Rhode Island Contract and Lease Drafting

For businesses setting up in the cannabis industry in Rhode Island, there are enough regulatory hurdles to contend with without creating extra problems with the business contracts you draft and sign.

Cannabis contracts and leases create potential legal, tax and licensing hurdles that lead to extra unwanted headaches for business owners. These headaches can even escalate into full-blown legal disputes and litigation over leases and contracts that have severely impacted some operators in the cannabis industry.

Rhode Island Contract and Lease Drafting

Because of the extra challenges involved in running a cannabis business, it’s important to protect yourself from the common issues that can turn problematic. That requires the type of in-depth knowledge of the cannabis industry that only comes from experience.

The bottom line is that when preparing business contracts, without the right advice and attention to detail, you are placing unnecessary risks on your business.

At Cannabis Law Solutions, our lawyers have helped many cannabis entrepreneurs prepare the contracts and leases that protect their businesses and provide the best foundation for a profitable future in the industry.

What’s wrong with generic cannabis lease agreements?

Cannabis commercial space leases are complex by nature. Entrusting the future of your cannabis business to the types of generic agreements or templates downloaded from the web is inadvisable. Yet many new cannabis businesses attempt it in the mistaken belief that it will save money.

The amount you will save, when weighed against the risk of a poorly drafted cannabis business contract or lease agreement, is negligible.

Besides, while many types of businesses successfully use templated agreements without issues, cannabis businesses are under the microscope in Rhode Island and elsewhere. The industry is just starting and everyone’s eyes are on the industry, waiting to jump on mistakes.

Most commercial real estate leases include a clause related to “applicable law.” This usually states something like the following:

“…tenants cannot use the premises for any unlawful purposes, including, but not limited to, using, manufacturing, selling, storing, or transporting illicit drugs or other contraband, or violate any law or ordinance, or commit a waste or nuisance on or about the premises.”

While you may argue that cannabis has been legalized under Rhode Island law, it remains illegal under the federal Controlled Substances Act. That is unlikely to change anytime soon, so by using a generic agreement, you may be opening your business up to contractual disputes.

You must address the “disconnect” between state and federal laws. Cannabis business lease agreements need to remove exclusions from federal or state laws that might inadvertently prevent the operation of a cannabis business on the premises to be leased.

They should also explicitly state the “permitted use” activities on the premises, such as growing, manufacturing/extracting, dispensing or retailing.

This is just one notable example of why it’s important to consult with a knowledgeable cannabis business lawyer before drafting the contracts that will help to define your cannabis business in the years to come.

Other potential issues with cannabis lease agreements

  • The length of the lease term may not be given due consideration: this should be discussed with an experienced cannabis business lawyer before committing.
  • Local zoning and real estate location issues: the premises must comply with often-stringent local municipal regulations as well as state laws — and cannabis businesses need to check who the neighbors are.
  • Property alterations and utility use: the alterations that the landlord consents to acceptable water, electricity, and air quality/circulation usage must be specified in the contract.
  • Landlord access: generic leases usually provide landlords with the right to access the property at any time, which may not meet cannabis business regulatory compliance
  • Property insurance: most policies are not suitable for cannabis businesses and those that are suitable for a landlord may be prohibitively expensive for your business.
  • Profit-sharing: some commercial landlords expect a profit-sharing agreement that may not be suitable (or legal) for your cannabis business.
  • Hazardous materials/waste disposal: generic lease agreements that prohibit the use and storage of “hazardous materials” will not work if it could be argued that cannabis is a hazardous material — so this potential clause needs to be addressed.

Why is it so critical to get cannabis contracts right?

Without addressing the above in your contracts and lease agreements, you are risking the potential for disputes, litigation, and expensive delays in establishing and growing your cannabis business in Rhode Island.

You need to draft cannabis contracts and lease agreements that cover every angle — which can be challenging in such a rapidly changing sector.

Aim for clear, easy-to-understand and unambiguous language that sets out the terms of the agreement. Never sign any contract before having it reviewed by an experienced cannabis lawyer who is familiar (and up-to-date) with the local Rhode Island laws and regulations.

This will safeguard your interests while you remain focused on getting your business established.

How our cannabis attorneys can help you draft effective contracts

When you draft the necessary contracts for a cannabis business in Rhode Island, the support of our knowledgeable cannabis business attorneys can provide the complete peace of mind you are looking for.

We’ve watched the cannabis industry grow around the U.S. and have helped many entrepreneurs not only set up but flourish in their state. The foundation of this is watertight contracts and lease agreements that address local, state and federal issues.

With Rhode Island legalizing recreational cannabis but federal laws still prohibiting it, we can help you address this major disconnect and protect you from the time of business formation and beyond, as you grow and become more established.

The strongest cannabis businesses in Rhode Island will be those that have planned, prepared and protected themselves from the many complexities and challenges ahead — starting with your business contracts.

For informed legal advice, call 866-329-0729 for a consultation with a knowledgeable cannabis attorney at Cannabis Law Solutions.

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How will our cannabis and psychedelic business services help you

Cannabis & psychedelics business entity formation

Whether you are looking to form a limited liability company (LLC) or a corporation, our experienced business lawyers can discuss the pros and cons of both and help you incorporate your business with the optimal structure to achieve your goals.

Cannabis & psychedelics business licenses

If you want to run a cannabis or psychedelics business, you will need a valid business license issued by your state authority as well as local permits. Eligibility criteria are likely to be stringent and we can help you navigate the often-complex license application process.

Cannabis & psychedelics corporate documentation

Whether you need to prepare for a license application, transfer of business ownership, change of corporate structure, transfer business location or another business process, we can help you identify and draft the documentation you need to operate legally in your state.

Cannabis & psychedelics administrative law

State authorities watch licensed and unlicensed cannabis and psychedelics businesses closely. If you violate regulations, you could face an administrative penalty. Our attorneys can provide representation or help you prepare for an administrative hearing, settlement conference or appeal.

Cannabis & psychedelics disputes and litigation

Whether you have a dispute with another business, a legal issue with one of your partners or a licensing or administrative issue, you may need legal assistance to help resolve it. We are adept at alternative dispute resolution methods as well as civil litigation.

Cannabis & psychedelics regulatory compliance

As the cannabis and psychedelics industries emerge in states around the U.S., they are more heavily regulated than most other industries. We can help your business navigate the red tape and plan to stay on the right side of the regulatory authorities in whichever state you are based.