Hemp was lauded as a climate-smart commodity for its use as a construction material by U.S. Agriculture Secretary Tom Vilsack this week as he highlighted new funding opportunities for farmers.

Speaking at a university in Missouri, Vilsack pointed to hemp Monday when he announced that the U.S. Department of Agriculture will invest $1 billion in climate-smart commodities.

The new Partnerships for Climate-Smart Commodities fund will go to farmers, ranchers and forest landowners who use climate-smart practices, Vilsack said.

“For far too long in rural America, we’ve taken products of the land and from the land, we’ve shipped them someplace else, where opportunity is created someplace else, where wealth is created someplace else,” Vilsack said.

“With this opportunity, we now have a chance to change it from an extraction effort to a circular effort. The ability to essentially create climate-smart commodities, the opportunity to convert waste into wide variety of bio-based materials. I saw some of them today – hemp in construction material, for example.”

“Those processing facilities can be located right where the crops are being grown.

“They can be sustainably produced; they can be a higher value; they can create jobs in rural communities; they can increase farm income; they can expand population centers in rural places, taking pressure off our urban centers; they can restore life and vitality in our small towns.

“That’s the opportunity side of this – we just need to understand the opportunity we have, and we need to fully seize it.”

The USDA defines a climate-smart commodity as a commodity crop produced using practices that reduce greenhouse gas emissions or sequester carbon.

The USDA’s Commodity Credit Corporation will be used to fund pilot projects to provide incentives to:

• Implement climate-smart production practices, activities and systems on working lands.
• Measure or quantify, monitor and verify the carbon and greenhouse-gas benefits associated with those practices.
• Develop markets and promote the resulting climate-smart commodities.

Applications will be taken in two groups, sorted by the size of the proposals. Deadlines are:

• April 8 for the first funding pool (proposals from $5 million to $100 million).
• May 27 for the second funding pool (proposals from $250,000 to $4,999,999).

Learn more about eligibility and how to apply here.

(Editor’s note: This column is part of a recurring series of commentaries from professionals connected to the hemp industry. Andrew M. Rosner and Kaelan Castetter are vice presidents of the New York State Cannabis Growers and Processors Association.)

Government officials nationwide are talking about banning the sale of hemp flower in the name of public health. But we know from experience that the prohibition could do more harm than good.

Three of the four most populous states – California, Texas and New York – have either passed smokable hemp bans or are considering them. New York provides a good case study to guide industry in addressing this issue.

In New York, the state Department of Health recently proposed regulations that ban the sale of hemp flower, which would result in harm to the many New Yorkers who prefer flower, a lower-cost item than other, more highly processed hemp products.

By permitting flower, states can address safety and access to this fast-growing market segment.

In fact, ensuring quality on unprocessed flower can utilize the same approaches for other manufactured products.

The New York Hemp Regulations require farmers and processors to maintain strict record-keeping and test their products for:

• Cannabinoids.
• Heavy metals.
• Microbial impurities.
• Mycotoxins.
• Residual pesticides.

Products sold in the marketplace must provide testing panels directly to consumers. Cannabinoid hemp products that contain levels that deviate from the allowable limits are considered adulterated and must be destroyed.

New York State can take a similar approach with smokable flower by creating testing panels and limits for combustible products.

Template for marijuana

As it works to legalize adult-use marijuana, New York will almost certainly adopt standards for smokable products. Smokable hemp can provide a template for adult use and begin developing the internal processes that marijuana will require.

The health department attempted to justify the smokable hemp ban by referring to its “efforts to reduce tobacco and smoking consumption.”

Surprisingly, the same proposed regulations allow for vapable products, and Gov. Andrew Cuomo’s recent proposal allows for smokable marijuana products.

New York’s health department rightfully took a harm-reduction strategy with hemp vaping products and should do so with hemp flower.

Public-health approach

Putting aside the current regulatory contradictions, a public health harm-reduction strategy should consider whether banning hemp flower will actually have any effect on people’s behavior. We know from studies of alcohol prohibition that consumption of alcohol remained steady over the period of the laws’ effect.

