In the cannabis industry, many relationships don’t last. One of the top questions our cannabis lawyers get is “how do I terminate my cannabis contract”? Despite clear contract termination provisions, terminating a cannabis contract can be a very difficult. Today, I’ll examine how cannabis contracts can be terminated.
Contract termination provisions
The first place I go when analyzing how to terminate a cannabis contract is the termination language in the contract itself. 99% of contracts have a termination provision. For the 1% that don’t, well, the parties may have bigger problems than just terminating.
Termination provisions done correctly will list the grounds on which a party can terminate a contract. Common termination grounds, in no particular order, are:
Uncured breaches of the contract Insolvency of a party Long-lasting force majeure events Changes in law that render a cannabis contract void or unlawful Convenience termination rights (i.e., one party can terminate for any reason by giving notice in advance) Mutual agreement of the parties
Once a party figures out whether there are grounds to terminate, it will then need to figure out how to terminate the contract.
Contract termination notices
In almost all cases, contracts are terminated by giving notice