California Cannabis Litigation: Airing the Dirty Laundry Edition

We’ve written a good amount on how ugly litigation will be. There’s federal illegality and the possibility that a court refuse to rule on a contract dispute because cannabis is federally illegal. Companies can be sued for false advertising and have all of their profits attributable to the false advertising disgorged by competitors. Allegedly false claims can also be the subject of class-action shareholder suits. If a company is engaged in ongoing wrongs, courts can literally order them to stop via injunctions, and if they do not, people could be held in contempt and go to jail. Courts can award punitive damages just to punish companies who do very wrong things like engage in fraud. The list goes on.

One thing that many cannabis companies may not even have on their radars is the damage that can arise through pleadings and during the discovery process in court litigation. Pleadings are the complaint and answers in any case. Plaintiffs file complaints and make allegations about defendants, and defendants answer those complaints and admit or deny the allegations. All of this is public unless companies are in arbitration or a court has ordered that it not be public (and good luck

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