The banning of flower may actually lead to a rise in smoking tobacco — a known carcinogen with negative systemic health impacts.

Consumer data suggests that banning flower would likely increase tobacco use.

Market analytics firm Nielsen Global Connect found that 1 in 4 tobacco smokers consume hemp flower, while being three times more likely than the general population to purchase the product.

Whether this is due to familiarity of consuming the plant in its unprocessed form or accessible price point (on average one third the price of CBD oil), tobacco smokers are now spending on average $88 a year on hemp flower products, according to Nielsen.

These consumers will most likely shift that spending back to tobacco products, which lead to 480,000 American deaths annually and increased rates of addiction. Nicotine naturally occurs in the nightshade family of plants, such as tobacco, but not in hemp plants.

Importantly, the World Health Organization in 2018 cited studies supporting the non-addictive nature of cannabidiol, a naturally occurring compound found in hemp plants.

The report even goes so far as to mention the “possible therapeutic application” of CBD in addressing tobacco addiction in people.

In New York, state Assemblywoman Donna A. Lupardo recently introduced a bill to amend the public health law in relation to cannabinoid hemp.

As one of the authors of New York’s law giving the health department the role of regulating hemp, Lupardo understands the layers involved in hemp production and the legislative intent behind the original bill.

Her recent actions indicate that the health department went too far in banning smokable flower. The prohibitive stance against hemp flower undermines the purported mission of the state — to ensure that New Yorkers purchase tested, labeled and quality-controlled hemp products.

Lupardo recognizes the prevalence of people smoking hemp flower and wants to protect New York State residents.

Lessons for the industry

Using a multipronged approach, the hemp industry within states can play an instrumental role in opposing bans.

First, start early to advocate directly with state representatives on statutory and regulatory language. Support from elected officials can help in significant ways in applying pressure on administrative bodies that may go rogue.

Second, like in New York, consider independent legislation that legalizes smokable hemp flower. This can help prevent covert efforts to impose flower bans from outside sources.

Third, like in Texas and Indiana, industry representatives can bring a lawsuit against the state for harms caused by the ban.

Ideally, the hemp industry within a state will use a number of the above approaches in tandem with a vigorous social media campaign.

Nothing beats getting the word out and letting other people know the impact of the ban on their family, friends and neighbors.

Ironically, New York’s proposed flower ban came a century after the U.S. Constitution was amended to ban alcohol.

Alcohol prohibition took 13 years to undo. We only hope that what started in 2020 with the release of the flower ban sees a much shorter period of prohibition and we learn from the mistakes of the past in creating hemp regulations that protect all New Yorkers.

Andrew M. Rosner can be reached at [email protected] Kaelan Castetter can be reached at [email protected]

To be considered for publication as a guest columnist, please submit your request to [email protected] with the subject line “Guest Column.”

Hemp-derived CBD giant Charlotte’s Web Holdings is positioning itself to enter THC and marijuana markets.

The Boulder, Colorado, company says it has signed a five-year, $8 million purchase agreement option with a marijuana company started by its founders, Stanley Brothers USA Holdings Inc.

The deal allows Charlotte’s Web to take over the marijuana business after the U.S.  legalizes marijuana nationwide for a total price to be determined based upon revenue and EBITDA figures.

Charlotte’s Web CEO Deanie Elsner says the company made the deal because of signs that federal marijuana reform is nearing.

“Consumer attitudes, market trends and laws surrounding cannabis and its role within the wellness category continue to trend positively,” Elsner said in a statement.

Stanley Brothers founders Jared and Joel Stanley are also members of CW’s board of directors but will step away from those positions to oversee the future acquisition.

Stanley Brothers USA Holdings makes cannabis products that don’t qualify as legal hemp but are lower in THC than many formulations in adult-use cannabis markets.  The company has operations in Colorado, California and Florida.

Charlotte’s Web trades on the Toronto Stock Exchange as CWEB.

(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the hemp industry. Jackie Berg is co-founder of CBD Marketing Hub, a digital-to-door agency focused on CBD and cannabis marketing.)

