When Colorado citizens petitioned in 2012 to legalize the retail sale of marijuana in their state, Colorado Governor John Hickenlooper publicly opposed the ballot measure. He knew that state legalization of retail marijuana sales would be risky because the federal Controlled Substances Act makes selling marijuana a crime. He worried that being the first state to legalize retail marijuana sales would make Colorado the “experiment.” Governor Hickenlooper knew that this experiment would come with “unintended consequences.”
Governor Hickenlooper’s concerns were well founded. Scholars have identified a host of practical and legal problems caused by the combination of state marijuana legalization and federal prohibition, in realms ranging from banking, taxation, legal representation, employment law, family law, and others. However, the scholarly discussion has largely overlooked the ramifications of state marijuana legalization for state business entity laws. This article introduces a significant, new business law discussion: the unintended consequences of state marijuana legalization for the formation and dissolution of partnerships.
This article argues that partnerships cannot legally form to engage in the retail marijuana business, and would automatically dissolve if they were formed for that purpose, because the retail marijuana business is illegal under the Controlled Substances Act. It then advocates an amendment of the state marijuana laws to remedy the problems identified. Finally, this article concludes by advising states that legalize marijuana sales in the future to proceed slowly and learn from others’ mistakes so that they may avoid unintended consequences of their own.
Lauren A. Newell, Up in Smoke? Unintended Consequences of Retail Marijuana Laws for Partnerships, 38 Cardozo L. Rev. 1343 (2017).