Are you a cannapreneur thinking about starting a cannabusiness? You’ll need
to take a few steps and prepare several documents to give your new venture
a solid legal foundation.
Articles of Incorporation/Organization
To protect your personal assets from business risks and financial liabilities,
you will want to form a legal entity such a corporation or limited liability
company by registering the new entity with the Secretary of State of your
home state (or another state of your choosing). These days, standard filings in
most states can be done online, although there are situations where online
filings won’t work, such as when you need to do something nonstandard like
including specific indemnity provisions for your board of directors or creation
of different classes of stock (common and preferred or voting and non-voting).
Internal Governance Agreements
If you have more than one shareholder or a multi-member LLC, it is
dangerous to proceed without both an operating agreement and without an
initial set of organizational resolutions. In fact corporation must have bylaws
and organizational meeting minutes and resolutions to complete the
incorporation process and install the initial officers and directors. The
shareholder or operating agreement in particular is going to define the
spectrum of voting and economic rights each member has in the company, as
well as crucial operational such as what happens when the company requires
more capital or when a member endangers the company’s state-issued
license. Depending on your business structure, you may need a subscription
agreement, offering agreement, non-disclosure and non-compete
agreements, voting agreement, proxy agreements, or other documents
regarding the rights and responsibilities of the equity owners.
Lease Agreement
Even if one of the cannabis business owners also owns the real estate being
used for the business, you are going to need a cannabis-business specific
lease from the property owner to the operating entity for the cannabusiness. A
well drafted lease will insulate the property and its owners from liability if the
cannabis business fails, or finds itself in litigation. When your business is

leasing from a perfect stranger, the lease becomes even more important to
outline the basic terms of the landlord-tenant relationship, on everything from
your rights to occupy the property, to your rights to make modifications
required to obtain a license.
Employee Handbook
If you have even one employee in your business, having an employee
handbook is critical in this highly regulated industry. This is also a good idea
where only owners will be working for the business. A good handbook will set
forth guidelines and expectations for workers, and perhaps most importantly, it
can give a broad array of legal protections to business owners.
Third-Party Agreements
If your cannabis business is doing a business transaction with a third party
you will want to be sure the terms and conditions of the business relationship
is memorialized in writing. Handshake agreements won’t work well in a heavily
regulated industry like cannabusiness where the terms of agreements must be
subject to regulatory review. Contracts give a broad array of legal protections
to the business owners.

When opening a new cannabusiness venture, a cannabis lawyer can be
especially helpful to help navigate the many unique issues encountered in the
cannabis industry. Our team can help New York cannapreneurs and investors
with these industry specific legal issues.