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How LOIs Can Go Horribly Wrong

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Cannabis businesses often use letters of intent (LOIs) to get agreed deal terms in writing before spending time and money negotiating the definitive written contract. LOIs can be a big help, especially with a complicated deal. But they are easy to botch, and can lead to some pretty devastating consequences if not done right.

Be careful for unintended binding LOIs

In the majority of situations, parties to an LOI want them to be fully or partially non-binding. These LOIs are intended only to be outlines of a deal that the parties can use in negotiating finer points. Some provisions may end up being binding, like confidentiality or exclusivity provisions. But the majority of terms are often left to be fleshed out.

The problem is that some LOIs do a pretty bad job of clarifying what is and is not binding. This leads to two pretty bad potential outcomes. First, a provision intended to be binding could be construed as non-binding. Imagine the buyer in a deal wanted the seller locked in to an exclusivity obligation for 60 days after signing, but the LOI didn’t clearly specify that this was a binding obligation (as opposed to just some kind of expectation). It’s possible that the seller could then shop the deal around without any recourse on the buyer’s part.

The second potential problem is possibly a lot worse – an LOI could be deemed binding where it was intended not to be binding. I’ll get into this in greater detail in the next part.

Binding LOIs can be a big problem

From time to time, people want fully binding LOIs. In almost all cases, I think these are a bad idea. Because binding LOIs are, by definition, binding, they must contain a LOT more detail than your average non-binding LOI which may be as short as a page or two. With more detail comes more negotiation, and more time. So in most cases, if parties want a binding document, it makes a lot more sense to just proceed to the definitive contract and not waste time on a binding LOI that will precede it.

As an aside, there are some limited contexts where a binding LOI makes sense despite these concerns. For example, imagine a deal with a lot of different contracts to be drafted and executed at different times over a long period of time, but where the parties are nevertheless willing to spend a bit of time up front negotiating terms. In that case, it may make sense to have a binding LOI, or some kind of other binding agreement to flesh out these contractual obligations.

In any event, where binding LOIs can be problematic is where the negotiating parties fail to include sufficient detail and basically treat them as binding versions of non-binding LOIs. And insufficiently detailed LOIs can lead to a host of issues. I’ve seen plenty of situations where one party would have wanted to include more protective provisions in a full-length definitive, but the other party knows that the LOI is binding and refuses to negotiate anything else. It can be a terrible outcome.

LOI fundraisers

A lot of businesses will issue press releases after inking LOIs, for marketing purposes but also to drum up investments – especially so for public cannabis companies. As you can imagine, there can be a lot of shenanigans here as well. Some cannabis companies will enter into a huge amount of LOIs with little intent to consummate the transactions. This is obviously bad news for their prospective business partner who may have not only wasted time and money on getting the LOI done, but also passed on other deals. And it can lead to even more problems for the company issuing the press release if they don’t represent the proposed deal’s context accurately.

There are some pretty easy solutions to these problems. For example, even a non-binding term sheet can contain restrictions on publicity that are binding (though careful wording is required!). Or one or both parties could carve out exclusivity obligations or allow for LOI termination in the event the other party isn’t taking the deal seriously or it becomes clear that the other side is trying to fundraise off the LOI.

Non-attorney drafted LOIs

People think that because LOIs are not binding and intended to serve as an outline, lawyers are unnecessary. The problem with this train of thought is that it could be incredibly easy for non-lawyers to write an LOI that was intended to be non-binding, but fail to actually make it non-binding. Or they could draft an intentionally binding LOI that fails to include sufficient detail. Or they could make a hundred other types of mistakes that could have been avoided.

As I wrote a few years ago, “Getting a lawyer involved in the term sheet process can be key. This is especially true on complicated or expensive deals, or where one party knows it has less leverage in a deal to request changes at a later date. It’s even more true where the other side or their lawyers are going to be tough negotiators.”

To flesh that out a bit more, as a deal outline, the LOI will be the one of the key things that lawyers look to when negotiating a contract for the life of the negotiation. I can’t tell you how many times I’ve heard lawyers complain that something was “not in the LOI” or “different from what’s in the LOI” during negotiations, even when the LOI was clearly not binding. And in a lot of cases, parties will simply agree to stick to what the original intent was.

