Legal Loopholes: How a $32 Million Cannabis Contract Dispute Was Dismissed

Anyway, this is a case that Curaleaf hired some lawyers.

to defend against a, just a simple collection, let's call it.

A simple collection for unpaid output contracts.

Do you know what an output contract is, Mickey? Not a clue.

Well, an output contract is essentially like all net revenue or like, I get all your shit.

And so here is the, the contract, your business unit exists to give me the shit.

And so like, I am going to take a hundred percent of the shit you make, like an every shit, all that stuff.

But an output contract means you are a business, all of your output gets bought by this one customer.

We have them here in Central Illinois with Caterpillar, at least we used to.

And so when that type of output contract would die, when they would cancel it, your revenue drops to zero.

And when your revenue drops to zero, bad shit starts to happen.

But anyway, so output contract gets canceled $32 million later while defending it.

I'm not sure if it was Jenner and Block or Honigman, another fine firm out of Michigan, Honigman.

They moved to dismiss it to federal court, and then they moved to dismiss it because it's illegal.

Okay.

So I'm looking at the article.

It says the takeaways for cannabis operators is a decision with real teeth.

Few takeaways.

Federal courthouse doors remain effectively closed to marijuana contract disputes.

That sucks.

Rescheduling did not change the outcome and opinion.

It is a clear signal that operators should not assume that April 26th rule cured the enforceability problem.

Even a purely medical marijuana contract is at risk under this reasoning.

And so like these lawyers, they were able to dismiss it to federal court and then move to dismiss it for being federally illegal.

And that won.