Sleep is valued commodity and something many Americans are increasingly bereft of. Many health experts see sleep issues as a looming health crisis.

Forty percent or more Americans don’t get enough sleep, according to the U.S. Centers for Disease Control and Prevention. The problem is worse among people of color.

Such sleep insufficiency, which health experts classify as less than seven hours of sleep nightly, leads to long-term health issues from cardiovascular disease and diabetes to mental-health issues.

The trends have led to late-night internet searches and seismic increases in overall digital consumption, which — while good for digital commerce — are detrimental to sleep.

The word “insomnia” was Googled more in 2020 than ever before. A record 2.77 million searches were clocked in the first five months of 2020 alone, according to researcher Kirsi-Marja Zitting, an instructor and associate neuroscientist at Brigham and Women’s Hospital in Boston who studied the trend.

The American Sleep Apnea Association estimates 20 million to 30 million Americans suffer from intermittent sleep problems every year.

Opprtunities for hemp and cannabis: Meaning, not money

Although the sleep market represents a significant growth opportunity, many CBD and cannabis brand are looking beyond the category’s profit potential at something far different: a chance to make a difference.

That aim is a part of the DNA of many CBD and cannabis brands, where 6 in 10 company founders see the industry’s momentum as a part of a greater mission to do good, according to the 2019 CBD & Cannabis confidence survey conducted by the Insyght Institute, the nonprofit arm of the market research firm Target Insyght.

The continuous drive for improvement is more important than ever, said PureKana CEO Kathy Casey, who reports sleep product sales growth of 14% over the last half of 2020.

“Families are really struggling to manage additional pandemic-related stressors and are becoming more and open to non-pharmaceutical sleep aides, particularly the more natural and non-addictive alternatives,” Casey said.

Together with Gen Z consumers, stressed-out millennials accounted for 48% of the U.S. CBD market in the fourth quarter last year, according to marketing analytics firm High Yield Insights.

THC products are another alternative growing in popularity.

One California-based dispensary and delivery service, Ganja Goddess, reports a 635% increase in its cannabis sleep product sales. Nearly 70% of its customers use its cannabis products to support sleep, according to its CEO Zachary Pitts.

“The pandemic and its extended duration has taken the lid off some of the stigmas surrounding the importance of mental health and its place in our overall well-being,” Casey said.

Education is more important than ever, according to Josh Richman, CMO of Receptra Naturals, which makes gummies and a tincture for sleep.

“Consumers need education about our products,” Richman said. “We need to promote the overall importance of sleep, not just our own product lines.”

Coping conversation

The pandemic has revealed how closely tied sleep and stress are.

Stress levels among U.S. adults are higher now than the early days of the pandemic, according to the American Psychological Association’s recent Stress in America survey, which revealed that 80% report emotions with prolonged stress.People are talking about stress, anxiety and related sleep issues more openly than they ever have, according to Casey.

“These issues are front and center in the majority of conversations taking place in people’s homes, communities and workplaces,” Casey said.

“Everyone is talking about how to cope, from new exercise and meditation routines to more natural alternatives.”

That openness is a part of what’s driving up sleep-market growth, which Market Data Forecast estimates will grow 5.9% annually from $34.9 billion in 2020 to an estimated $46.5 billion by 2025.

Melatonin supplements were among category drivers that drew $825 million in consumer spending, according to market analytics firm Nielsen, representing a 42.6% increase.

Prescriptions for sleep-related issues are at an all-time high, according to a report from Express Scripts, which reports a 14.8% increase in prescription sleep medications between mid-February and mid-March of 2020.

“The pandemic has helped to elevate awareness of the importance of good sleep and has softened the momentum of ‘Sleep is for Suckers’ messaging,” adds Richman, who reports a shift in interest around better sleep, particularly among moms 40 to 50 years of age and 25-to-35-year-old millennials, Receptra Naturals’ largest growth segment.

“Consumers definitely have a preference for plant-based solutions,” says Richman, who says that interest is particularly high in ‘paired’ products like CBN (an alternative to synthetic melatonin) which shows promise for enhancing sleep.

