I visited three retail cannabis stores recently and made purchases in two. The three stores were in two different cities in Southern California's Coachella Valley, and each presented a fairly different shopping experience.

What made such an impression were the attitudes and skills of the employees I encountered in each dispensary, and my overall experiences as a consumer. Each store was designed differently, with product variety and placement obviously catering to its local market. The “vibe” of each store also reflected the demographics of the area being served. For example, the dispensary located in a high-end shopping area was like walking into an expensive jewelry store: Product was displayed in separate glass and chrome cabinets with modern lighting, showcasing product merchandised with small pieces of art and décor.

The budtenders were all women wearing uniforms that appeared custom made—black pencil skirts and green long-sleeved tops with dispensary logo—and they took me on a guided tour. Security was discretely present. At the end of my shopping experience, another woman walked me to the lobby and asked me how I liked the experience and whether my needs were met.

Another dispensary located near the freeway was similar in that it had a security person inside and a front desk person who checked IDs. The atmosphere was very different once you entered the product area. This store was set up for efficiency and convenience, two factors that its customers (travelers and tourists) would want. Product was organized by delivery system (i.e., smoking/vaping; edibles; extracts and oils; etc.) and displayed on wall merchandisers and in long glass counter cabinets. Budtenders were positioned along the counters by product area. Regardless of these differences, all the budtenders I encountered were knowledgeable, polite, initiated conversations, didn’t rush me and seemed genuinely glad to help me decide among the varieties of products that they presented to me.

I must say that my entire experience was very different than the consumer experiences I have had in other retail shops selling non-cannabis products. At the dispensaries, I experienced customer service as originally defined, and it made me want to come back. This was where the owner/manager’s leadership, staff training, the selection of products, back office support and the standard operating procedures (SOPs) all came together to define the store’s mission through a single transaction between the customer and the budtender.

Leaders with emotional intelligence are more likely to create a workplace where employees are committed to providing excellence in customer service.

Delivering Great Customer Service

Do my customer service experiences sound like they would happen in your dispensary? Do you have employees who want to come to work every day and provide excellent service to your dispensary customers?

There are many available resources and opinions about what makes a great customer service representative. Here are the attributes that I experienced:

1. Patience: They took the time to truly figure out what I wanted or needed.

2. Intuition: Understanding and intuiting what I was telling them, by listening for subtle clues about my current mood, my personality and how I expressed my needs.

3. Product knowledge: They knew their dispensary’s products, how they typically perform, the differences between delivery options (vape, edible, oil, tincture, etc.), and had suggestions for what might work best for me.

4. Staying positive and using positive language: When making product comparisons, they pointed out the positive qualities of each product. They all had a cheery persona despite the number of questions I asked and my lack of knowledge.

5. Keeping calm under pressure: Excellent customer service providers can “keep their cool” in stressful situations.

6. They were articulate: Each budtender shared a compelling message about their dispensary’s products.

7. Work ethic: There seemed to be a willingness on the budtenders’ part to not take shortcuts and to do what it takes ensure I was a satisfied customer.

8. Closing the sale: They ended the conversation with an intent to make a sale based on ensuring I was satisfied with the purchase.

Customer service is not a department, but a philosophy to be embraced by every employee, according to Forbes. Certainly, “good” service isn’t good enough anymore given the competition for dispensary customers. A dispensary is service-driven, and customer expectations are high. Dispensaries must not only get it right for customers each time, they must do the “extra things” that inspire loyalty and make the customer want to come back.

Inspiring Great Customer Service

My recent customer service experience leads me to wonder what drives the employees in those dispensaries to want to come to work and provide excellent customer service?

One critical factor that influences all others is the positive relationship between employees and their direct manager, who often is the dispensary owner. The leadership behavior of an employee’s manager is highly correlated to employee engagement. And engaged employees are those who are committed to your dispensary’s mission of providing outstanding customer service.

When dispensary leadership is committed to making the dispensary a great place to work by engaging employees, we often find that the owner/manager displays the leadership trait of emotional intelligence.

