Cannabis activists and individuals affected by previous marijuana laws are facing troubling situations in the evolving cannabis industry. They are encountering deceptive agreements that leave them without real ownership or financial benefit in cannabis businesses. These agreements, used by some cannabis companies, exploit the desire of affected individuals to secure social equity cannabis licenses meant to benefit those impacted by marijuana criminalization.
These companies offer to pay eligible applicants for their participation in the application process, promising substantial payouts if they win the license lottery. However, the agreements stipulate that applicants would hold 100% ownership interest on the application but wouldn’t receive revenue or profits from the business. Instead, they’d be required to sell their share for a nominal fee or be in breach of the contract.
Such agreements raise concerns about defrauding the state and exploiting those seeking social equity in the industry. Legal experts and organizations like the NAACP have criticized these agreements, highlighting how they harm the very people affected by previous cannabis laws. They argue that these agreements could result in a modern-day form of indentured servitude.
The state’s authorities have the power to review these agreements during the post-licensure verification process to ensure compliance with state laws and regulations. If violations are found, licenses may be revoked. These cases have raised important questions about the ethical and legal conduct of cannabis companies seeking to benefit from the emerging legal cannabis industry.
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