Business Entity Formation: Risks and Liability

Forming a legal entity to conduct a cannabis-related business challenges the common requirement that a business pursue a legal objective. Nevertheless, numerous cannabis industry ventures--from publicly traded pharmaceutical firms to privately funded cannabis information providers--are seeking to profit from the industry despite the legally threatening environment

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OPINION: Northbay Wellness Group, Inc. v Beyries

789 F.3d 956 (9th Cir. 2015)

Bankruptcy court held that the doctrine of unclean hands prevented creditor Northbay, a medical marijuana dispensary, from obtaining relief from debtor attorney who converted its funds. Ninth Circuit reversed because the debtor's wrongdoing outweighed Northbay's and because application of the unclean hands doctrine to absolve an attorney of responsibility for stealing from his client would be contrary to the public interest.

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