road.

Mediation and or arbitration are typical contract clauses, and it is quite normal to have one or the other or sometimes both. In our case of cannabis, I suggest both, where the parties agree to first mediate and if that fails, then arbitrate. This is particularly so if one of the parties is a non-cannabis party and has the unfair advantage at mediation to threaten prejudice at court if the mediation negotiations stall.

One last point here for my young community: a contract that addresses dispute resolution does not equate to distrust. I was shocked to once have a sophisticated business person state we probably shouldn’t contract in the first place if I felt there was a need to discuss dispute resolution. Obviously I won’t say who, but suffice it to say the statement ignores the fact that most relationships, business or other, run into troubled waters at some point and a sound dispute resolution policy can keep the wheels on the deal.

In my view, given the infancy of our industry, keeping our disputes out of court is paramount. Dispute resolution discussions are probably the best tools to accomplish that goal. If you won’t include these discussions for your own safety, at least consider it part of your duty to advocate for the safety from prejudice in our courts.