Are Marijuana Contracts Enforceable in California?

May 3, 2016

 

Marijuana contracts are a hot topic today due to cannabis legalization efforts and it is important for Californians to understand whether or not marijuana contracts are enforceable by the state. Activities that are legal under state law but illegal under federal law rely on courts to decide whether the contracts involving the activity are illicit and therefor void under contract law. A workaround for California marijuana firms may be through arbitration practices. The Federal Arbitration Act, set up in 1925, is an act of Congress that calls for judicial facilitation of private dispute resolution through arbitration. The arbitral award is a merit-based determination by the arbitration tribunal and is similar to that of a judgment given by the court system. The arbitration members give up the right to appeal on substantive grounds to a court and the courts rarely have the ability to overturn arbitral awards.

 

States essentially determine the validity of marijuana contracts but there could be future decisions made through arbitration and these verdicts have a track record of holding up in state courts. Firms seeking marijuana contracts will benefit from safe and promising contractual discussions and arbitrating associations will benefit from the repeat business of set negotiations. There is a case-by-case analysis that is required to choose whether a specific California law is anticipated there is no preemption where FA has no procedural provisions pertinent in state court. 

 

 

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