Navigating Ownership Disputes in the Cannabis Industry: Lessons from the Field

By Jim Boland

As the cannabis industry continues to grow and evolve, ownership disputes are becoming increasingly common—especially in states with limited licensing opportunities and high barriers to entry. At Holon Law Partners, we’re currently working with cannabis licensees in multiple states who are seeking to unwind bad partnerships, reclaim control over their businesses, or assert their rights in the face of mismanagement or exploitation.

These disputes can take many forms:

• Partners who stop contributing but continue collecting profits
• Investors trying to take control without proper authority
• Owners being locked out of decision-making or denied access to financial information
• Disagreements about profit distributions, capital calls, or strategic direction

In many cases, these issues stem from the same root cause: poorly drafted or incomplete partnership documents.

When cannabis markets first opened in states like Illinois, New Jersey, and New York, among others, operators rushed to secure licenses, raise capital, and find real estate—often before they had time to structure their internal agreements carefully. In that environment, many entrepreneurs entered into partnerships with minimal documentation or relied on generic templates that failed to address the unique challenges of the cannabis space.

Unfortunately, these shortcuts can become costly in the long run.

Common Ownership Disputes in Cannabis

Ownership disputes in cannabis tend to fall into a few key categories:

• Equity and Control Disputes: One party attempts to exert control or decision-making power without authority, or equity percentages are unclear or misrepresented.
• Financial Transparency Issues: Partners are denied access to books and records, or there are disputes over how profits and losses are reported and distributed.
• Breach of Fiduciary Duties: Allegations that one or more partners acted in their own interest rather than in the best interest of the business.
• Deadlock and Inactivity: Partners who are no longer contributing but are blocking critical decisions, creating deadlock or operational gridlock.
• Undisclosed Agreements: Side deals, management agreements, or outside arrangements that undermine the governance structure of the business.

Because cannabis businesses are highly regulated, these disputes carry additional consequences—such as triggering mandatory disclosure obligations, delaying license renewals, or jeopardizing compliance with ownership and control rules.

Strong Agreements Are the First Line of Defense

When the cannabis industry first opened up in many states, operators were often in a rush to meet application deadlines, secure real estate, and raise capital. In that environment, many partnerships were formed quickly—sometimes with handshake deals or template documents that didn’t clearly define roles, responsibilities, or protections for the parties involved.

The result? When conflicts arise, there’s little guidance for how to resolve them, making litigation more likely and business disruption almost inevitable.

A properly drafted operating agreement, shareholder agreement, or joint venture agreement isn’t just a formality. It’s a roadmap for how the business will operate, how decisions will be made, how profits and losses will be shared, and how partners can exit if the relationship no longer works. These agreements are especially crucial in a highly regulated industry, where ownership changes often necessitate state approval.

What We’re Seeing in the Market

Our firm is currently representing clients in multiple states who are navigating ownership disputes, some of which involve efforts to remove inactive or disruptive partners, while others require unwinding relationships with investors or management companies that have overstepped. We’ve helped licensees assert their rights and negotiate clean exits, and when necessary, we’ve pursued litigation to protect our clients’ interests.

Whether you’re a dispensary operator, grower, infuser, or transport company, the lesson is the same: the strength of your internal documents can make or break your business when conflict arises.

How We Help Clients Navigate Disputes

At Holon Law Partners, we represent cannabis operators across the country in disputes with co-owners, investors, and third-party management companies. We’ve helped clients:

• Remove inactive or disruptive partners through buyout or dissolution
• Enforce rights under poorly drafted or disputed agreements
• Negotiate exits from unfavorable partnerships or operating agreements
• Litigate ownership and fiduciary duty claims in state court
• Preserve licenses while restructuring ownership and control

Our experience spans multiple markets and license types, and we understand the unique challenges cannabis businesses face when navigating legal disputes under the scrutiny of state regulators.

Conclusion

Ownership disputes are often avoidable—but only if you take the time at the beginning of the relationship to set clear expectations and protect your interests. If you’re entering into a cannabis partnership or facing challenges with your current one, make sure you have experienced legal counsel who understands the nuances of this industry.

At Holon Law Partners, we help cannabis businesses build strong foundations and resolve complex disputes—so they can stay focused on what they do best.