(309) 306-1095 tom@collateralbase.com
Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Are you from the buckeye state and want to establish a cannabis business? Having a good cannabis lawyer in Ohio makes the difference between getting a license or not.

Even though Ohio’s medical marijuana market had a bumpy start, the market has a bright future ahead in terms of its prospects for long-term sales.

As the market has a limited licensing structure and a large population, experts estimate the market could go as high as $400 million by the end of this year.

Also, there is a good chance for adult-use legalization to happen in the near future, so there are even more chances to enter the market.

In this sense getting the right cannabis lawyer that knows the legislation, risks and trends associated with the industry is vital in order to ensure maximum success.

A cannabis lawyer must have expertise helping individuals navigate processes like civil litigation, transactional law, trademarks and -in general- business litigation.

So if you want to open an Ohio marijuana dispensary, or a cultivation, processor or testing facility, here’s what you need to have in mind when hiring an Ohio cannabis lawyer.

Free Strategy Session?

For a quick assessment of your needs – let’s talk to discuss how Trusts can help your business.

What can an Ohio cannabis lawyer help you with?

A cannabis lawyer in Ohio can assist with business creation and launch, marketing and advertising, packaging and labeling, banking and funding, taxation, and patents and copyrights for new strains or products.

Licensing, on the other hand, is critical. Cannabis cultivators, extractors, dispensaries, processors, and distributors are just a few of the businesses that rely significantly on permits to operate.

Ohio legalized medical marijuana in 2016, although sales didn’t start until 2019. The market is often qualified as restrictive, as the hoops established by the regulations are hard to go through. However, even so, sales are hovering $5 million to $6 million a week according to recent data.

In order to get into the business you need to maneuver through the regulations successfully, and for that you need the experience of a cannabis lawyer.

In such a heavily regulated sector, every step of starting a cannabis company necessitates significant enforcement and licensing, making the regulatory skills of an experienced cannabis lawyer invaluable.

Further, a Ohio cannabis lawyer can be of help with advertisement and applying for trademarks and patents, which is of major importance when you’re starting a business in order to establish your brand.

Specifically in Ohio, you will need to be extremely wary of zoning issues, as well as complying with the phases of licensure.

Further, you’d probably need a good cannabis business plan to go along with your license application.

What should you look for when hiring an Ohio cannabis lawyer?

It is critical to find proven experience in the industry while looking for a reputable cannabis attorney for your startup cannabis organization. Despite the fact that cannabis business attorneys are relatively new to the field, there are cannabis lawyers with expertise in the hemp and cannabis industries.

You should look for cannabis attorneys who are knowledgeable not only about the local and state laws, but also about federal law.

Furthermore, the best cannabis attorneys will be able to provide contacts and advice in the cannabis industry, as well as participate in lobbying and legislative activities.

This allows you and your company to remain current on cannabis, marijuana, and hemp developments, as well as changes in the law.

Cannabis licensing, regulatory enforcement, and administrative cases can all be handled by a cannabis lawyer.

They can also help with everything from company formation to mergers and acquisitions to risk management and dissolution.

Make informed decisions to avoid costly errors: Collateral Base’s cannabis and CBD industry attorneys represent a wide range of clients in the marijuana and hemp sectors, as well as the CBD market. We continue to be involved in cannabis-related policy activity and continue to represent hemp and legal cannabis businesses.

Free Strategy Session?

For a quick assessment of your needs – let’s talk to discuss how Trusts can help your business. 

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer Earlier this year, Virginia voted to legalize adult-use marijuana becoming the first southern state to do so. Under the newest legislation on the matter, home cultivation and personal possession will become legal as of July 2021, but retail...

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer Are you from the buckeye state and want to establish a cannabis business? Having a good cannabis lawyer in Ohio makes the difference between getting a license or not. Even though Ohio’s medical marijuana market had a bumpy start, the market has a...

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer.

As the cannabis industry gets more recognition and the market expands, recreational and medicinal marijuana grows in popularity.

Getting the right cannabis lawyer that knows the legislation, risks and trends associated with the industry is vital in order to ensure maximum success.

A good cannabis lawyer has to be an expert at satisfying business requirements. Applying for licensure is usually a complex process, your business must comply with federal and state laws, following ever-changing regulations.