All of this is to say that an LOI is an incredibly important investment. Good lawyers don’t need to charge an arm and a leg on them, and a good LOI can save a ton of headache down the road. This is especially the case in a highly regulated industry where one or both of the parties to a deal may be less familiar with regulatory intricacies when negotiating the LOI.



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How Do You Stop Lab-Shopping for the Highest THC Results?

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single lab test for cannabis THC results

In a decisive move aimed at bolstering consumer safety and ensuring the integrity of cannabis products, Massachusetts regulators have mandated that all cannabis products must undergo testing at a single, licensed laboratory. This new regulation comes in response to the growing issue of “lab shopping,” where cannabis producers seek favorable testing results by sending their products to multiple laboratories. The Massachusetts Cannabis Control Commission (CCC) announced this significant regulatory change after extensive consultations with industry stakeholders, public health officials, and consumer advocates.

 

This article explores the implications of this regulation for the cannabis industry, consumers, and public health. It also examines the broader context of cannabis regulation in Massachusetts and the potential impact of this decision on the future of the state’s cannabis market.

 

Understanding Lab Shopping

 

 What is Lab Shopping?

 

Lab shopping refers to the practice where cannabis producers send their products to various testing laboratories in search of the most favorable results. Producers may choose labs based on their reputation for leniency or their history of providing positive results. This behavior can lead to significant discrepancies in product safety assessments and quality assurance.

 

The Risks Associated with Lab Shopping

 

1. Consumer Health Risks: The primary concern surrounding lab shopping is the potential risk it poses to consumer health. Inconsistent testing results mean that products containing harmful contaminants—such as pesticides, heavy metals, or mold—may be sold without proper scrutiny. This can lead to serious health issues for consumers who unknowingly purchase tainted products.

 

2. Market Integrity: Lab shopping undermines the integrity of the legal cannabis market. When consumers cannot trust that products have been tested rigorously and uniformly, it erodes confidence in legal cannabis sales and can drive customers back to illicit markets where safety standards are nonexistent.

 

3. Regulatory Challenges: For regulators like the CCC, lab shopping complicates enforcement efforts. It becomes increasingly difficult to monitor compliance when producers can easily switch labs to obtain favorable results, making it challenging to ensure that all products meet established safety standards.

 

The Regulatory Response

 

The Role of the Cannabis Control Commission (CCC)

 

The Massachusetts Cannabis Control Commission is tasked with regulating the state’s cannabis industry. As part of its mandate, the CCC has worked diligently to establish a comprehensive regulatory framework that governs various aspects of cannabis production and sale. However, as the industry has evolved, so too have the challenges associated with ensuring product safety and quality.

 

In light of growing concerns about lab shopping and its implications for public health and safety, the CCC recognized the need for a more robust regulatory framework. After extensive discussions with industry stakeholders and public health officials, the commission concluded that a single-lab testing requirement was necessary to address these issues effectively.

 

Implementation of Single-Lab Testing

 

In late 2023, following thorough deliberation and stakeholder engagement, the CCC announced its new regulation mandating that all cannabis products must be tested by a single licensed laboratory before they can be sold to consumers. This decision aims to achieve several key objectives:

 

  • Standardize Testing Protocols: By requiring that all products be tested by a single lab, regulators can ensure that all products are subject to consistent testing standards. This uniformity is crucial for maintaining product quality and safety across the market.

 

  • Enhance Accountability: A single-lab requirement makes it easier for regulators to hold laboratories accountable for their testing practices. If discrepancies arise in testing results, it will be clear which laboratory conducted the tests, facilitating more straightforward investigations.

 

  • Improve Consumer Confidence: With consistent testing results across all products, consumers can feel more secure in their purchases. This increased confidence is vital for fostering a healthy legal cannabis market in Massachusetts.

 

 Implications of Single-Lab Testing

 

For Producers

 

1. Increased Accountability: Producers will need to establish relationships with specific laboratories and ensure that their products meet stringent quality standards before submission for testing. This shift will require producers to invest more in quality control measures throughout their production processes.

 

2. Potential Cost Implications: While single-lab testing may streamline processes for some producers, it could also lead to increased costs if producers are required to pay higher fees for comprehensive testing services. Smaller producers may find it particularly challenging to absorb these costs.

 

3. Adaptation Period: Producers will need time to adjust their operations and supply chains to comply with this new regulation. This may involve reevaluating partnerships with existing labs or investing in new quality control measures.

