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Cannabis Contract Approval Headaches

Cannabis companies move a million miles an hour. Many cannabis companies don’t spend nearly enough time focusing on the “basics,” such as corporate governance and getting things in writing (for more posts on why handshake deals are bad, see articles linked at the bottom of this post). Another area where many cannabis businesses need some improving is in handling contract approvals.

Contract approvals are exactly what they sound like: a party to a contract cannot do something without the other party’s consent (usually prior and written approval). I like to think of cannabis contract approvals as falling into one of two buckets: contract approvals related to a contract, and contract approvals that are unrelated or somewhat related to a contract.

With respect to the first bucket, these kinds of things are generally fairly obvious. A contract usually will require one party to act a certain way, and the other party will need to consent to departures from these actions. One pretty common approval is the approval of a property lessor to an assignment or sublease. These can be a huge headache for buyers in M&A deals, as I’ve discussed before. The bottom line is that any time a cannabis business

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