Cannabis Contract and Lease Drafting
As entrepreneurs in New Mexico recognize the opportunities associated with the recent legalization of recreational cannabis usage in the state, there is a growing demand for cannabis contract and lease drafting.
As expected, new businesses are already being established to take advantage of the relaxation of attitudes towards cannabis usage here and elsewhere around the country.
If you are looking to purchase or rent out space for a cannabis business, you need the advice and support of skilled lawyers to draft comprehensive cannabis contracts that protect your business.
This is just one of the business contracts that you will need. However, with cannabis businesses, there are some complexities with these contracts that businesses in other industries don’t have to contend with.
At Legal Solutions of New Mexico, we can look after the legalities of getting set up while you focus on product development, marketing your business, and other key aspects of starting up that demand your attention.
Why are cannabis contracts/agreements important?
To protect your rights and business interests, it is essential to draft a cannabis contract or lease agreement that covers every angle.
A solid agreement will form the foundation of success for your business in the coming years, providing a good degree of stability and predictability in what is sure to be a rapidly changing market.
Your lease agreement needs to include at least the following elements:
- The owner's right to inspect
- The mode of rent payments
- Early termination rights by the owner
- Compliance with state laws
- Permitted use
The language of your contract or lease should be clear and easy to understand for all parties.
Cannabis contract attorneys keep up-to-date with the latest legislation and protect and prepare you for what’s around the corner. Robust contracts should be prepared with the necessary experience and knowledge of the cannabis industry.
This will safeguard your business interests while you remain focused on building your startup.
How to draft an effective cannabis contract
If you are setting up a cannabis business in New Mexico, you need to protect your business interests with other contracts besides lease agreements.
When you draft these documents, allow for the fact that New Mexico state has legalized cannabis but federal laws have not.
This may create problems if you need to enforce the contract in court but these problems can be solved by including the right clauses in your contracts.
Forum selection clauses
According to New Mexico law, cannabis businesses are now legal and it is expected that you will operate as a legal business.
This means that you need all the right types of contracts, including leases, employment contracts, distribution agreements, licensing agreements, purchase and sale agreements, contracts to buy and sell cannabis trademarks and copyrights, and so on.
To be effective, these contracts must include provisions for the resolution of disputes. This is fine when the dispute is handled by the New Mexico courts. Cannabis is legal here and the contract is enforceable.
But what happens if the dispute ends up in a federal court or in a state where cannabis has not been legalized?
Because cannabis remains prohibited at a federal level, a federal court is unlikely to aid you in a dispute by enforcing your cannabis business contracts – especially for buying or selling cannabis. The same applies if you find yourself in the court system of a state where cannabis remains illegal.
In these situations, your cannabis contract is likely to be deemed void and its provisions will not be enforced.
So, unless you can guarantee that your dispute remains in the New Mexico courts – or another state where cannabis has been legalized – you will not be able to ask the court to enforce your business contracts.
Experienced cannabis contract attorneys can help you draft contracts with “forum selection clauses”. This is a provision that makes it clear that claims must be resolved in the New Mexico State courts. In turn, this minimizes the risk that the counter-party on your contract can switch your case to federal court if you sue.
Your contract should also include wording that says that the contracting party waives any right to pursue claims in (or remove claims to) a federal court.
Protect your cannabis business in New Mexico
The ink is barely dry on the legislation that legalizes cannabis in New Mexico but that’s no reason to delay in setting up your cannabis business. It’s likely to get very competitive out there very quickly.
The strongest businesses will be those that have planned, prepared and protected their businesses from the many complexities and challenges ahead. This starts with getting your cannabis business contracts drafted by those in the know.
If you have a legal issue concerning setting up your cannabis business, call (505) 445-4444 to talk to a knowledgeable cannabis lawyer at Legal Solutions of New Mexico in Albuquerque.