I will continue publishing a series of posts identifying common issues with cannabis supply chain contracts in California over the next few months. If you haven’t already read earlier articles on this topic, I suggest you start with the following:
Today, I want to talk about termination rights. Believe it or not, our California cannabis lawyers have seen a fair amount of cannabis supply chain contracts that don’t even address basic concepts like how long of a term the contract is for, the grounds for termination of a contract, and what happens after termination. I’ll unpack why each of those things is necessary below:
Most supply chain contracts, with the exception of things like a one-time sale of a single good, contemplate a continued relationship over a period of time. If the contract does not fix that amount of time by clearly defining the “term”, there will almost certainly be issues later down the road and getting out of the contract for parties who want to may be challenging.
Another common problem we see with contract terms is how they are renewed. If a contract has a one-year term but does not address renewal, it will end and any additional