 

4. Impact on Product Development: The requirement for single-lab testing may also influence how producers develop new products. With fewer laboratories available for testing, producers may need to plan their product launches more carefully and allow additional time for testing processes.

 

For Laboratories

 

1. Increased Demand for Services: Licensed laboratories may experience an increase in demand as producers consolidate their testing needs with fewer facilities. This could lead to higher revenues for labs but also increased pressure on them to maintain high-quality standards amidst growing workloads.

 

2. Need for Enhanced Capabilities: Laboratories will need to ensure they have the capacity and technology necessary to handle increased volumes of samples while maintaining rigorous quality control measures. This may require investments in new equipment or hiring additional staff.

 

3. Regulatory Compliance: Laboratories will face heightened scrutiny from regulators as they become key players in ensuring product safety. They will need to demonstrate compliance with all relevant regulations and maintain transparent practices regarding their testing methodologies.

 

 For Consumers

 

1. Improved Product Safety: The primary benefit for consumers is enhanced safety assurance. With standardized testing protocols in place, consumers can trust that cannabis products have been thoroughly vetted for contaminants and potency before reaching store shelves.

 

2. Greater Transparency: As part of this regulatory shift, there may be increased transparency regarding testing results and laboratory practices. Consumers will have access to clearer information about what goes into their cannabis products, empowering them to make informed choices.

 

3. Potential Price Increases: While improved safety is paramount, there is a possibility that compliance costs could be passed on to consumers through higher prices for cannabis products. Producers may need to adjust their pricing structures in response to increased operational costs associated with single-lab testing.

 

Cannabis Regulation in Massachusetts

 

 Historical Overview

 

Massachusetts was one of the first states in New England to legalize recreational cannabis use following the passage of Question 4 in 2016. The legalization marked a significant shift in public policy and opened up a new economic sector within the state. However, as with any emerging industry, challenges quickly arose—particularly concerning product safety and quality assurance.

 

Existing Regulatory Framework

 

Prior to the introduction of single-lab testing regulations, Massachusetts had established a comprehensive regulatory framework governing various aspects of cannabis production and sale:

 

 

 

 

Despite these measures, lab shopping highlighted gaps in enforcement and compliance that necessitated further action from regulators.

 

 Industry Reactions

 

Support from Public Health Advocates

 

Public health advocates have largely welcomed the CCC’s decision to implement single-lab testing as a crucial step toward safeguarding public health by ensuring that all cannabis products meet consistent safety standards. Many believe this regulation will help prevent contaminated or substandard products from reaching consumers while bolstering trust in legal cannabis sales.

 

Dr. Emily Thompson, a public health expert at Harvard University, stated, “This regulation is essential for protecting consumers from potential health risks associated with contaminated cannabis products.”

 

Concerns from Industry Stakeholders

 

Conversely, some industry stakeholders have expressed concerns about potential drawbacks:

 

1. Operational Challenges: Smaller producers may find it difficult to navigate relationships with larger laboratories or face delays in getting their products tested due to increased demand at those facilities.

  

2. Innovation Stifling: Critics argue that requiring single-lab testing could stifle innovation within the industry by limiting producers’ options for exploring different testing methodologies or technologies offered by various labs.

 

3. Market Dynamics: There are worries that this regulation could create monopolistic tendencies within laboratory services if only a few labs dominate the market due to increased demand from producers seeking reliable test results.

 

4. Impact on Small Businesses: Small-scale cultivators might struggle more than larger companies due to limited resources and access to high-quality labs capable of meeting stringent requirements without significantly raising costs.

 

 Future Outlook

 

As Massachusetts implements this new regulation mandating single-lab testing for all cannabis products sold within its borders, it sets an important precedent that other states may consider as they navigate similar challenges within their own burgeoning cannabis markets.

 

Potential National Implications

 

The decision by Massachusetts regulators could influence national discussions around cannabis regulation as other states look toward creating frameworks that prioritize consumer safety while fostering industry growth:

 

  1. Increased Interest from Other States: States grappling with similar issues related to lab shopping may look closely at Massachusetts’ approach as they develop their own regulations.

 

  1. Collaboration Among States: As states continue legalizing recreational marijuana use across the country, there may be opportunities for collaboration on best practices regarding product safety standards and laboratory oversight.