Also, a cannabis lawyer must have expertise helping individuals navigate processes like civil litigation, transactional law, trademarks and -in general- business litigation

The truth is, getting your cannabis business on the right foot may be really hard without the proper guidance, so it is recommended for you to contact an expert on the matter if you want to succeed.

Free Strategy Session?

For a quick assessment of your needs – let’s talk to discuss how Trusts can help your business.

What can a Michigan cannabis lawyer help you with?

A Michigan cannabis lawyer can help with business startup and formation, marketing and advertisement, packaging and labeling, banking and funding, taxation, and patents and copyrights on new strains or products.

However, licensing is of upmost importance. Cultivators, extractors, dispensaries, processors, and distributors are a few of the cannabis companies that rely heavily on licensing. 

Although recreational cannabis has been legal since 2018, the laws that govern medical and recreational cannabis are not static, in fact, regulations tend to change as time pass by.

Cannabis attorneys support individuals and cannabis businesses with a variety of procedures and acts.

In such a heavily regulated sector, every step of starting a cannabis company necessitates significant enforcement and licensing, making the regulatory skills of an experienced cannabis lawyer invaluable.

Further, a Michigan cannabis lawyer can be of help with advertisement and applying for trademarks and patents, which is of major importance when you’re starting a business in order to establish your brand.

Specifically in Michigan, you will need to be extremely wary of zoning issues, as well as complying with the phases of licensure.

Knowing how to get prequalified is vital, for which you need to assemble the right team.

Further, you’d probably need a good cannabis business plan to go along with your license application.

What should you look for when hiring a cannabis lawyer?

It is critical to find proven experience in the industry while looking for a reputable cannabis attorney for your startup cannabis organization. Despite the fact that cannabis business attorneys are relatively new to the field, there are cannabis lawyers with expertise in the hemp and cannabis industries.

You should look for cannabis attorneys who are knowledgeable not only about the local and state laws, but also about federal law.

Furthermore, the best cannabis attorneys will be able to provide contacts and advice in the cannabis industry, as well as participate in lobbying and legislative activities.

This allows you and your company to remain current on cannabis, marijuana, and hemp developments, as well as changes in the law.

Cannabis licensing, regulatory enforcement, and administrative cases can all be handled by a cannabis lawyer.

They can also help with everything from company formation to mergers and acquisitions to risk management and dissolution.

Make informed decisions to avoid costly errors: Collateral Base’s cannabis and CBD industry attorneys represent a wide range of clients in the marijuana and hemp sectors, as well as the CBD market. We continue to be involved in cannabis-related policy activity and continue to represent hemp and legal cannabis businesses.

 

Free Strategy Session?

For a quick assessment of your needs – let’s talk to discuss how Trusts can help your business. 

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer Earlier this year, Virginia voted to legalize adult-use marijuana becoming the first southern state to do so. Under the newest legislation on the matter, home cultivation and personal possession will become legal as of July 2021, but retail...

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer Are you from the buckeye state and want to establish a cannabis business? Having a good cannabis lawyer in Ohio makes the difference between getting a license or not. Even though Ohio’s medical marijuana market had a bumpy start, the market has a...

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

Why Do You Need a Buy Sell Agreement Lawyer

Why Do You Need a Buy Sell Agreement Lawyer

Buy Sell Agreements

Buy Sell Agreement Lawyer

Why Do You Need a Buy Sell Agreement Lawyer?

A buy-sell agreement is a legally binding contract between the owners of a business where they agree on what happens to a partner’s shares in the event of life-changing situations that may result in chaos that could potentially ruin the business and bankrupt its owners, assuring the remaining owners that the business will carry on successfully.

A Buy Sell Agreement Lawyer Helps Transition the Business Ownership.

The Buy Sell agreement is also heard of as a buyout agreement, a business will, or a business prenup. Comparing a buy sell agreement with a prenuptial agreement is the most accurate comparison: In a prenuptial agreement, you can get out of the marriage under certain conditions. 

At the same time, you can protect your financial operations. A buy sell agreement offers the same rights, just with one small difference. In a Buy Sell agreement you can cover all the financial transactions between the business partners. This makes a buy sell agreement more reliable and more effective in terms of financial stability.

A buy sell agreement defines your rights when it comes to difficult situations.

Your partner can fall ill or become unable to operate the business the right way. In that case, a buy-sell agreement lowers your financial risks of bankruptcy or debt. You can protect yourself by signing an agreement that will keep your business intact.

