Cannabis Business Litigation: What’s the Point of a Demand Letter?

It’s no secret that there’s been a huge uptick in cannabis disputes in 2020. If anything, financial pressures due to COVID-19 have made a lot of these disputes more pointed. With the rise in cannabis disputes  this year, we thought we’d do a deeper dive into something that’s taken for granted in a lot of cannabis litigation: the demand letter.

A demand letter is exactly what it sounds like: one party will send a letter making demands to another party. In most cases, demand letters are sent before a court case or arbitration is filed, and the goal of a demand letter is to prompt the other side into acting or not acting so as to avoid costly dispute resolution. Demand letter recipients usually are under no obligation to keep them confidential (unless the parties are in a contractual relationship and the contract calls for it), so chances are that if a court case or arbitration is ever filed, the demand will be part of the proceeding.

Readers may be asking themselves what the point of a demand letter is for parties who are close to litigating or arbitrating; in other words, why incur extra legal fees drafting and

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