What works

Employers’ workplace policies, practices and protocols are shifting in concert with consumer and market trends.

“Employers formerly focused almost primarily on physical health programs and benefits are seeing the need to extend their focus and are changing the way they address benefit programs and policies … understanding that it is incumbent on them to offer more and better mental health solutions,” Casey said.

With alcohol consumption up and consumers increasingly turning to addictive remedies to keep themselves together throughout this pandemic, there are new worries that many remote workers will be returning to the workplace with substance misuse disorders.

Although the cannabis industry must comply with challenging marketing restrictions, there are legal and effective ways to position sleep products. Here’s our top four:

• Content Marketing. Like many CPG companies, more CBD and cannabis brands are moving their ad budgets to content marketing buys, working directly with publishers able and willing to create custom marketing campaigns. This move allows brands to leverage user consent-driven segmentation and attribution controls and to encourage a personalized brand experience.
• Keyword Marketing. Other digital solutions utilize a legal form of keyword marketing, which allows brands to serve up ads to bottom funnel buyers in the search process. Although program capabilities vary, most allow brands to competitively blunt (including competitive product names in their targeting), leverage key consumer demos and CBD and cannabis search terms in their targeting.
• Strategic Partnerships. Foundations and nonprofit partners are also becoming more willing to partner with cannabis brands as a result of shifting consumer acceptance and legalization of cannabis.
• Educational Posts. Education is key. Brands should responsibly educate consumers about the importance of sleep, irrespective of product messaging.

“We need to support and applaud lifestyle changes beyond CBD that people are making to be and stay well,” Richman said. “If the outcome of our efforts is good, it is good for us all.”

Jackie Berg can be reached at [email protected]

To be considered for publication as a guest columnist, please submit your request to [email protected] with the subject line “Guest Column.”

(A version of this story appears in the February issue of Marijuana Business Magazine.)

From mom-and-pop shops to corporate chains, everyone in the retail business knows that a carefully chosen location is key to success.

The cannabis industry is no exception.

Although regulatory requirements, license availability and market demand will vary from place to place, marijuana and hemp retailers on the hunt for a killer location might benefit from:

• Understanding both immediate local markets and regional trends.
• Creative thinking to find underserved locations—particularly for smaller players.
• Carefully considering the potential benefits and drawbacks of buying versus leasing.
• Identifying future markets before local officials start writing ordinances, then engaging early.

Think local, but also regional

Prospective cannabis store operators need to get intimately familiar with the area where they want to open, advises Michael Lord, chief operating officer at Colorado cannabis firm LivWell Enlightened Health, which operates 22 dispensaries across the state.

“Google Earth does not articulate a true representation of boots on the ground,” Lord said. “I think a lot of people are siting (stores) in areas that perhaps they’ve never visited, putting locations (based on) just what looks good on a map.

“It can vary in a neighborhood from street to street. … And I think that businesses, at the end of the day, still have to have a finger on the pulse of the communities that they operate in.”

Stephanie Goodman, CEO of Michigan cannabis real estate brokerage Bricks and Mortar Group, also recommends doing regional market research in surrounding areas.

“You might think you’ve got this great spot and they’re only going to issue two licenses in the city, but immediately next door, it’s unlimited (licenses),” she said. “Knowing those types of things helps you forecast for future sales.”

That means doing your homework.

“Know your market — population, demographics, regulations, etc.,” said Franny Tacy, CEO of Franny’s Farmacy, which has eight franchises in four states.

“We have made choices to postpone development of Franny’s Farmacy CBD Dispensaries in certain states that do not allow smokable hemp flower because it is a top quantity sold product, revenue generator and driver to brick-and-mortar locations.”

Carving out your own niche

Elev8 Cannabis founder and CEO Seun Adedeji, who opened a single dispensary location in Oregon before expanding into Massachusetts, believes smaller, less-capitalized businesses can benefit from opening in smaller towns.

Adedeji focused Elev8’s Massachusetts expansion on border towns near New Hampshire, New York and Vermont, where acquiring real estate is cheaper than in bigger cities.