According to the Society for Human Resource Management, “Emotional intelligence is the ability to understand your own and others’ emotions and how they drive behavior, and then using that knowledge to motivate others.” Emotional intelligence has to do with one’s ability to both recognize and control his/her own emotions, as well as an awareness of and sensitivity toward others’ emotions. A dispensary owner/manager’s emotional intelligence can influence how they manage the dispensary team and how they interact with each employee.

Leaders with emotional intelligence are more likely to create a workplace where employees are committed to providing excellence in customer service. Decades of research now point to emotional intelligence as the critical factor that sets superior leaders apart from average leaders; these are leaders who pay attention to people, provide a work environment where employees feel comfortable to take risks and to voice their opinions. These leaders are aware of how others will react emotionally and can leverage emotions for the good of the organization. This is the kind of leader who cultivates a work culture that makes employees want to work for them. Because these employees have this type of leadership, they are then able to pass on their positive feelings about their job to the customer. And thus, the foundation of excellence in customer service is established. Because the employee is engaged, they care about the success of the dispensary and are emotionally connected to its success. Again, success for most dispensaries is defined by the experiences of its customers. Excellent customer service that is replicated continuously and consistently, every hour of every day the dispensary is open, means success for the dispensary and for the dispensary employees.

A telltale sign of leaders who need to work on managing their emotions is that they frequently have upsetting or difficult interactions with others.

Emotional Intelligence How-To

A lack of emotional intelligence in leaders or the management team can be devastating to the rest of the dispensary workforce. Leaders who are low in emotional intelligence tend to react poorly in stressful situations because they fail to manage their emotions. Sometimes this failure comes across as aggressive or as a verbal attack. This will create an even more stressful environment where workers are nervous about when another outburst or awkward situation might happen. This could have a very negative effect on productivity and certainly on customer service, as employees are distracted and not focused on the customer.

A telltale sign of leaders who need to work on managing their emotions is that they frequently have upsetting or difficult interactions with others.

Lacking emotional intelligence means that the leader sets a poor example of how to treat people—an example that can “trickle down” through the dispensary, often resulting in low morale, lack of employee engagement, and high turnover. An employee who feels unmotivated or dislikes management will likely reflect that feeling when dealing with customers.

Thus, to increase customer service performance in your dispensary, you might want to improve your emotional intelligence. The good news is that it is possible to develop these skills by focusing on the four elements of emotional intelligence:

• Self-Awareness: Get some honest feedback about your current behavior.
• Social Awareness: In social interactions, focus more on the other person than yourself.
• Self-Management: Take a 20-second pause that allows your "thinking brain" to control your behavior rather than engaging your "emotion brain."
• Relationship Management: Practice being positive with your employees to give them a sense of hope and commitment to the goal.

Increasing your emotional intelligence takes work, but the benefits make the effort worthwhile. As an emotionally intelligent leader, you will see positivity in your dispensary, increased engagement of your employees, and satisfied repeat customers who have received excellent customer service.

Note: This column is not to be considered as legal or financial advice nor does it address all HR regulatory actions that may impact your business.

Today, Alameda County’s Garden of Eden dispensary is a model of efficiency, according to its chief financial officer, Shareef El-Sissi. The California dispensary welcomes some 1,400 patients daily, El-Sissi estimates, to its 1,000-square-foot space, which makes it one of the busiest dispensaries in the country—as well as one of the smallest and most technologically friendly, he adds. That’s a lot of people in a little area, and Garden of Eden was not always as adept at handling them as it is now.

“Trying to serve 1,200 customers or 1,400 customers in a day—that broke the shop,” and resulted in long customer wait times, El-Sissi says. To make matters worse, a 2016 review of the dispensary by the Alameda County newspaper, the East Bay Times, described it this way: “Garden of Eden sits beneath a huge billboard in a run-down, one-story, cinder-block retail shop, with little to attract shoppers beyond copious street parking. … The retail area is small, with two cash registers. There are no clones, edibles, extracts, or trappings. The only splurges are the [HD] flat-screen menus, displaying a truly miraculous marijuana lineup.”

