August 2017


Already generating billions of revenue dollars annually, the cannabis industry is moving ever closer to the mainstream, and newly created companies are increasingly seeking out investor assistance to turn their ideas into realities. In this post, we present some issues to consider and measures to take when deciding whether to invest in a cannabis-related company that is seeking funding.

1. Make sure the company has truly obtained all required licensure

Each state has its own system for awarding licenses to grow or sell cannabis. It’s important to understand how far along the business is in the licensing process, and what its status means for your investment. It’s not unusual to invest in a company prior to its obtaining full licensure; however, before doing so, you should protect your stake by ensuring that there are procedures in place for the return of all or most of your money if the company fails to get licensed in a reasonable amount of time.

Make sure you verify with the proper authorities where the company truly stands, as it may not fully understand the nuances of the process, and could be incorrect about its position. Often, this information is public record. We’ve heard … Keep reading


In 2012, Anthony Pisarski and Sonny Moore, marijuana cultivators operating legally under California law, were raided by federal agents, who seized 327 cannabis plants, firearms, and over $400 thousand in cash. Pisarski and Moore were each charged with conspiracy to manufacture and possession with the intent to distribute.

Five years later, and only days ago, their case was reviewed by the Honorable Richard Seeborg, a California U.S. District Court judge.

Judge Seeborg’s decision blocked federal prosecutors from pursuing claims against Pisarski and Moore, ruling that Pisarski and Moore’s actions were legal in light of California’s laws governing the growth and sale of medical marijuana. In his decision to dismiss the federal prosecutor’s claims, Judge Seeborg expressly stated that “[Pisarski and Moore]’s conduct strictly complied with all relevant conditions imposed by California law on the use, distribution, possession, and cultivation of medical marijuana.”

Pisarski and Moore’s defense was based primarily upon legislation known as the Rohrabacher–Farr Amendment, which was passed in 2014 and mandates that federal funds cannot be allocated toward prosecuting individuals following state cannabis laws.

In rendering his trailblazing decision, Judge Seeborg cited United States v. McIntosh, a case heard by the Ninth Circuit last year. In … Keep reading


Here’s some food for thought: 29 states currently have laws broadly legalizing cannabis, in some form. Eight of those states – Alaska, California, Colorado, Oregon, Massachusetts, Maine, Nevada, and Washington, as well as the District of Columbia – have legalized the plant’s sale, for both medicinal and recreational use. These numbers continue to grow. In fact, many studies indicate that cannabis is the fastest-rising industry in North America.

For companies to capitalize on the many opportunities this industry presents, however, they need startup and growth capital. And among the myriad questions they must address before entering the space is: What is best for my company, debt or equity financing?

Below is a primer of the pros and cons of both.

What is debt financing? Debt financing is when a company borrows money from a lender, whether institutional or non-institutional, that it will eventually pay back, in addition to agreed-upon interest. Sometimes debt may be convertible, or may also provide warrants to the lender.

What are some of the pros and cons of debt financing? 

– Pros: The advantages of debt financing are many. For example, a company does not give away ownership interests to its lender, and is able … Keep reading


In my previous post, I outlined some of the challenges property owners face with regard to leasing real estate to registered marijuana dispensaries (RMDs) and cannabis cultivation centers (MJ Tenants). For all parties involved, the path to success in the cannabis space begins with an understanding of the differences between applicable state and federal laws. With respect to leasing to businesses that actually touch the flower, there are significant zoning and locational restrictions imposed on RMDs and MJ Tenants that must be taken into consideration.

Additionally, factors like financing, security, and liability are also strong concerns for all stakeholders – protecting the property, as well as the business, is critically important.

3. The cost of financing
Many, if not most, federally regulated lenders do not, or will not, make loans to entities involved in cultivating or dispensing cannabis. Indeed, very few banks will even allow a dispensary to open a simple operating account. Banks remain concerned about the federal prohibitions against the use and sale of cannabis, and because most are either federally chartered or federally insured (or both), their unwillingness to lend to such businesses is expected to continue until marijuana is legalized at the federal level.

As … Keep reading


Recently, I’ve been asked to negotiate several commercial leases for cannabis cultivation centers (MJ Tenants) and registered marijuana dispensaries (RMDs) around Massachusetts. Competition is fierce, and parties are scrambling to scoop up real estate in qualifying zoned areas. As a result, the market value of these properties is increasing rapidly.

While high costs pose an entry challenge for new businesses, many commercial landlords are benefitting from the sudden increases in value. But despite their expanding profit margins, there remains a host of issues for commercial property owners to consider when leasing to operators of RMDs and MJ Tenants, which sometimes contribute to the increased rents/costs that many of the latter are experiencing.

1. Differences between state and federal laws regarding the growth and cultivation of cannabis
State and federal laws are vastly different concerning the cultivation and sale of cannabis, regardless whether for medicinal or recreational use. The Controlled Substances Act (CSA) classifies cannabis as a controlled substance; as such, cultivating and dispensing marijuana remains illegal at the federal level.

Property owners that derive income from tenants who use a space to cultivate or sell cannabis may expose themselves to prosecution under federal laws. It is a violation of … Keep reading