“The beauty is, because of the limitations of licenses, each of those small towns are only giving out two recreational licenses,” Adedeji said. “So your value still increases.”

Smaller towns might have their charms, but a border strategy such as Adedeji’s can also work within cities.

Erbn Green Cannabis Co., a small Canadian retailer that opened its first location in the competitive Toronto market in October, found a location in the uptown area of that city.

It might not be a hot address compared to the city’s downtown core, but Chief Compliance Officer Farrell Miller said the location meets demand in an underserved market near two suburbs that opted out of allowing cannabis stores. Erbn Green’s second location is in Picton, Ontario, a small community with less competition for cannabis store licenses than in big cities such as Toronto or Ottawa.

“This town is getting really known for wineries and tourism,” Miller said. “We eventually see cannabis aligning with those things.”

To buy or to lease?

Elev8’s Adedeji got burned when the landlord for his first Oregon store declined to renew the lease and he had to find a new location. As a result, Adedeji is a strong proponent of retail operators buying real estate instead of leasing.

“For anybody looking to get into a leasing option, have a 10-year lease with an option of an additional 10 years,” he said.

In Michigan, real estate broker Goodman said marijuana’s federal prohibition contributes to landlords’ hesitancy to lease to cannabis businesses.

“We’re seeing more private funding on the purchasing side, and they’ll lease back to the operator,” Goodman said.

For well-capitalized players, buying and then executing a leaseback deal can bring advantages. LivWell’s Lord said the company acquires some properties, then sells them to partners who will lease the locations back to the dispensary operator.

“That allows us to go and execute and use that capital for continued expansion rather than having it tied up in the real estate itself,” he said.

Tacy at Franny’s Farmacy, however, favors leasing.

“Keep your capital and use your money to make money,” she said. “Landlords are more willing to negotiate leases now especially with the commercial real estate climate of COVID. I strongly encourage a short-term 3-5 year lease option with the ability to extend.

“Even though hemp is federally legal, it is not business as usual for banking, advertising, credit card processing or for finding a great retail space. COVID has proven that cannabis is a more than just recession proof, it’s pandemic proof.”

Get a head start

Smaller players might score an advantage by identifying potential markets before regulators start offering licenses, then engaging local officials early, Goodman said.

“In that scenario, I’d recommend that you start working with the city before they’ve written any ordinances and then work with them to get the ordinance written for what you want to do,” she said.

“We’ve seen quite a few of those work out. They do like local businesses, but it’s a longer play. It might take six to 12 months to get that done.”

Goodman also recommends spending time engaging with the local community.

“We’ve worked in a lot of cities where the residents are completely terrified of cannabis businesses,” she said. “But once they start to get to know you, and there’s actually a face associated with the business that wants to come in, it’s different.”

Ivan Moreno contributed to this report.

Canadian hemp and marijuana producer Tilray cut its annual loss to $271 million for 2020 — an improvement from the Nanaimo, British Columbia company’s $321 million loss in 2019, according to the full-year and fourth-quarter results released Wednesday.

Tilray, which is on the verge of being merged with Canadian peer Aphria, lost only $3 million in its fourth quarter ended Dec. 31, 2020.

Adjusted EBITDA was $2.2 million.

Tilray reports its financials in U.S. dollars.

Overall revenue rose to $56.6 million in the quarter, up from $51.4 million for the July-September period.

Revenue attributed to cannabis was $41.2 million, up from the previous quarter’s $31.4 million.

Hemp revenue, on the other hand, fell 23% quarter-over-quarter to $15.3 million.

Tilray shares trade as TLRY on the Nasdaq exchange, and Aphria shares trade as APHA on the Nasdaq and Toronto Stock Exchange.

Read more about Tilray’s financials at and the merger at Marijuana Business Daily.

Pennsylvania is awarding $253,000 to organizations with projects designed to increase sales and exports of hemp products.

Pennsylvania’s Department of Agriculture is accepting applications for the grants until March 5, PennWatch reported. Projects aimed at promoting consumer awareness are also eligible.

