Welcome back again to “California Cannabis: Frauds and Strategies of the Week.” We are publishing this sequence to get rid of gentle on the unscrupulousness of certain attorneys, consultants, and operators in the California hashish market, with the goal of setting up a a lot more moral and regulated market in the condition. You can uncover last week’s put up right here.
Rip-off #1: Attorneys Symbolizing Buyer and Vendor and Using Fee
We carry on to see lawyers representing hashish entities on both sides of mergers and acquisitions, and in addition to having an hourly fee, they are having a commission on the deal (from both functions)! We are viewing the similar lawyers appoint on their own as counsel for the procured company. We have witnessed some stunning discounts that hurt both functions and gain only the lawyer. Most typically, troubling information about a business enterprise or assets is hid for the gain of the vendor and the lawyer, to the detriment of the buyer. We typically see great, trusting men and women get taken for a journey by lawyers with unethical motivations. The incentive to shut a deal as immediately as doable to get a commission is at odds with the incentive to conduct thorough because of diligence. Make sure your agents and lawyers have your ideal interests at heart, and if a lawyer tells you he or she can stand for “both sides” in a transaction, operate!
Rip-off # 2: The $10 Million Plot of Vacant Desert Land
We have witnessed some outrageous land discounts in California. There are a selection desert parcels devoid of any improvements or utilities, in the center of nowhere, being supplied for thousands and thousands of pounds. Due diligence is essential in actual estate transactions, primarily in the speculative hashish sector. Just because hashish activity is doable in a particular jurisdiction does not suggest an vacant plot of desert land there is well worth $10 million. Providing that land with water, electrical energy, and creating out the composition is no little feat. Many distant desert regions deficiency the infrastructure to offer these parcels with important utilities, and the set up of these infrastructure requires several several years and significant price tag. Beware.
Rip-off #3: Function for Equity in My Nonprofit!
In California, no a person “owns” a nonprofit. A single cannot purchase or market a nonprofit company, and no inventory can be issued or authorized by a nonprofit. We have mentioned this just before on the blog.
Even now, we have men and women asking us to critique equity agreements where by their nonprofit employer is giving inventory alternatively of wage. In some circumstances, the corporation giving these pretend inventory discounts may perhaps not know any much better because they are being advised by incompetent lawyers. In other circumstances, even so, these corporations are knowingly having benefit of employees who are blinded by the exhilaration of being aspect of a bourgeoning market. Wander away.
Rip-off #4: Obtain My License!
Under MAUCRSA, condition licenses are non-transferable. According to 16 CCR 5023(c), if a person or a lot more of the owners of a condition license transform, a new license application and charge ought to be submitted to the BCC in 10 business enterprise times of the ownership transform.
Most community hashish permits are in the same way non-transferable. And if they are transferable, most jurisdictions call for you to obtain created acceptance from the community govt prior to transfer. Preserve this in thoughts if you’re on the lookout to purchase or lease a “cannabis approved” assets, There is simply just no ensure you will be capable to get a license to run there.
If you’ve appear throughout a California hashish market scam, we would like to listen to from you! Depart a comment beneath, or e mail us at firstname.lastname@example.org.