Founders Agreements in Cannabis: These are not just a formality but actually a vital tool for survival in a complex and volatile market.
How often have we seen agreements that were never executed (.....signed!) OR, get this
Handshake deals....right?
This industry is rife with both. All goes well, UNTIL IT DOESN'T.
For example-
A partner doesn't live up to their side of the bargain with their expected scope of work.
Or, money needs to be contributed for either operating capital or expansion. Who's going to pony up?
Or, one shareholder is conservative tax-wise- where the other would like to take more aggressive tax positions.
The list goes on and on...
I'm sure many of us have heard industry horror stories of these going awry.
Beyond outlining roles and equity, a solid agreement must also address our industry's unique regulatory hurdles, tax matters partners, management roles, evolving IP challenges, and the need for adaptable (key word!) exit strategies.
Too often, founders overlook the necessity of performance-based equity, regulatory alignment, and a shared vision.
^^ And when they do, they can face disputes that will cripple their business.
At VERDANT Strategies we provide guidance from a financial, tax, and best business practice standpoint to cannabis companies- as it relates to partner, shareholder, and founder agreements -- shifting them from a basic contract to a dynamic, future-proof strategy that can help you thrive long-term.
And don't forget, a transactional or corporate attorney is key to round of the equation and to lead on these matters. We don't consult on these matters without one!
If you'd like to explore this with our team, let's connect!
Kimberly Simms, Esq. Michael Schwamm Sander Zagzebski Andrew Cooper
#foundersagreements #cannabis #cannabisindustry #partneragreement #shareholderagreement
Chief Executive Officer & Founder & Student at everything I do | Enrolled Agent
6moSurvival of the fittest in the Golden State. Do small fish stand a chance anymore? Tony Wayne