El-Sissi admits that this is a “100-percent” accurate description of the dispensary at the time, adding that it was “just a beige [building], as simple as can be.” Back then, the dispensary’s menu kept patients coming in for the time being, but Garden of Eden knew that wouldn’t last. To stay competitive, the company, which launched in 2003, had to reinvent itself with its customer in mind.

At first, Garden of Eden was reluctant to make sweeping changes. As El-Sissi explains, the Garden of Eden team didn’t want to upgrade the space—neither technologically nor aesthetically—because it had been difficult to operate the dispensary in Alameda County. The dispensary—along with all dispensaries in the county—was only allowed to sell flower for many years, which limited its ability to become profitable. In addition to that hurdle, “We had been raided by the DEA,” El-Sissi says. “We had been [audited] by the IRS—you know, all these occurrences that kind of limited our desire to invest a ton of money into a shop where we didn’t know if we were going to be open the next day or the next year, and we had a bureaucracy in Alameda County that made it really tough for us to build a new building.”

However, in 2015, the dispensary team began conceptualizing the major re-design that patients enjoy today. “We basically have been clawing and fighting uphill for a long time,” El-Sissi explains. By this time, regulations that had slowed the dispensary’s growth—such as one that restricted dispensaries from having more than 20 pounds of flower on site at one time—began to ease or be eliminated.

As “the times kind of shifted, we were able to dedicate the attention that the shop really deserved,” El-Sissi says.

Garden of Eden contracted multidisciplinary design firm Sand Studios for its redesign, which was completed and unveiled in September 2018. This time, when the East Bay Times wrote about the dispensary, its tune had changed: “Smiling greeters at a check-in desk, soft lighting and creams displayed behind glass make the Garden of Eden more like a spa than a marijuana dispensary.”

According to El-Sissi, “We literally didn’t spare any expense to build the Garden of Eden—to build that world-class experience that our customers had deserved for a long time here. That’s something that we had envisioned for a long time.”

Paradise: Rebuilt

Garden of Eden and Sand Studios worked for six months to refine the redesign plans, El-Sissi says. Construction took an additional eight months. “The end product is really beautiful, really efficient,” El-Sissi says. “We’re able to serve a lot of customers.”

Today, the building’s exterior is wrapped in ivy and “is very easy on the eyes,” El-Sissi says. “The front door is a piece of art,” he adds, mixing metal and glass to make a bold impression on customers as they enter the dispensary.

Inside the store, “we went from a two-room layout to a single room,” El-Sissi says. “Now, when you walk into the front door of the dispensary, there’s one continuous space that patients can go in—and we kind of broke down the barrier between intake and retail [for medical products].”

The dispensary’s gray concrete floor blends well with the bronze-glazed glass displays. “There’s all these different design elements that kind of pop out at you,” El-Sissi says. “For the most part, the first time people walk in, they are really taken aback. You see people looking up, down, left and right, or looking at the lighting.”

The color, lighting and decor choices were purposeful: “People want to go to beautiful spaces,” El-Sissi explains. “So we wanted to attract people on the outside, but we also wanted people to feel good on the inside. The lighting selections, the color of the floor, the color of the glass, the countertops, all of those elements of design to make you feel good.” Flat-screen TVs positioned throughout the space rotate among 12 channels that show information or menus. “We’ve used tech to enhance the experience,” he says.

What’s more, El-Sissi adds, “We owe it to our employees to feel really good. I wanted them to want to come to work and … be in a room filled with oxygen being produced by plants.” As such, greenery fills the space via a large live wall across the room from the check-in counter.

Garden of Eden’s changes weren’t strictly aesthetic, though.

With a check-in process performed entirely on iPhones, Garden of Eden’s patients can quickly obtain their medicine without hassle, El-Sissi says. Before transitioning to the smartphone system in 2017, Garden of Eden captured required patient information, such as names, purchases and dates of visits, by hand.