“Hemp has presented a unique opportunity to build an industry from the ground up, supplying seemingly limitless environmentally sustainable construction materials, industrial fiber and food products just to name a few,” said Agriculture Secretary Russell Redding.

“These competitive grants can help cultivate the growth of the industry that once was a staple of Pennsylvania’s economy and could once again support new jobs and income for Pennsylvanians.”

The projects must have started on or after July 1, 2020, and have to be completed by June 30, 2021. The grants will cover up to half of a project’s cost.

The state’s Department of Community and Economic Development is processing the applications.

(This story appears in the February issue of Marijuana Business Magazine.)

Partnership disputes — whether between business partners or owners and investors — continue to be an ugly feature of the marijuana and hemp industries. Such conflicts can be costly and time-consuming; plus, they can sink a cannabis company.

But there are steps companies can take to head off disputes—or at least manage them more effectively when they do happen, which is all too often.

“In terms of litigation in the cannabis industry to date, the most common issue we probably see is partnership disputes,” said Cassia Furman, managing partner of Vicente Sederberg’s California practice.

For any business, a fight between partners can divert millions of dollars in financial resources into legal fees. That is especially true with cannabis companies. The industry is young and rife with inexperienced operators as well as friend-and-family investors who might neglect to draft documents governing their business relationships.

In addition, many legal operators are former illicit-market players who didn’t draw up contracts before legalization because they didn’t want to leave a paper trail for law enforcement. Now, these owners have carried that habit over into the legal market.

To avoid legal pitfalls, marijuana operators can take a variety of steps to mitigate the risk of and damage from partnership disputes. Those steps boil down to:

• Vetting partners and investors beforehand.
• Putting ownership, investments and other business relationships on paper through formal contracts and agreements.
• Having attorneys review those documents to ensure they don’t contain terms that could be detrimental.

Many Different Conflicts

Disputes typically arise at two points in a business relationship, said Katy Young, managing partner at Ad Astra Law, a cannabis-focused law firm in San Francisco.

Disputes can happen when the company is doing poorly, prompting the partners to start fighting and blaming each other. Conversely, disputes can come up when the company is making lots of money and partners get greedy and try to push others out.

Young said it is also important to recognize the types of personalities and situations that can give rise to conflicts.

One problem she often sees is when startup marijuana business owners overpromise the amount of money investors will earn. These investors often are friends and family, and the owner ends up owing too much money to too many people.

Another common situation includes what Young calls the “absentee financier.” In this case, a financier might give a grower a large sum of money to purchase a greenhouse. Next, the investor gives the marijuana operator—who often has relatively little business experience—control of the bank account, like any other company owner.

The investor takes their “eyes off the ball” for several weeks or months—only to return and find the bank account is empty and the cultivator has only excuses to show for it: The crop was stolen, for example, or bad weather damaged the plants.

In other cases, Young said, partners neglect to write contracts or agreements when they tap friends and family for loans or investments, complicating the settlement of any disputes that develop.

Another problem is mismatched personalities—for example, one partner funds a venture and the other puts in sweat equity and works much harder. In the end, the funder feels more entitled because of the financial risk he or she took. By contrast, the other partner feels more entitled because he or she worked much harder.

“Oftentimes, we see partnership disputes arise out of half-baked partnerships, operating agreements or bylaws and shareholder agreements that do not appropriately encapsulate the relationship,” said Garrett Graff, managing partner at the Hoban Law Group in Denver.

Put It in Writing

Such partner disputes can be relatively easy to avert — or at least be made easier to settle — without having to go through litigation if the parties formally record their relationships on paper through investment agreements, loan agreements, operating agreements, shareholder agreements or company bylaws.

“At their heart, partnership disputes are contractual disputes,” Young said.

Those documents govern the relationships the company has with its owners and shareholders. If those terms are breached, that can lead to a lawsuit. Without the documents and contracts, individuals and the business itself are unprotected, Young said.

But many groups fail to create written contracts—or when they do, the contracts are often poorly executed.

“We’re are often dealing with disputes that have very little paper evidence,” Young said.

