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Structuring Enforceable Contracts in the Cannabis Industry: Managing Risk Under State and Federal Law

Subject Matter Description and Contract Invalidation, Choice-of-Law and Marijuana-Friendly Courts, Arbitration Provisions

Recording of a 90-minute CLE webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Monday, February 24, 2020

Recorded event now available

or call 1-800-926-7926

This CLE course will examine contractual enforcement issues presented by the conflict between the legalized use of marijuana in many states and its treatment as a controlled substance under federal law, and guide counsel through structuring contracts with cannabis-related businesses. The panel will review how courts have ruled on the interpretation and enforcement of these agreements, explain the potential risks associated with their use, and provide best practices for carefully drafting provisions to mitigate those risks given the current regulatory environment.


The expansion of marijuana's legal status nationwide has positioned the cannabis industry for massive growth and fueled a surge in cannabis-related business opportunities.

Besides individual entrepreneurs, many large and mid-sized companies have sought to tap into new revenue streams by pursuing contracts with businesses that have established cannabis-related operations. Contracting with such cannabis-related businesses may be lucrative. Still, marijuana's federal criminal status--and the patchwork of conflicting local, state, and federal laws--means doing business in this industry triggers distinct legal issues relating to contract validity and enforcement.

These issues give rise to contract challenges unlike those in any other industry. And while some courts show a trend toward robust enforcement of cannabis-related contracts, uncertainties persist on the enforceability of these agreements. Whether cannabis distribution engagements, company acquisition contracts, or third-party equipment-supply contracts, the risks of entering into a contract in the cannabis industry remain high because of enforceability issues.

Multiple innovative options are available for informed counsel representing companies contracting with cannabis-related businesses, including contractual provisions addressing marijuana's legal status, subject matter description, contract invalidation, choice-of-law and venue, severability terms, and mediation or arbitration.

Listen as our veteran panel of practitioners explains the unique considerations and legal risks facing canabis-related businesses and their partners, identifies specific techniques counsel should consider when entering into marijuana-related contracts, and provides insights for drafting contract terms to lower the legal risks of cannabis business arrangements.



  1. Risks of entering into a contract in the cannabis industry
  2. Federal law enforcement policies and state law conflicts
  3. Cannabis-related contract enforceability issues
  4. Recent judicial decisions
  5. Specific techniques counsel should consider when drafting contract clauses for cannabis businesses
    1. Preliminary statement
    2. Express acknowledgment of marijuana illegality
    3. Subject matter description and contract invalidation
    4. Choice-of-law, venue, and conflict-of-law provisions
    5. Severability terms
    6. Independent consideration
    7. Remedies
    8. Arbitration and mediation clauses
    9. Best practices for different types of cannabis-related contracts
  6. Additional legal concerns for counsel representing marijuana businesses


The panel will review these and other high-priority issues:

  • What are the risks of entering into a contract in the cannabis industry?
  • What are the practical implications of federal and state law conflicts?
  • What are the primary marijuana-related contract enforceability issues?
  • How effective is arbitration as a dispute resolution mechanism for cannabis-related business contracts?
  • What are the specific techniques counsel should employ when drafting arbitration clauses for cannabis businesses?
  • What concerns should counsel have regarding remedies given the illegal nature of the subject matter under federal law?
  • What are the most marijuana-friendly jurisdictions?


Gard, Jeffrey
Jeffrey S. Gard

Gard Law Firm

Mr. Gard represents numerous patients, doctors and marijuana businesses throughout the state of Colorado and has...  |  Read More

Young, Katy
Katy M. Young

Managing Partner
Ad Astra Law Group

Ms. Young’s areas of practice are mainly business and commercial litigation, including partnership disputes,...  |  Read More

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