Connect with us

Business

Opinion: 3 ways to protect a cannabis business partnership from litigation

Published

on

The cannabis industry has grown dramatically with each new state that legalizes its sale.

Still, the industry continues to have the reputation of being a no-holds-barred Wild West.

As a result, partnership disputes, bad business practices and “off-the-books” backroom dealings abound, particularly in contrast to other, more mature, established industries.

Here are three key pieces of advice on how to protect yourself from bad actors, acrimonious partnership disputes and costly legal disputes:

1. Protect your licensing: Each state typically requires that every marijuana business be licensed and the company owners undergo a background check.

It is critically important that your name is on the license if you are a partner or owner. For one thing, it is usually the law.

For another, having a name on the license is vital in preventing later ownership disputes about the existence and amount of your ownership.

Unfortunately, I often see people get cute with their licensing requirements. They have owners with handshake deals who aren’t on the license.

Investor groups, in particular, sometimes hear that they don’t need to be on the license, but in reality, they do.

If your name isn’t on the license, you might not later be able to claim an ownership stake or partnership rights.

On the other hand, if you are on the license, you have leverage in any disputes or major business decisions (including a sale) because regulators often require proof that all owners have consented to a transfer.

2. Formalize your partnership agreements: There are countless examples in the cannabis industry of handshake deals that have been happily in place for years until one of the parties tries to disown or dissolve it for any number of reasons.

These types of informal partnership agreements might be a lingering reminder of pre-legalization days when people were reluctant to put anything marijuana-related in writing.

However, now that marijuana is legal in many states, the old way of doing business serves no purpose other than to open up partnerships to contentious and expensive legal disputes.

Many states have enacted statutes requiring the recognition of partnership agreements, even if no signed paperwork exists.

However, the crux of the issue is not necessarily whether a handshake deal is enforceable – nearly all will be considered enforceable – but, rather, the sizable cost of the litigation required to prove its existence and to enforce it.

There’s also the onerous statutory provisions of the Uniform Partnership Act that apply to partnerships without a written partnership agreement.

The issues can get particularly muddy and lead to litigation when winding up a partnership.

Without a written agreement setting forth the process for dissolution, including potential liquidation of assets or buyout requirements, many partnerships will end up in litigation.

Signing a partnership agreement at the outset is always the best course of action because trying to unwind one after the fact can be as tricky as getting toothpaste back into the tube.

Once you attempt to formalize something informal, both parties usually begin jockeying to make new changes to the existing agreement that will work in their favor.

3. Safeguard minority owners: Shady accounting is one of the most notorious issues I regularly see in the cannabis industry, particularly regarding calculating profits and distributions.

A common problem I’ve encountered is a majority owner who tries to make profits look lower to reduce required profit distributions to minority owners while increasing profits for themselves.

A frequent example of this type of self-dealing is when payments for goods or services are made to affiliate businesses of the majority owner, meaning that they are, in effect, paying themselves twice and reporting lower profits to minority partners.

Perhaps surprisingly to many, such a practice might not be illegal or a breach of contract.

Many limited liability company operating agreements and partnership arrangements contain provisions allowing managing or majority owners to engage in some level of self-dealing.

Minority owners should protect themselves from this type of situation by having a written partnership agreement that requires:

  • Notification of transactions with companies in which the majority owner has a stake.
  • Any transaction with an interested party to be done on the same terms as an arm’s-length transaction.

Agreements should also provide minority partners with the ability to obtain an accounting of the amount spent and specific uses.

Having that language in writing is often enough to deter dishonesty because majority owners understand that minority owners have protections in place and can take legal action if needed.

These three examples illustrate why it’s beneficial for marijuana business partners to have an experienced cannabis litigation attorney prepare and review partnership agreements.

Don’t be penny-wise and pound-foolish. Spending a few hundred dollars upfront can save many thousands of dollars in potential litigation costs down the road.

David Olsky is a partner at Denver-based law firm Fortis Law Partners. He can be reached at dolsky@fortislawpartners.com.

Source: https://mjbizdaily.com/3-ways-to-protect-a-cannabis-business-partnership-from-litigation/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

Published

on

By

A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

Continue Reading

AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

Published

on

By

Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

Continue Reading

Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

Published

on

By

Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

Continue Reading

Trending

Copyright © 2022 420 Reports Marijuana News & Information Website | Reefer News | Cannabis News