In the dynamic cannabis industry, disputes are not uncommon, but traditional litigation often proves too lengthy, costly, and adversarial to meet the needs of business owners. Faced with such obstacles, many are turning to alternative dispute resolution (ADR) as a more suitable pathway for resolving disagreements. ADR methods like mediation and arbitration can save time, money, and stress while also preserving relationships essential in the tightly networked cannabis community.
ADR provides a private, collaborative framework, which is especially valuable for businesses aiming to protect sensitive information and reputations. ADR methods are typically informal and solution-focused, fostering mutual understanding and often allowing for a resolution without the need for prolonged legal battles.
Cannabis businesses can leverage two ADR options: mediation and arbitration. In mediation, a neutral mediator facilitates discussions between the parties, helping them work toward a mutually agreeable solution. Control over the outcome stays with the parties, encouraging collaboration and preserving relationships. Arbitration is more structured than mediation but less formal than litigation, employing a neutral arbitrator who makes a binding decision. The process is faster and private, making it particularly appealing to industries where confidentiality is paramount.
The benefits of ADR for businesses include time and cost savings. ADR resolves disputes faster than litigation, which can drag on for years. In a rapidly evolving industry, time is critical, and ADR keeps businesses on track without prolonged disruptions. In addition, ADR keeps disputes private, unlike court proceedings. Confidentiality is essential for companies protecting sensitive information and business processes in a highly scrutinized industry.
Cost efficiency should not be undervalued. Traditional litigation often carries high legal fees, whereas ADR is generally more budget-friendly. With financial demands already high in the sector, the affordability of ADR makes it a smart alternative.
Cannabis-related disputes require more than general mediation or arbitration skills. The industry’s constantly shifting regulations and unique operational challenges mean businesses need ADR professionals with specific expertise.
Effective mediation and arbitration in this industry require an understanding of the unique regulatory and operational challenges the industry faces. A knowledgeable legal firm can help:
Navigate regulatory nuances. State-by-state regulations vary widely. Advisors who are well-versed in these differences and can manage disputes across jurisdictions will help parties stay compliant and avoid future regulatory issues.
Understand industry challenges. Cannabis businesses face distinct financial, operational, and reputational pressures. An experienced advisory team can help clients reach resolutions that align with real-world priorities and business goals.
Reach informed decisions. Effective ADR isn’t about reaching just any resolution, but one that works within the industry’s context. A firm that has deep familiarity with cannabis operations ensures decisions are made with a true understanding of the industry’s demands.
Mitigate compliance risk. Each step in the supply chain must adhere to strict regulatory standards. Experts in these nuances can guide clients toward solutions that comply with the law and avoid further regulatory scrutiny.
Address cross-jurisdictional challenges. Regulations differ across state lines, complicating operations and partnerships. A well-versed advisor can help tailor the ADR process to fit each state’s regulatory environment, reducing compliance risks and facilitating smoother operations.
ADR allows businesses to resolve conflicts efficiently, preserving resources and focusing on growth and innovation. Whether mediation or arbitration, ADR is designed to facilitate the right solutions for long-term success.
Bianchi & Brandt Founding Partner Laura Bianchi began focusing on cannabis law in 2010 and now represents individuals as well as private and public companies in all facets of industry endeavors from applications and start up through operations to continued growth, expansion, and exit.
For almost a decade, Bianchi & Brandt Founding Partner Justin Brandt has represented cannabis clients including multi-state operators, dispensaries, cultivators, and processing operators. In addition, he is a policy expert in the emerging, highly regulated psychedelics arena and a frequent speaker at industry events.
