Legal Consequences for Using or Acting as an Unregistered Broker-Dealer in the Cannabis Industry

Meital Manzuri

Meital Manzuri is the Managing Partner for Manzuri Law in Los Angeles. With over twelve years’ experience in the field and, as one of the first cannabis business attorneys in California, she has earned a prominent reputation for advising commercial cannabis businesses on myriad issues, including licensing and regulatory compliance, corporate and transactional law, joint ventures, M&A, best business practices, risk mitigation, and criminal defense^*

I. INTRODUCTION

As the cannabis industry continues to grow, the players have begun to change a bit and cannabis business owners face the daunting task of navigating the private and public markets along with many hefty regulations. Whether it is finding private investors to raise capital via a private placement or looking for merger and acquisition ("M&A") activity, cannabis operators and their legal counsel should be aware of individuals or firms that claim they have connections to private investors or an ability to make introductions to interested buyers or potential acquisitions. Those parties are likely acting as broker-dealers and, if unregistered, can pose significant legal headaches for a business and its legal counsel down the road.