“As we got busier and busier, we needed to make those systems quicker, so we moved into scanning driver’s licenses and capturing people’s pictures so they didn’t have to bring in their recommendation or their ID because we had that information stored in the system,” El-Sissi says.

Garden of Eden, in its tech-friendly fashion, has also “designed our own inventory system that enables us to count the entirety of our inventory every day,” El-Sissi says. “We’ve been able to count a ton of money—and a ton of our inventory value—in a very short period of time.”

Its inventory system works a little like this: Using software called Treez, employees can “cycle-count” inventory and sort it by product and location, says El-Sissi. “Counting inventory daily allows management to reduce shrinkage and hold employees accountable for the inventory they came in contact with,” he says.

These are merely a few examples of how Garden of Eden has evolved to become a forward-thinking and in-demand dispensary.

In addition to its modern-day check-in system and its inventory tracking method, Garden of Eden has also prioritized its digital presence. “If you take a look at our digital footprint—whether it’s social media or on our website—you’ll see we really care about our representation of our business digitally as much as we do physically,” El-Sissi says.

On the company’s website, prospective patients can take a 360-degree, virtual tour of the space before ever entering the building. “We’ve also started a pick-up program that if you preorder online, you don’t have to wait when you come in,” El-Sissi says. “We’re trying to improve the efficiency of the store so customers don’t have to have a waiting experience. … The more preorders that we [can] get, the quicker and shorter the wait times are. That’s very important for us.”

Whether they order online or come into the store to browse, El-Sissi says that Garden of Eden’s patients do have preferred products. According to him, the store’s most popular products include the Honeycomb Farm brand of flower, and vaporizers account for roughly 20 percent of total sales. When it comes to flower, “We don’t buy flower in huge lots,” says El-Sissi. Instead, “We buy small amounts and we keep the flowers for [short] stints and keep [the menu] constantly rotating.” At any given time, Garden of Eden has about 24 cultivars on its menu, El-Sissi says, including some “classics” the dispensary always keeps in stock. But, as he explains, “The best cultivators tend to keep their offering relevant to the times as newer, more exclusive genetics command higher prices. When we find a cultivator who works well [with] the classics, we find shelf space for them.”

Paradise: Expansion

Garden of Eden has evolved quickly, but the dispensary is far from finished. “We’re really turning toward becoming the Apple store, where you sell your products and they are super high quality and they are well designed, well packaged, well thought out—and that’s the bulk of our business. That’s something we’ve been working toward.”

It has also been working toward opening as many as four additional dispensaries. “By the end of this year, we’ll have one in Union City, Calif.,” El-Sissi says, describing it as a “campus” that will have its own indoor cultivation facility, distribution and retail “in a city where there’s no other cannabis businesses open today,” he says. “That [Union City location] is going to become Garden of Eden’s hub and kind of the headquarters of our entire business.” Additional locations are also planned for outside Fremont, Calif.; Ukiah, Calif.; and in Mendocino County, Calif.

“We’re going to continue to seek licenses for retail and … continue to extend our retail footprint,” El-Sissi says. “We already have enough infrastructure for us to do cultivation—outside cultivation and indoor cultivation—that we really could be growing into that [footprint].”

El-Sissi anticipates these new locations and operations will grow quickly—just as its original location did—without much marketing. “I think word of mouth goes a long way, especially when you’re in an area [where] you may be the only game in town,” he says. “It doesn’t take a ton of spend to have really wide-reaching impact when you’re selling quality product,” and, of course, enjoying Garden of Eden’s new design aesthetic.

Jillian Kramer is a Cleveland, Ohio-based freelance writer.

In this month’s cover story, Allison Ireton, co-founder of Bloom City Club in Ann Arbor, Mich., says new patients, uninitiated to the wide variety of products and options in the legal cannabis market, are often surprised and sometimes overwhelmed by the myriad ways they can consume the plant.

That’s why the dispensary invests in a talented team and employee education so that staff can walk customers through their choices to help them pick the most suitable products for their needs. Bloom also focuses on women—ensuring female customers feel welcome and comfortable is a top priority. You can read more about the business and how it’s navigating the evolving Michigan market.

