Cannabis Contracts 101: Authority and Why it Matters

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Cannabis contracts are – in the simplest sense – binding agreements between two parties. But how you get to something being “binding” can be complicated. And in the cannabis industry, where things move a mile a second and people often overlook basic contract requirements, the results can be disastrous. Today I want to focus on a concept known as “authority” and explain why I think it is so critical for the cannabis industry.

What is the deal with authority in cannabis contracts?

When an individual who is (a) an adult, (b) not under duress, and (c) of sound mind enters into a contract, there is almost no question it is binding. [Yes, we are talking about cannabis contracts and federal illegality is an issue, but let’s put that to the side for a second.]

But what about contracts with entities as parties? While you’ve probably heard of things like corporate personhood, and seen contract definitions of “person” to include entities, in reality entities are legal creations and cannot physically sign contracts or do anything else. Companies act through employees or other authorized people, commonly referred to as “agents.”

The thing about agents is that they need

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