Two Common Types of Buy Sell Agreements Are:

 

  • Cross-purchase agreement, and
  • Redemption agreement
  • A cross-purchase agreement happens when the remaining owners decide to purchase the shares of the business that is for sale. In this matter, it is important to know that the mechanism relies on a life insurance policy.
  • A redemption agreement is another form of a buy sell agreement. Here, we have a situation when the business entity buys the shares of the business. With a redemption agreement, the contract limits the ability of business owners to sell or transfer their ownership stakes in the business.

Some businesses decide on a mix of the two forms of agreements, with some portions available for purchase by individual partners and the remainder bought by the partnership. The importance of a buy sell agreement covers most of the financial risks that may occur in the business.

How to Know If a Buy Sell Agreement Is Right for Me

If you plan to start a business with a partner, a buy sell agreement can offer many protective points that can change your business perspective.

Many life situations are inevitable and we can rely on this kind of contract when the official regulations are necessary for business operations.

Your business partner may go ill or die, and that is when a buy sell agreement comes into effect. Your business capital will be protected and you can continue all the future business operations.

Here are some potential situations that a Buy Sell Agreement would prepare you for:

  1.  Personal Bankruptcy of one of the owners;
  2.  Business owner’s retirement;
  3.  Disability of one of the owners;
  4.  Irreparable disagreement between partners;
  5. Death of one of the owners.

Cross-purchase buy and sell agreements contribute to the rights of the business owners.

As a remaining business owner, you can buy the interests of the selling owner. This applies when a selling owner is no longer capable of maintaining their business obligations. 

Buy and sell agreements are also important in the method of determining the overall business value at the beginning of the business as well as when one of the business owners remains the only owner.

Careful drafting of a buy sell agreement can also eliminate or lower any potential estate taxes that apply at your death.

In the situation when you want to pass your ownership interest to one of your family members at your death, avoiding the estate tax is one of the possible outcomes.

What Can I Get From A Buy Sell Agreement?

A Fair Value Price for Shares

A Buy Sell Agreement is a perfect way to establish the Fair Value of your business individual stake. This agreement sets the figure ahead of time, preventing disagreements between partners about whether a buyout is or not fair.

Facilitates the break up of the partnership 

The Buy Sell Agreement minimizes the stress of the disintegration of the partnership, having designed a legally binding strategy to be followed in the case a partner exits the company 

Lets owners decide on the future of the shares

The Buy Sell agreement specifies who is entitled to your stake if you exist, preventing owners fighting over shares or third parties deciding on the future of your company. The uncertainty can be avoided with a well-crafted agreement.

Do I Need a Buy Sell Agreement Lawyer?

A buy sell agreement lawyer is necessary if you want to avoid state taxes and protect your business capital and operations. With a buy sell agreement, you will be able to buy shares of the business and prolong your business perspective.

A good buy sell agreement lawyer can help you draft the buy sell agreement that protects both your business partner’s interests and your interests. You will have the right to continue the business operations even in the case of illness or death of your partner. 

It is possible to stay protected and define a new business strategy with a buy sell agreement. A good buy and sell lawyer can help you craft and improve the right contract that protects you in the case of inevitable circumstances.

 

When Should I Make a Buy Sell Agreement?

The perfect moment to create a Buy Sell Agreement is way before the ownership transition, when all the owners are equally involved and an orderly transition can be planned for. 

Since at the time the buy sell agreement is being executed the owners may not even know who would be bought out, when and why. Hence, relationships between the owners would be presumably good so they would most likely come to an objective consensus on the terms.

If you wait for the triggering events to occur, relationships may be strained, and not having a solid buy sell agreement may result in conflict, potentially becoming extremely expensive for all the parties. 

Making sure that the terms of the buy-sell agreement are in writing and having the owners agree to those terms beforehand helps to eliminate the potential conflict. 

The buy sell agreements doesn’t need to be a separate document. It could be included in the company’s shareholders agreement or in the partnership agreement. 

The important thing is not to assume that you have one, and always make sure to keep it updated and clear in what your specific intentions are, amending the existing agreement or creating a new one if necessary. 

Do I Need a Buy Sell Agreement if I Am the Sole Proprietor of My Business?