A few years ago, Garden of Eden, based in Alameda County, Calif., received negative press coverage and reviews because of long wait times, and its retail space wasn’t inviting. Product quality alone wasn’t enough. You can read more about how the company turned things around and renovated its store. You’ll also find customer service stories in Maria Denzin’s HRHQ column about employee engagement and emotionally intelligent leaders, and tips on how to make customers comfortable in this month’s “Quick Tips” department on store design.

You’ll read more about customer service and see additional tips in future issues of Cannabis Dispensary because it’s that important.

Many aspects of the cannabis industry make this space unique, but what’s not unique is the need to meet and exceed customer expectations.

Product quality and selection will only get you so far.

And cannabis isn’t the only plant that people are sometimes unfamiliar and uncomfortable with. Before having the incredible opportunity to join the talented team at Cannabis Dispensary and sister publication Cannabis Business Times, I oversaw another award-winning horticulture trade publication at GIE Media—Garden Center magazine—which serves independent garden center retailers. Garden centers have faced a declining and less engaged customer base since the Great Recession for many reasons, but one is because millennials seem to know a lot less about plants and gardening than previous generations did.

If some of your customers are overwhelmed walking into a 1,000-square-foot dispensary, imagine how they feel when they enter a 10,000-square-foot greenhouse full of blooming annuals and perennials in every color and pattern imaginable, each with specific watering and light needs they need to follow to ensure their live goods survive.

To assuage fears, garden centers have focused on providing practical education and a great customer experience to be sure people are successful and have the tools they need—just like a dispensary employee might educate patients or consumers on which cannabis products might be most helpful or appealing.

With increased competition from online sources and big box stores, independent garden centers’ attention to customers is what sets them apart from others and will ultimately determine their success. As legalization expands and the U.S. moves closer to ending prohibition, the same will be true for dispensaries of all sizes. Product quality and selection will only get you so far. That’s why Bloom City Club takes care of its staff, its customers and focuses on providing a great experience. These factors give customers a reason to choose Bloom over the competition.

Michelle Simakis, Editor | msimakis@gie.net

It takes a village to run your cannabis company.

You may rely on vendors, security and tech companies, and other operators to help your dispensary run optimally and smoothly. And with those various relationships come contracts to ensure both you and the other party are protected in the best- and, of course, worst-case scenarios. But are you sure your contracts are working for you and not against you? Unfortunately, without guidance, they may not be.

To help you navigate the complicated world of contracts, four cannabis industry attorneys offer 10 best practices you should follow when drafting legal agreements.

Habib Bentaleb, founder, Law Office of Habib Bentaleb

The Law Office of Habib Bentaleb is a corporate firm that advises direct operators, service providers and investors in the cannabis industry. Bentaleb points out that while the cannabis plant itself is quite old, the industry is still in its infancy—and that can cause quite a few issues for those wading the waters of legal agreements with others.

“Because everything is still so new, the best practices for the cannabis industry are still very much in development,” Bentaleb says. Here are his top four tips for legal documents.

1. Choose your jurisdiction wisely. Your business might be located in California, but if a vendor you’d like to work with is in Florida, that can present potential problems, Bentaleb says. He recommends that you “make sure your governing law and choice of jurisdiction for dispute resolution is [your state] for transactions in [your state],” whenever possible. Without attention to this detail, “you might be contracting with an entity that was incorporated in another state, and they have included their state of domicile as the jurisdictional venue of choice,” Bentaleb says.

Why is this a problem? Bentaleb explains that “if the state of jurisdiction has yet to legalize any commercial cannabis activities—like Wyoming—or is medical-only—like Delaware—your contract will likely be unenforceable in that state. And I can’t tell you how many times I’ve seen contracts with Delaware, or even worse, Wyoming, as the jurisdiction of choice.”