 

  1. Federal Considerations: With ongoing discussions about federal legalization of marijuana gaining traction nationally—especially amid shifting political landscapes—regulatory models like those emerging from Massachusetts could serve as templates for future federal guidelines governing cannabis production and sale across state lines.

 

 Conclusion

 

The Massachusetts Cannabis Control Commission’s mandate for single-lab testing represents a pivotal shift in evaluating cannabis products for safety and quality assurance within one of the nation’s most dynamic legal marijuana markets. By targeting the issue of lab shopping, this regulation prioritizes consumer protection, aiming to enhance public health outcomes and rebuild confidence in the safety of legalized cannabis products. While the transition poses challenges for producers adapting operational processes and laboratories scaling their capabilities, the regulation seeks to balance fostering innovation in an evolving industry with rigorous oversight mechanisms. As Massachusetts refines its regulatory framework, balancing the interests of regulators and profit-driven stakeholders, collaboration will be essential to thriving under these new guidelines. This change not only advances the state’s cannabis sector but also sets a potential standard for other states to ensure safe consumption and responsible business practices in the growing marijuana industry.

 

LAB SHOPPING FOR HIGH THC RESULTS? READ ON…

CANNABIS LAB SHOPPING FOR THC

LAB SHOPPING FOR THC RESULTS- THE DIRTY SECRET IN CANNABIS!



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Happy Holidays from The Canna Law Blog

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Wishing all of our readers, along with friends and families, the very best this holiday season.

Whether you celebrate Hanukkah, Christmas, Kwanzaa, Winter Solstice, Festivus, or something else, we hope you can kick back and enjoy this wonderful time of the year.

The post Happy Holidays from The Canna Law Blog appeared first on Harris Sliwoski LLP.



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5 Cannabis Christmas Recipes to Try This Holiday Season at Home or the Office Party!

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Ah yes, it’s that magical time of year again when Ganja Clause slides down the chimney to visit all the good little stoners. The lights are twinkling, the fire is crackling, and the sweet aroma of cannabis-infused treats fills the air. As someone who’s spent years experimenting with cannabis cuisine, I’ve learned that the holidays present the perfect opportunity to elevate traditional recipes to new heights.

To help make your holidaze more “dazey,” I’ve crafted five festive recipes that combine seasonal favorites with our favorite herb. These dishes aren’t just about getting high – they’re about creating memorable experiences and new traditions. But before we dive in, I need to emphasize something crucial: dosing is always important, and you should NEVER give these recipes to anyone without their explicit consent. While sharing is caring, tricking someone into consuming cannabis is not only unethical but potentially illegal. Always clearly label your infused treats and keep them safely away from children and unsuspecting guests.

With those important notes out of the way, let’s get into these magical recipes that will make your holiday season extra special.

Look, we all know eggnog is a holiday staple, but why not kick it up a notch? This cannabis-infused version will have you feeling jolly in no time. Just remember – this isn’t your grandma’s recipe (unless your grandma is really cool).

What You’ll Need:

  • 4 cups milk (or non-dairy alternative if that’s your jam)

  • 1 cup heavy cream (or coconut cream for you plant-based folks)

  • 6 egg yolks (fresh is best, trust me)

  • 1/2 cup sugar

  • 1 tsp vanilla extract

  • 1/2 tsp ground nutmeg

  • 1 tbsp cannabis tincture or cannabis-infused syrup

The Magic Process:

  1. Start by heating your milk and cream in a saucepan. You want it hot but not boiling – we’re making eggnog, not scrambled eggs.

  2. In a separate bowl, whisk those egg yolks, sugar, and vanilla until they’re well combined and looking smooth.

  3. Here’s the tricky part: slowly (and I mean SLOWLY) add the hot milk mixture to your egg mixture while whisking constantly. If you dump it all in at once, you’ll end up with sweet scrambled eggs, and nobody wants that.

  4. Pour everything back into your saucepan and cook over medium heat, stirring constantly until it thickens enough to coat the back of a spoon.

  5. Remove from heat, stir in that nutmeg, and let it cool a bit before adding your cannabis tincture or syrup.

  6. Chill thoroughly before serving.

Pro tip: Start with a small serving – this stuff can creep up on you!

Want to elevate your holiday meal? This gravy will take your feast to new heights. It’s perfect for drowning those mashed potatoes or smothering that turkey.

