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Cannabis companies and (depending on the state) brands often use license agreements to grow their brands. If done correctly, they can be a huge driver of revenue for the brands and licensees, and can grow the good will of the brand across a particular territory. However, they are notoriously easy to botch. A bad license agreement can be devastating for a cannabis brand. In this post, I’ll examine some of the most common problems I’ve seen in license agreements across a host of different states.
It may help if I first explain what I mean by “license agreement.” I’m using the term loosely to refer to a situation where a company (a licensor) licenses its intellectual property (like its brand name) to a third party to use in a defined way. There are a million different ways license agreements can take shape.
One common example would be a license of IP to a cannabis company for purposes of manufacturing and selling the branded products. In general, this is the kind of license agreement I want to focus on in this post.
#1 Failure to consider regulatory impact
Cannabis is a highly regulated industry.
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