Ask any good lawyer the question, “is cannabis corporate governance important?” The answer will be a resounding yes. So why is it often ignored? Why do so many cannabis businesses treat governance as a box to tick on a checklist just once?
Here’s a fact pattern our cannabis attorneys have seen time and time again: an entrepreneur forms a cannabis company, throws together a few shoddy governance contracts with templates pulled off of Google, tosses them into a folder on their desktop, never thinks about them again, and starts working.
Today, I’ll break down the necessity of good corporate governance practices and documents for a cannabis business — and specifically those businesses in the marijuana side of the industry where the concerns are different from hemp or cannabinoid businesses. But first, I need to define corporate governance.
What is Corporate Governance?
Forming a cannabis company is as simple as filing forms with a state agency. Actually managing a company is a much different story. When lawyers and businesspeople talk about corporate cannabis governance, they refer to “the system by which companies are directed and controlled.”
In plain English, a strong corporate governance program is one in which a cannabis business