The association and its members may make and execute marketing contracts that require the members to sell, for any period of time, but not over 15 years, all or a specified part of a cannabis product exclusively to or through the association, or a facility that is created by the association. If the members contract a sale to the association, title to the cannabis product passes absolutely and unreservedly, except for recorded liens, to the association upon delivery or at another specified time that is expressly and definitely agreed in the contract.
Cannabis Cooperative AssociationsMarketing Contracts
Section § 26230
This law allows cannabis associations and their members to create marketing contracts where members agree to sell their cannabis products exclusively to or through the association for a maximum of 15 years. Once the product is delivered or at a specified agreed time, ownership of the product transfers completely to the association, except if there are any recorded debts on it.
cannabis product marketing contracts exclusive selling
Section § 26230.1
This section says that an association can legally require a member or stockholder to deliver cannabis products that they have either produced or acquired, even if the Civil Code would normally allow otherwise. Basically, if you make an agreement with an association about giving them cannabis products, they can legally enforce that agreement to make sure they get the products.
Notwithstanding any provisions of the Civil Code, a contract that is entered into by a member or stockholder of an association that provides for the delivery to the association of a cannabis product that is produced or acquired by the member or stockholder may be specifically enforced by the association to secure the delivery to it of the cannabis product.
cannabis product delivery association contract enforcement civil code exception
Section § 26230.2
This law allows the rules or a marketing contract between a member or stockholder and an association to specify a set amount of money, known as liquidated damages, that must be paid if the member breaches the agreement related to selling, delivering, or withholding cannabis products. The contract can also require the member to cover all associated legal costs if the association takes them to court over the breach. Such terms are considered valid and enforceable in California courts and are not seen as penalties.
The bylaws or a marketing contract may fix, as liquidated damages, specific sums to be paid by the member or stockholder to the association upon the breach by him or her of any provision of the marketing contract regarding the sale or delivery or withholding of a cannabis product and may provide that the member will pay all costs, premiums for bonds, expenses, and fees, if any action is brought upon the contract by the association. These provisions are valid and enforceable in the courts of this state. The clauses that provide for liquidated damages are enforceable as such and shall not be regarded as penalties.
liquidated damages cannabis products marketing contract
Section § 26230.3
If a member of an association breaks or is about to break a marketing contract, the association can request a court order to stop the breach and force the member to comply with the contract. While the case is being decided, the association can file a complaint and a bond to get a temporary court order to prevent the member from breaching the contract further.
If there is a breach or threatened breach of a marketing contract by a member, the association shall be entitled to an injunction to prevent the further breach of the contract and to a decree of specific performance of the contract. Pending the adjudication of the action and upon filing a verified complaint that shows the breach or threatened breach, and upon filing a sufficient bond, the association shall be entitled to a temporary restraining order and preliminary injunction against the member.
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