The Goods:

  • 2 cups chicken or vegetable stock

  • 1/4 cup all-purpose flour

  • 1/4 cup cannabis butter (cannabutter)

  • 1/2 tsp salt

  • 1/4 tsp black pepper

  • 1 tbsp chopped fresh herbs (thyme or rosemary work great)

The How-To:

  1. Melt your cannabutter over medium heat in a saucepan. Watch it carefully – burnt butter is not the vibe we’re going for.

  2. Whisk in the flour to create your roux. Cook it for about 1-2 minutes to get rid of that raw flour taste.

  3. Now, slowly pour in your stock while whisking like your life depends on it. No lumps allowed!

  4. Add your seasonings and herbs.

  5. Keep stirring and simmering until it reaches your desired thickness.

  6. Taste and adjust seasonings if needed (before you get too lifted).

Remember: Label this clearly! You don’t want Aunt Martha accidentally pouring this all over her plate without knowing what’s up.

Forget that canned stuff – this homemade cranberry sauce with a special twist will have everyone at the table asking for seconds (though you might want to limit them to just one serving).

The Ingredients:

Getting Saucy:

  1. Toss your cranberries, OJ, and sugar into a saucepan over medium heat.

  2. Let it cook until those cranberries start popping like tiny little fireworks (about 10 minutes).

  3. Once it’s thickened up nicely, remove from heat.

  4. Here comes the fun part – stir in your cannabis-infused honey or tincture.

  5. Let it cool completely before serving.

Pro tip: Make two batches – one regular and one infused. Just make sure to label them clearly!

These aren’t your regular sweet potatoes – they’re elevated sweet potatoes. Perfect for getting baked while getting baked.

What You Need:

  • 4 large sweet potatoes

  • 1/2 cup cannabis butter (cannabutter)

  • 1/4 cup brown sugar

  • 1 tsp ground cinnamon

  • 1/2 tsp ground nutmeg

  • Salt to taste

  • Marshmallows (optional, but highly recommended)

The Method:

  1. Preheat your oven to 375°F (190°C).

  2. Bake those sweet potatoes until they’re tender (about an hour).

  3. Once they’re cool enough to handle, peel and mash them up.

  4. Mix in your cannabutter, brown sugar, and spices.

  5. Transfer to a baking dish.

  6. If you’re feeling extra, top with marshmallows.

  7. Bake for another 20-30 minutes until everything’s golden brown and gorgeous.

Warning: These are dangerously delicious – pace yourself!

This warm, spicy cider will lift your spirits in more ways than one. Perfect for those chilly winter nights.

The Essentials:

The Process:

  1. Pour your cider into a large pot.

  2. Add your cinnamon sticks, cloves, and orange slices.

  3. Heat until it just starts to bubble, then reduce to a simmer.

  4. Add your cannabis-infused maple syrup (or add tincture to individual cups for controlled dosing).

  5. Let everything mingle and get cozy for about 20 minutes.

  6. Serve it up warm with an orange slice or cinnamon stick garnish.

Pro tip: Keep a non-infused batch warming for designated drivers and non-partaking guests.

Remember folks, the key to a successful Dankmas feast is clear labeling and careful dosing. Nothing ruins a holiday gathering quite like someone getting unexpectedly zooted. Happy cooking, and may your holidays be dank and delightful!

There you have it, folks – five unique ways to spice up your Dankmas traditions and make the season truly memorable. As someone who’s hosted many cannabis-friendly holiday gatherings, I can’t stress enough the importance of starting slow with these recipes. Edibles can take anywhere from 30 minutes to two hours to fully kick in, and you definitely don’t want to overdo it during family dinner. I strongly recommend doing a test run with different dosages before the big day to find your sweet spot.

What I love most about these recipes is that they offer a fantastic alternative for those looking to skip the traditional alcohol-heavy holiday celebrations. Cannabis provides a more natural way to unwind and connect with loved ones during this special time of year. Plus, you won’t have to worry about a hangover the next morning!

Remember to celebrate responsibly, be open about what’s infused and what isn’t, and most importantly, enjoy the magic of the season. Happy Dankmas to all, and to all a good height!

 

MORE DANKMAS STORIES, READ ON…

GANJA CLAUSE

THE NIGHT BEFORE CHRISTMAS BY GANJA CLAUSE!



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