#cannabisindustry – “Directors and officers insurance has been pricey and tough to obtain for cannabis companies since the industry started requiring coverage.

D&O is difficult in most business sectors (For more on that check out: “You’ve Heard it Before, so Here it is Again: D&O is a Tough Pill for Cannabis.”), but cannabis businesses may pay up to 50% more in premiums for D&O – if they can get it…..

Small- to mid-size cannabis companies, by and large, don’t want it, an Insurance Journal poll shows. Roughly 20% of respondents said they sold no D&O policies to these companies, and about 40% said that fewer than one-in-four buy a D&O policy. Few said they had a good chance to sell one…..

Price is, of course, one of the top reasons Baker hears when a small- to- mid-size company doesn’t want a D&O policy, and he said they also often offer the reasoning they are still too small to need it.

Beyond that, Baker believes there’s a widely held belief that the directors and offers of privately held cannabis companies don’t feel they’re vulnerable to legal actions relating to their managerial capacities.”


#cannabisindustry – Education – “The alter ego theory of liability attempts to reach pockets beyond the putatively liable business entity. Doing so is known at piercing the corporate veil. The alter ego theory of liability is not limited just to piercing a company to reach into the pockets of the owners. It may also be used to reach into other entities. And veil piercing may be accomplished in few different ways.

Vertical piercing refers to piercing the veil between a subsidiary and its parent to hold the parent company liable.

Horizontal piercing refers to using the alter ego theory of liability to hold sister company’s liable.

Reverse piercing refers to using the alter ego theory of liability to hold a company liable for the conduct of its owners…..

As the name suggests, the “alter ego” theory of liability ultimately concerns whether the members or shareholders have treated the corporate entity as a “mere instrumentality” or “alter ego” of themselves. Typically the bar to pierce the veil is high, and a court’s use of its equitable powers is exercised only when there is clear evidence that those in control of a company have used the corporation for improper means such as fraud.

Keep in mind that a plaintiff must have a reasonable good faith belief that its allegations are true. Oftentimes a plaintiff does not have enough information to allege a claim for alter ego theory liability. But where a plaintiff does have such information, a claim for alter ego liability is a powerful one. It allows the plaintiff to reach past the ordinary limitations of liability into the pockets of shareholders, members, or sister or parent companies.”


Courtesy of Cannabis Industry Journal

#californiacannabis – “In every state with regulated cannabis, there is a requirement to label the potency of products so consumers can make informed purchasing and medicating decisions. The regulations usually state that the THC/cannabinoid content on the label must be within a particular relative percent difference of the actual tested results for the product to be salable. In California, that threshold is +/- 10%.

The problem is, with all the focus on THC percentage in flower and concentrate products, enormous pressure has been placed on cultivators and manufacturers to push their numbers up. Higher numbers = higher prices. But unfortunately, improving their growing, extraction and formulation processes only gets companies so far. So, they proceed to ‘lab shop’: giving their business to whichever lab provides them the highest potency.”