When operators do have the foresight to have contracts drafted, they often do it superficially. For example, they will try and draft legal documents with the help of web-based tools or templates. But without an attorney’s expertise, such a document can omit critical terms, leaving parties to the contract without legal protections found in professionally drafted documents.

Furman stressed that partnership disputes aren’t just an early stage company issue. They can come up in more mature and growing companies, too.

“You’re going to need to raise capital to scale, which is going to involve contractual obligations with the lender or investor,” Furman said. “Expanding in other states can also mean connecting with new partners—and that is another set of contracts.”

Contracts Are Not the Enemy

State-legal cannabis business operators shouldn’t fear contracts being used against them by federal authorities. Rather, marijuana business owners should view contracts as a shield. The more seriously a business owner takes its contracts—and the more competent the lawyer who drafts them—the stronger the shield will be.

“Have a voice in it. Be active. Hire a lawyer who is knowledgeable about local and state regulations,” Young said. “Never enter a contract unless you’ve had a lawyer look at it.”

Attorneys stressed that disputes turn unwieldy and ugly when there aren’t well-constructed agreements that govern ownership and how assets will be distributed when a partner exits the business, among other situations.

“It’s important to hire a really good transactional lawyer to help you form your corporation right in the first place,” Young said.

Indeed, dealing with these issues now can save tens of thousands of dollars in litigation later, depending on whether you’re working with a boutique law office or a national law firm. And that’s not counting additional, costly expenses such as gathering evidence to bolster your case.

“If there is evidence scatted all over the internet that proves investments or loans or expenses you’ve incurred, it costs money to get vendors to retrieve that information and pay paralegals to put it together. It’s usually five or six figures,” Young said.

Furman advises clients to talk about the relationship that they’re forming and what they want to get out of it before actually committing to a definitive agreement.

“Come up with a detailed term sheet and actually find out if there is a meeting of minds with either the investor or the white-label relationship that you’re trying to enter it through,” she said.

Beyond that, official documents such as operating or shareholder agreements can help push partners to consider important details that can make any future breakup less harmful to the business and the individual parties.

“Not only does it set the legal parameters for how to conduct and, if needed, unwind the business, but it also forces parties to think about term sheets and where they might be in a year or two if the company is successful, or if the company is not successful. Have some of those discussions at the outset,” Furman added.

“You could do all sorts of diligence on your partners, and that’s always helpful. But it’s difficult to have that crystal ball as a business owner to know how the relationship is going to develop until it’s actually tested. So, protecting your interests with contracts is certainly a recommended protection.”

Factors to Consider

Graff said scores of issues must be considered in any agreements. These issues include:

• Voting rights—such as how much do votes count for, and are they per person or per share?
• The provisions governing a partnership or company’s dissolution. For example, if one partner or shareholder wants to sell, does he or she face restrictions governing the terms of the sale or the potential buyer? The other partners or shareholders, for example, might not want shares or ownership interests transferred to a personality that doesn’t mesh with the remaining team.

When drafting agreements, Graff said, lawyers should consider how the partners are working in the present and anticipate potential scenarios should they not work well down the road.

“Those are tough conversations to have when the going is good and everyone is still in that honeymoon phase,” Graff said. “Of course, it becomes far more subjective and emotional when you’re in an actual dispute.”

Omar Sacirbey can be reached at [email protected]

The U.S. Drug Enforcement Administration is asking job applicants whether they’ve used hemp before it was legalized in 2018, saying current and past drug use is taken into account in the hiring process.

The DEA posted the updated questionnaire for applicants this month, asking prospective employees to “Please include any Hemp or Cannabidiol (CBD) use, if used before 12/20/2018,” Marijuana Moment reported. The date is when the hemp was legalized in the enactment of the 2018 Farm Bill.

“The application of DEA’s drug use policy guidelines, in conjunction with a case-by-case analysis, will determine if an applicant’s prior drug usage or activity will result in the applicant’s non-selection for employment with the DEA,” the questionnaire states.

The DEA also asks applicants whether they’ve used marijuana, including for medical use.