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Q: What’s a Cannabis Operator to Do to Get Ahead Without Getting Indicted?A: Be fully informed and

Werner-Simon, Cannabis Business Times, Dec. 17, 2021, “Getting ahead - - without Getting Indicted”

Entry into today’s cannabis space is rife with obstacles posed by states with opaque licensing awarding procedures, caps on entry, as well as other challenges set in motion by local governments (and local officials) seeking bounty of all sorts for the privilege of operating a business within the city, town or county’s physical boundaries.

In the last few years, we’ve seen lawmakers pass imperfect laws that intentionally or negligently include loopholes that undermine a law’s stated purpose and that can be contorted—for example, to benefit multi-state operators over social equity beneficiaries. Government officials (often behind closed doors) sometimes steer their associates, friends, or those to whom they have ties to the prizes of cannabis licenses, zoning allowances, and/or amenable community host agreement buy-ins. It feels to many that the deck is rigged. Grumbling does little because unless confronted by lawyers or litigation (of the criminal or civil litigation kind), those involved typically deny any impropriety.

As a result, civil lawsuits against states and localities are becoming commonplace. Consider the flurry of civil litigation in Illinois against the way it awards licenses, or the December 2021 lawsuit filed against the city of Gloucester, Mass., sued by a cannabis operator for charging almost $500,000 as a “community impact fee” above the state’s statutory limit for a cannabis company seeking to operate in that bucolic seaside city. The cannabis business operator’s lawyers there allege that the fees, excess taxes, and charitable giveaways are in no way reasonably related to the costs incurred by the municipality to permit the business to operate in the city. The cannabis company lawyers are also asking the court to bar the city from assessing such fees and have even asked the court to order the city to refund some of the money already paid.

The lawsuit is indicative of those broader trends within the regulated cannabis space.

What’s a Cannabis Operator to Do?


Authored by Werner-Simon

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