Contracts with medical marijuana companies unenforceable, Arizona court rules

Source: NewsCore

PHOENIX — Doctors and businesses in Arizona that are cheated out of money by medical marijuana dispensaries may have no legal recourse after a recent court ruling.
The new legal reality stems from a case in which two Arizonans, Michele Rene Hammer and Mark Haile, gave a $500,000 loan to a medical marijuana company in Colorado, which — along with Arizona and over a dozen other states — permits some medicinal use of the drug.
When the company failed to repay the loan, Hammer and Haile sued.
But Maricopa County, Ariz., Superior Court Judge Michael McVey threw out their lawsuit because federal law prohibits marijuana possession for all reasons.
"The explicitly stated purpose of these loan agreements was to finance the sale and distribution of marijuana," McVey wrote in his judgment of dismissal. "This was in clear violation of the laws of the United States. As such, this contract is void and unenforceable."
It is unknown whether Hammer and Haile will appeal.
Legal observers noted McVey’s ruling could make it impossible to enforce business agreements with medical marijuana companies.
"This is just one contractual relationship," Randy Nussbaum, managing partner of a law firm that represented Hammer and Haile, told The Arizona Republic. "The macro view of this is, if it’s true that anyone who has a contractual relationship with anyone dispensing medical marijuana and that contract is not enforceable, how does anyone enforce a legitimate contract in this business?"
Phoenix attorney Richard Keyt, who discusses legal issues related to medical marijuana on his blog, noted that McVey’s ruling means landlords who rent to medical marijuana dispensaries may not be able to take squatting tenants to court.
Doctors who provide services to dispensaries may also have no legal options if they are denied payments, according to Keyt.
"Until an Arizona appellate court reverses the result in this case it means that people who enter into contracts that relate in any way to Arizona medical marijuana will have to hope the other side to the contract satisfies his/her/its obligations because it may not be possible to sue for breach of contract and get a judgment against the party who defaults," Keyt wrote.

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