Defense against contract disputes in the commercial cannabis industry

2025-09-05

Background

We represented as the defendant in a complex civil action arising from a collaboration within the commercial cannabis supply chain. The plaintiff alleged breaches relating to design/fulfillment, revenue allocation, and performance metrics, seeking money damages and temporary/permanent injunctive relief. The dispute sat at the intersection of industry compliance and contract interpretation, including:

  • Priority and enforceability among a master agreement and multiple addenda

  • Conditional obligations tied to delivery, consideration, and KPI triggers

  • State-law cannabis compliance and public-policy considerations

  • Plaintiff’s application for Temporary Restraining Order (TRO) / Preliminary Injunction (PI)

Challenges

  1. Regulatory overlay: Cannabis is a highly regulated sector. State-law compliance issues can color both remedies and damages.

  2. Fragmented record: Communications spanned emails, chats, POs, and settlements—requiring a timeline rebuild and evidence matrix.

  3. Aggressive early relief strategy: Plaintiff sought immediate injunctive relief to disrupt defendant’s channels and pressure settlement.

Our Strategy

  • Front-loaded procedural review: Assessed forum, service, arbitration/choice-of-law, and pled facts; filed targeted demurrer / motion to strike to narrow claims early.

  • Injunction defense: Challenged TRO/PI on irreparable harm, likelihood of success, and balance of equities/public interest, emphasizing ongoing compliance and the adequacy of monetary remedies.

  • Evidence matrix & timeline: Built a four-layer record—master contract → addenda → orders/invoices → payment/settlement proofs—plus email metadata, showing plaintiff’s unmet conditions precedent / self-breach.

  • Compliance alignment: Produced a checklist (licensing, reporting, track-and-trace) to reframe the dispute from “compliance fault” back to contract risk allocation.

  • Negotiation cadence: After defeating the injunction, steered the matter to Early Neutral Evaluation (ENE)/mediation, leveraging narrowed claims and rising proof burdens to establish a favorable anchor.

Key Milestones

  • TRO/PI denied: Court declined temporary injunctive relief; status quo preserved.

  • Claims narrowed: Ambiguous/duplicative or insufficiently pled causes of action were dismissed or constrained.

  • Protective order: Limited disclosure of trade secrets and compliance workflows, reducing operational exposure.

  • Cost & timeline control: Shifted from “injunction crisis” to a predictable discovery-and-resolution track.

Outcome

Without any admission of liability, the parties reached a confidential settlement:

  • Plaintiff’s monetary demand reduced to under 20% of the initial ask;

  • Mutual dismissals and broad releases;

  • No ongoing injunction or operational restraints;

  • Cash flow and commercial channels remained stable; core projects proceeded on schedule.

Amounts and specific terms are confidential and summarized with client consent. Prior outcomes do not guarantee similar results.

Our Value

  • Converted an injunction-driven emergency into a managed discovery and negotiation process.

  • Used a compliance-plus-contract dual track to restore leverage.

  • Reduced uncertainty through evidence matrices and timeline management, delivering result predictability and business continuity.