In California, where Bentaleb operates his practice, it is especially important to review the law to make sure cannabis contracts are recognized as lawful. “California only recently updated its Civil Code to explicitly state that cannabis contracts are lawful,” Bentaleb says.

Lastly, Bentaleb adds, “if your business operates in a state that has legalized some type of commercial cannabis activities but its civil code doesn’t address cannabis contracts, then the next best step is to include a binding arbitration clause,” which is an agreement that requires parties to settle disputes out of court. “[In that case], enforcing an arbitration award will depend on the jurisdiction but it’s definitely the best alternative,” he says.

2. Look out for an indemnity provision. “An indemnity provision is basically a form of insurance where one party agrees to make good on a loss or damage that another party has suffered,” Bentaleb says. Before you sign any contract, Bentaleb recommends that you review it to see if an indemnity provision is included, and if it is, read very carefully to understand exactly the liability you are assuming. “Too many sellers are unaware of the size of the liability they are assuming,” Bentaleb warns.

For example, he says, “if you are a cultivator, have you agreed to indemnify a manufacturer or distributor for their own negligence? That might sound outrageous, but in some jurisdictions—California included—indemnity provisions may establish a duty to hold harmless the other party even if they were actively negligent. Is the indemnity triggered at liability or at loss? In the latter, there must be an actual loss or an out-of-pocket payment.”

As Bentaleb has seen, “too many businesses, not just cannabis businesses, gloss over their indemnity provisions as if they were an iTunes or Spotify user agreement. It is extremely important that you review any indemnity provisions and see how they relate to the types of insurance you carry.” If you don’t, Bentaleb warns, “you ignore them at your own peril.”

Are you sure your contracts are working for you and not against you? Unfortunately, without guidance, they may not be.

3. Beware of boilerplate contracts. When it comes to boilerplate contracts (which use a standardized template), Bentaleb’s advice is simple: “Don’t use them,” he says. Here’s why: “This is a highly regulated industry—originating from an agricultural commodity—that is still federally illegal,” he says. “Boilerplate and recycled contracts are not going to help you. Yes, there may be a random provision here and there from that deal you did a couple of years ago … but realistically, you’re only going to get yourself in trouble.”

Remember, Bentaleb adds: “Each state has its own set of specific regulations, so the contract you used in California might not be applicable in Massachusetts.” As such, he says, it’s very important that the contracts you use are tailored for the state in which you are operating.

“Commercial cannabis contracts are still a relatively new concept,” Bentaleb says, “so it’s really important that, as a cannabis operator, you sit down with your attorney, go over all the things that can potentially go wrong, and then put together a contract that will mitigate those risks while complying with your state’s regulations.”

4. Do your research. Before Bentaleb reviews or drafts an agreement for a client, he asks them, “What do you know about this individual or company?” he says. “I ask this of my non-cannabis business clients, as well, but it’s even more important in the cannabis industry, where there’s little historical data. Due diligence is extremely important, and the earlier you start it, the better.”

To do that due diligence, Bentaleb recommends that you visit an operator’s facilities and talk to other vendors who have worked with that operator in the past. “Knowing as much as you can about the other side will make drafting the legal agreement that much easier,” he says. “Cannabis contracts will vary depending where along the supply chain the parties fall, or whether you’re dealing with a service provider. Contracts can cover everything from intellectual property, delivery terms, and other representations and warranties.”

Omar Figueroa, director, National Cannabis Bar Association, and founder, Law Offices of Omar Figueroa

As the founder of a boutique law firm in California devoted to cannabis law, Omar Figueroa knows a little something about cannabis-related contracts. “I have been practicing cannabis law in California for more than 20 years, and our team … is focused on quality,” he explains.

Figueroa recognizes there are land mines in legal agreements in the cannabis industry. “There is a very heavy, and potentially catastrophic, price for failing to follow the best practices for legal agreements, including needless litigation and even insolvency,” he says.

Here, Figueroa provides three of his top tips for building the best legal agreements.

