Vendors, lenders, landlords and contractors “voluntarily waive” right to sue MED?

Investors, landlords and others with an “indirect” financial interest in a marijuana dispensary automatically “waive” their traditional legal right to challenge the Colorado Marijuana Enforcement Division in state court under changes to the Colorado retail marijuana code that took effect Jan 1.

Non-owners with financial stakes in a marijuana business may need to hire lawyers to preserve their rights to be heard in court.

Under the new rules, an unknown number of people and businesses known as “indirect beneficial interest holders” automatically waive, or give up, their traditional legal rights to challenge the MED in state court.

“Indirect beneficial interest holders” include vendors, who supply inventory, lenders, who provide working capital, landlords, who supply retail space, and contractors, who build improvements.

Landlords leasing to marijuana businesses, for example, automatically waive their right to take the MED to court. To get access to the state courts back, they may be required to negotiate new lease agreements to make sure they receive written notice of any MED enforcement action against their dispensary-tenant in time to “intervene” in the proceeding.

In other words, before landlords can sue the MED in state court, they must first hire an attorney and ask the MED’s permission to take part in any relevant agency enforcement action against the dispensary-tenant.

Should they fail to intervene in the agency proceeding, the decision of the MED will be enforced, even if it damages the landlord’s financial interest in the dispensary and, the landlord will have no right to appeal the decision to state court.

The new restrictions are more efficient because they will help prevent clogged administrative and court dockets. They will also reduce the chance of inconsistent decisions by state court judges, the MED contends.

“The (waiver) in the rules provides advanced notice to such indirect beneficial interest owners of the need to intervene,” the MED said. “The advance notice provided by the rules and (waiver) allows the parties to provide for contractual remedies to protect investments in advance. The rules will promote administrative and judicial economy and avoid the risk of inconsistent” decisions.