Even if you are the only shareholder in your business, you should still consider to have a Buy Sell agreement to make sure your assets are protected in the face of any eventuality. 

The Buy Sell Agreement is a clear outline of your intentions for the future of your company that will be taken into consideration once you no longer have the power to voice it. You certainly would be saving your heirs, and employees unnecessary trouble.

What Important Things Should I Consider in My Buy Sell Agreement?

Avoid the use of Ambiguous Language

Since the purpose of your Buy Sell Agreement is to prepare for any possible eventuality involving one of the owners, you should make sure the statements in the agreement are the clearest possible so you prevent conflict between the stakeholders the moment the sale is executed. 

Unclear language in contracts tends to represent further conflict between the parties involved, which can only mean negative financial repercussions for you.  

Worst Case Scenarios Must be Considered

It doesn’t matter if probabilities are very low, you should have a Buy Sell Agreement that takes into consideration all the possible scenarios. You want to have every precautionary clause possible to assure you the best outcome.

Set the Objectives Of Your Business Straigh

All of the owners should not only understand, but also agree with the short and long term objectives of the company. If this concordance doesn’t happen and the owners have varying objectives it may be difficult to outline a good Buy Sell Agreement.

Beware of Taxes

You should get assessment on the tax consequences of shares exchanging, to prevent you and your business from losing a lot of money. A good Buy Sell Lawyer can guide you to make the right moves when it comes to avoiding getting wrecked by taxes.

If you are looking for a Buy Sell Agreement Lawyer don’t hesitate to contact us.

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer Earlier this year, Virginia voted to legalize adult-use marijuana becoming the first southern state to do so. Under the newest legislation on the matter, home cultivation and personal possession will become legal as of July 2021, but retail...

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer

Ohio Cannabis Lawyer Are you from the buckeye state and want to establish a cannabis business? Having a good cannabis lawyer in Ohio makes the difference between getting a license or not. Even though Ohio’s medical marijuana market had a bumpy start, the market has a...

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

Victory for Hemp

Victory for Hemp

Hemp Ban Overturned

Hemp is completely legal to grow in Illinois with the proper state license.

Illinois Hemp Ban Overturned in Rural Oakland

The City of Oakland tried to ban hemp farming inside its city limits by claiming authority under the Illinois Municipal Code section regarding Urban Agricultural Areas. Collateral Base represented the prejudiced farmer and had the municipal ordinance tossed by an Illinois Court. Because the City of Oakland is not a home rule community Dillion’s Rule in Illinois barred the City from banning hemp due to its lack of authority. 

Let’s touch on what is a “home rule” or “non-home rule” municipality in Illinois. 39 States follow “Dillion’s Rule” – including Illinois – and it allows municipalities to allow themselves to govern their community with greater detail than the state law applies, but first they must become a “home rule” unit of government.

Q: What is “home rule,” why would a community want to become a home rule unit, and how?

A: In Illinois, home rule is the State constitutional authority of local governments to override the state and self-govern provided the General Assembly did not explicitly limit that power or maintain the exclusive exercise of authority in a specific area, for example the CRTA limited home rule communities from banning home grow cannabis for medical marijuana patients.

Home rule municipalities explicitly have police powers.  Article 7 of the Illinois Constitution regarding home rule provides that they “may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt” without specific statutory authority.

 

Hemp Questions?

How home rule is different than non-home rule

Non-home rule basically bows to the state laws, unless the municipality has a statute or enumerated constitutional powers that enable it to create new ordinances. However, a home rule municipality can go beyond state regulations unless expressly pre-empted by statute and can rely on its police powers.  Here we will examine the differences between the language from the Illinois Constitution on home rule units. 

The City of Oakland went beyond its non-home rule powers when making its hemp farming ban.

Ill. Const. Art. 7, § 7 for Non-home Rule Municipalities

  1. to make local improvements by special assessment and to exercise this power jointly with other counties and municipalities, and other classes of units of local government having that power on the effective date of this Constitution unless that power is subsequently denied by law to any such other units of local government;
  2.  by referendum, to adopt, alter or repeal their forms of government provided by law;
  3.  in the case of municipalities, to provide by referendum for their officers, manner of selection and terms of office;
  4.  in the case of counties, to provide for their officers, manner of selection and terms of office as provided in Section 4 of this Article;
  5.  to incur debt except as limited by law and except that debt payable from ad valorem property tax receipts shall mature within 40 years from the time it is incurred; and
  6. to levy or impose additional taxes upon areas within their boundaries in the manner provided by law for the provision of special services to those areas and for the payment of debt incurred in order to provide those special services.