1. Consider the worst-case scenario. When you know the worst thing that could possibly happen, you can take steps to avoid it. For example, Figueroa says, “foreseeing the possibility that a dispensary will be sued on a strict product liability cause of action, it would be wise for a dispensary [that was] drafting an agreement with other licensed operators to include an indemnification clause requiring the distributor or manufacturer of the product to defend and indemnify the dispensary for any litigation costs and liability.” Figueroa recommends considering worst-case scenarios, then working hand-in-hand with an attorney to address those issues before they happen.

2. Look for arbitration clauses. Figueroa says attorneys have a trick when they read contracts: “Litigators read contracts backward,” he says, so that they can catch arbitration clauses they might otherwise miss. In this case specifically, you will want to suss out any clauses denoting courts or any “with teeth and waivers of federal illegality,” Figueroa says.

To do that, Figueroa says, you will need to pay attention to the choice of venue listed in the contract—the court in which any matter will be litigated in if there is a dispute—and try to spot any clauses that might say “one party cannot later claim the contract is unenforceable because it violates federal law,” or the “loser pays winner’s attorney fees,” Figueroa says.

3. Consider when to sign. Once a legal contract is ready to be signed, carefully consider who puts his or her John Hancock on the dotted line. “Somebody with authority to bind the entity which is a party to the agreement has to sign the document,” explains Figueroa. Consult with your attorney for who that might be before sending a representative to sign a legal agreement.

What’s more, Figueroa advises, “ideally the document will be signed [in front of] a notary public to minimize disputes about the authenticity of the signatures.”

Nicole Howell Neubert and Ariel Clark, co-founders and principals, Clark Neubert LLP

Together, Nicole Howell Neubert and Ariel Clark run the woman-owned cannabis business and regulatory law firm Clark Neubert LLP, which is based in San Francisco and Los Angeles. And they recognize the importance of following best practices in this industry.

According to Clark, “Business owners and investors are best served by understanding legal best practices because the intersection of traditional corporate matters and the new and emerging area of local and state regulatory cannabis laws [are] very new,” especially where they practice in California. She adds, “new issues are still being presented and addressed by contracts every day.” And to combat those issues, “operators need experienced counsel who know the lay of the land today, yesterday and what will come tomorrow,” she says.

Here, Clark and Howell Neubert share advice they say will help cannabis companies follow a few common best practices, and make smart decisions when it comes to their contracts.

“Operators need experienced counsel who know the lay of the land today, yesterday and what will come tomorrow.” Ariel Clark, co-founder and principal of Clark Neubert LLP

1. Account for risk of loss. “When a retailer contracts with a company to purchase a product and there is a purchase order issued, the law allows that product to legally become the property of one or other of the parties before they have actual possession,” Howell Neubert explains. At the same time, the law also asks someone to assume the risk of loss—who is on the hook if something was to happen to the product during transit or at any point before it reaches the retailer.

“Retailers should be sure their contracts account for this,” Howell Neubert advises, and any contract should be drafted so that you know what happens when title and risk of loss occur.

2. Consider your local laws. In California, Proposition 65 requires a specific warning be included on all products that do or may contain “marijuana smoke” and/or “myrcene,” Clark says. What’s more, retailers have to post a similar sign, making those disclosures, in their stores. And that’s something that has to be in your contract. “A contract provision would [need to require that] all products sold to the retailer to be in compliance with Proposition 65,” Clark says, as well as have “adequate products liability coverage. It’s crucial to work with … an insurance coverage attorney to review your policy to be sure it’s not gutted by exclusions,” Clark says.

While you may not live in California, other states may have similar requirements that could be easily missed if you’re not aware of them. Ask your attorney what needs to be included.

3. Don’t shake on anything. Don’t agree on anything until you’ve got it in writing—and had a cannabis-focused attorney look over that contract, Howell Neubert says. “The days of hand-shake deals are over,” she says, adding, don’t “get into business relationships before you have a contract in writing.”

Jillian Kramer is a New York City-based freelance journalist whose work has appeared in the online or print versions of Glamour, Food & Wine, SELF, The Wall Street Journal, and more.