Cannabis Partnerships

Many cannabis handshake deals result in the parties forming an inadvertent cannabis partnership. The words “partnership” and “joint venture” are often thrown around casually. Many early stage cannabis entrepreneurs know they want to do some type of business venture, often with a business partner, but they often do not know why or how to avoid forming an inadvertent cannabis partnership.

Why are cannabis partnerships bad?

Cannabis partnerships are undesirable because general partnerships as a legal entity are undesirable. If two people go into business together based on a handshake deal, they are, from that point forward, partners in an unregistered state general partnership, complete with all of the legal and state and federal tax obligations of a general partnership.

It may surprise you that the partnership is equally undesirable whether the partnership is a registered or unregistered partnership. This is because partners in a general partnership are saddled with both the good and bad aspects of a general partnership. Both partners can and do represent the partnership as equal partners, with equal rights to governance and profits and equal obligations regarding all partnership debts and other liabilities.

Most business partners agree that one partner is often better suited for business

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