News & Events

News & Events

7.8.2016

High Stakes: Investing in a Legal Marijuana Business

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Brian DeFoe and David Spellman co-authored an article titled “High Stakes:  Investing in a Legal Marijuana Business.”  In the article, they discuss the risks involved with investing in marijuana businesses and the steps you should take before investing.

Before you write that check:

  • First, research the company, related persons, and the business, industry and legal risks.
  • Next, if you decide to make the leap, consider having legal counsel assist you in documenting your equity position.

Pressing escape or reboot can be difficult, after you have already signed documents. If you’re investing in a partnership or limited liability company, state law imposes default rules, unless you have an agreement modifying them. If the business — or you — fail to comply with the state’s rules on ownership and investors, the state regulator may impose penalties including cancellation or suspension of license and fines.