Nobody could have predicted the situation that the cannabis industry now finds itself in. Just a few months ago, it looked like there were challenging financial issues for many cannabis businesses across the country. Now, many states that have imposed coronavirus lockdowns have declared cannabis businesses to be essential so that they can stay open, leading to massive spikes in sales at the retail level.
If the increase in cannabis sales continues (just my two cents, but I think it will during lockdowns) then increased demand is likely to benefit the whole supply chain, necessitating lots of deals on a short-term basis. There are some important considerations for cannabis companies making deals in the time of COVID-19.
First, given the need for speed with cannabis dealmaking right now, it may be tempting to enter into handshake deals. As I wrote a while back, this is never a good idea and can lead to huge disputes. In such a volatile market, where laws, enforcement priorities, and consumer demands can change immediately, handshake deals are even worse.
Second, parties to any kind of contract need to consider the possibility that the coronavirus situation gets worse. We’ve written about force majeure provisions