Most common litigations in legal cannabis
It should be no surprise that the legal cannabis industry is fraught with litigation across a wide range of scenarios. As the industry has grown, litigations have only increased. This is common in any growing industry however.
Reuters conducted an analysis of cannabis-related litigations filed in the first half of 2022. They focused specifically on civil litigations in the 19 states — including the District of Columbia — that have adult use cannabis laws.
Between Jan. 1 and June 30, 2022, there were 55 filings in representative cases, according to the analysis.
The most common litigation that was found among these filings was labeled “commercial disputes”. These would include breach of contract, landlord-tenant disputes, securities issues, in addition to business torts such as fiduciary duty and fraud.
34% of the litigations fell within the commercial dispute territory. Despite the current downtrend in the industry, Reuters believes that growth will not slow any time soon. Consistent growth encourages more outside investment and businesses to enter the industry.
However with many still holding the “green rush” mentality of getting rich quick off of cannabis, a lot of businesses will still struggle and face issues with partners along the way. With this will be an increase in more commercial disputes and other litigation.
Following civil disputes came actions specifically against state and local governments. This portion of litigation made up 21% of the 55 filings, and mostly related to administration and regulation of a state’s cannabis market. Included in this category would be licensing disputes, or disputes challenging the state’s cannabis licensing body.
It is not uncommon for investors and business owners to bring court action against state agencies when cannabis is legalized. This can be for a variety of reasons as mentioned above, and will only increase as more states legalize.
Employment and tax disputes made up an additional 14% and 10% respectively. Intellectual Property disputes such as trademark infringement most commonly, made up 9% of all litigations.
Another 5% of litigations came in the form of class actions related to “spam” calls and texts promoting products. Surprisingly the least common dispute involved litigation brought by state and local governments against industry operators. This includes failure to comply with laws and regulations, such as operated an unlicensed business or not following worker’s compensation laws.
Overall the most common litigations in legal cannabis are partnership disputes, breach of contract, landlord-tenant, and real property issues. However tax issues, intellectual property disputes, and employment disputes were are nearly as common in growing cannabis industries across the country.
Not sure how to handle the laws and regulations in your state, or how you can stay in operation? Talk to us at Greener Consulting Group about how we can help.