Protect yourself from unscrupulous business people
Lately I’ve noticed an uptick in deals that have gone sour and business partners who are unhappy with each other.
These situations range from fairly simple splits because one party over-hyped their abilities and under-delivered to more serious legal actions that include allegations of fraud, theft and various other unsavory business practices that can occur when one party is not honest with another.
Is dishonesty more prevalent in the cannabis business than any other industry? I’m not sure, and I doubt there are statistics about it at this early stage. However, the incidents that are coming out of Colorado, Oregon and Washington often seem to involve business arrangements that were not planned well. In many situations, one party — or both — thought that a handshake was a good substitute for a well-written contract.
Marijuana Venture readers know that we’ve made it a point to say what needs to be said, and to go with hard facts rather than anecdotal information. While we may occasionally irritate the “pot culture” crowd with our candid views, we believe that no business can thrive without honesty and a forum where people are unafraid to say what others sometimes may not want to hear.
Getting back to the subject of bad deals, allow me to offer this opinion: Having known a lot of people involved in the black market marijuana trade over the years, I can honestly say that the vast majority are decent, trustworthy people.
Sure, most probably didn’t pay taxes on their income, but we’re not talking about Pablo Escobar or Al Capone here. Many Americans view their choice of occupation as relatively benign.
However, the simple fact is that this business — because of its history of prohibition — has a disproportionately high number of criminals and dishonest people for the exact same reason the alcohol business did in the 1920s.
While there were probably plenty of nice and trustworthy booze smugglers and distillers during Prohibition, there were also folks like Al Capone — and the last thing you’d want to do with your business investment is rely on a handshake deal with a gangster.
If you believe this industry is all about “peace, love and respect” or that there are fewer dishonest operators in the legal marijuana business, you need a reality check.
My advice, having recently talked to several entrepreneurs who have been burned by unscrupulous partners or landlords, is this: Be careful! Get your deal in writing. Have a good lawyer review it. Check into the background of the people who want you to invest in their enterprise. Ask for references. If a deal sounds too good to be true, it probably is.
Don’t let your excitement about this new industry outweigh common sense and a healthy dose of skepticism. More than 90% of the folks involved in the legal commercial marijuana trade are good, hard-working folks who are excited about this new and rapidly growing industry. However, as in any business, there are those you want to stay away from.