The Dawn of the I-502 Era

Posted: January 26th, 2015 | Author: | Filed under: I-502 Marijuana, Small Business Topics | Comments Off on The Dawn of the I-502 Era

My law firm, particularly through my partner Heather Wolf, has taken the lead in coming to grips with the subtleties and nuances inherent in the new Washington marijuana legislation, and it’s been quite a ride for marijuana investors, licensees and their professional advisers!

One of the areas that I have become involved in as a business attorney is the funding of newly-licensed marijuana production and processing operations.

The problem is simple. Banks are extremely reluctant to make loans to I-502 operations, whilst license holders are desperate for operating capital to build out facilities to comply with the terms of their licenses. Then, because there are a limited number of licenses in existence and a lot of folks who want to invest in 1-502 operations, the folks with the funds aggressively seek out licensees to invest in.

As a result of this dynamic, we typically see either investors who end up with horribly-structured investments with little knowledge of what they are getting into, or, cash-poor, desperate licensees who literally give away the farm through lack of planning. To make matters considerably worse, the investment transactions are all too often in violation of federal and state securities laws and almost never involve any sort of agreement between the founders and new investors.

If you are an I-502 licensee or potential investor in an I-502 operation, proceed with caution.