Matt Maurer speaks to Lexpert about how the cannabis industry is beginning to face more litigation

Matt Maurer, of Torkin Manes' Cannabis Law Group, speaks to Lexpert about how the cannabis industry is beginning to face more litigation. 

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“You can start to see . . . some companies having harder times. Some disregarded contractual obligations . . . early on, and companies didn’t have the appetite to sue for many reasons,” says Matt Maurer, head of the Cannabis group for Torkin Manes LLP in Toronto. 

“I think [litigation is] going to continue to increase as time goes on, but right now I’m seeing, too, challenges against regulatory bodies for making decisions or refusing to make decisions,” he says. “I’m seeing regular breach of commercial agreements, as companies are starting to fall on harder times, which many will blame on [COVID-19]. But many were one foot in the grave before COVID came along.”

There has been a “cavalier” attitude by some in the industry as it burgeoned, Maurer says. Now, cultivators are seeing troubles play out more, with three creditor protection applications already filed this year and cannabis businesses trying to sell and close facilities.

These problems will continue, Maurer says, as the attitude is now compounded by financial troubles that will continue from the downturn in the industry that began in 2019. He predicts more insolvencies and bankruptcies, lawsuits launched when suppliers aren’t paid and there are rent defaults, as well as
labour issues if employees aren’t paid.

“It’s going to impact not an insignificant amount of cultivators,” he says, estimating that, of the 250 to 300 cultivators now in Canada, 25 to 50 may be faced with litigation and more.

This article was originally published in Lexpert.