60
82
Though it may seem counterintuitive, including express language recognizing that cannabis manufacturing and distribution is still nominally illegal under the Controlled Substances Act prevents a contracting party from making a morality play disguised as the illegal contract defense. It also removes any argument about ignorance of the same.
D. Mandatory Arbitration Provisions and Careful Selection of Arbitrators.
One way to avoid court altogether is to include mandatory arbitration provisions that require arbitration rather than litigation. As part of a gold standard arbitration provision, the parties should contract to select a specific arbitrator or arbitrators known to be friendly to the cannabis industry and cannabis-related contracts. Though an opposing party may still raise the illegal contract defense in an arbitration,
knowing how an arbitrator has
previously handled the defense
regarding cannabis-related
contracts leads to far greater
predictability in the process than
litigating in courts with very
little controlling case law.
98