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Few industries promise rapid growth equal to that of the cannabis industry, with one study projecting the industry could reach $30 billion in annual sales by 2025. This growth continues to accelerate as more states legalize cannabis for medical or adult use. But until federal cannabis laws are reformed, the illegality of cannabis at the federal level could render
all contracts associated with cannabis – whether they govern insurance, banking, consulting, leasing, etc. – unenforceable.
It is a basic tenet of contract law that a contract that requires a party to perform an illegal activity is unenforceable. After experiencing buyer’s remorse, some cannabis companies and their vendors have used this “illegality” defense as a sword to avoid the enforcement of cannabis-related contracts. Whether cannabis’s federal illegality renders a particular cannabis contract unenforceable turns on several factors: state law