These are the only powers a non-home rule municipality in Illinois may have – so the City of Oakland had to try and find another statute that enabled them to ban hemp farming throughout its city limits.  We will get to that soon, but we note that the City of Oakland then argued that the statutory authority did not matter because they could ban hemp under its police powers – but non-home rule municipalities do NOT have police powers.  As you can see from the powers of the Home Rule Units under Section 6 of  Article 7 of the Illinois Constitution below.

SECTION 6. POWERS OF HOME RULE UNITS

(a) A County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000 are home rule units. Other municipalities may elect by referendum to become home rule units. Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.

We put the police powers in bold.

What are Police Powers in Illinois?

They are: the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.

Urban Agricultural Areas in Illinois

The City of Oakland went to the Illinois Municipal Code and found a restriction against urban agricultural areas that a city can regulate if it bears a direct relationship with the public health, safety or welfare.

The only problem was – this law did not exist until 2019 and Oakland had no urban agricultural area. The City of Oakland tried to find any method they could to ban the hemp farming inside its city limits.  The City argued that its zoning laws from 1968 qualified as an urban agricultural area.  This is not how law works, as statutes do not operate retroactively.

Division 15.4 of the Illinois Municipal Code, titled Municipal Urban Agricultural Areas

The cited statute, 65 ILCS 5/11.4-30(a,) provides in full:

(a) A municipality may not exercise any of its powers to enact ordinances within an urban agricultural area in a manner that would unreasonably restrict or regulate farming practices in contravention of the purposes of this Act unless the restrictions or regulations bear a direct relationship to public health or safety. (Emphasis Added).

The City of Oakland skipped over all the regulatory hurdles to get to its objective of banning hemp.  Illinois amended the Illinois Municipal Code in 2019 to provide for urban agriculture and provided protections and procedures for farmers to establish an “urban agricultural area.” We must review Article 11, Division 15.4 of the Code regarding Municipal Urban Agricultural Areas. The City looked straight past the controlling provisions of the Code in search of its desired ends – banning hemp farming in its City limits. The City skipped right over numerous Sections of the Code that requires prior to adopting an ordinance designating an urban agricultural area, the municipality must:

  1.  receive an application for establishing an urban agricultural area [65 ILCS 5/11-15.4-15(a)]; 
  2. establish an urban agricultural area committee after receiving an application to so establish one [65 ILCS 5/11-15.4-10(a); 
  3. elect a chair for that committee [65 ILCS 5/11-15.4-10(b)]; 
  4. fix a time and place for a public hearing and notify each taxing unit of local government [65 ILCS 5/11-15.4-20]; 
  5. publish notice of this hearing in a newspaper of general circulation for days before such hearing [65 ILCS 5/11-15.4-20]; and 
  6. hold the public hearing; allow any interested person – like the Plaintiffs in this case – to appear and voice objections and comments with respect to the hearing [65 ILCS 5/11-15.4-20].
  7. Only after such public hearing, and in compliance with the procedures as provided in the Code, may the municipality adopt an ordinance establishing and designating an urban agricultural area [65 ILCS 5/11-15.4-20].

The City of Oakland did none of these things in banning hemp farming from its City limits. Instead, it just said that it did, which the court pointed out that it clearly did not and had no ‘urban agricultural area’ to regulate. Therefore, the City’s ban on hemp failed under judicial review.  The City of Oakland may try to appeal the decision, but that won’t fix the problems with its hemp ban. 

Illinois hemp bans may not be possible in home rule municipalities either because of the State’s comprehensive hemp licensing program, but that issue remains for another day.  

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Thomas Howard

Thomas Howard

Cannabis Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer Earlier this year, Virginia voted to legalize adult-use marijuana becoming the first southern state to do so. Under the newest legislation on the matter, home cultivation and personal possession will become legal as of July 2021, but retail...

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

Agriculture Bankruptcy & Marshalling of Assets

Agriculture Bankruptcy & Marshalling of Assets

marshaling equitable doctrine

General marshaling principles.

The equitable doctrine of marshaling rests upon the principle that a creditor having two funds to satisfy his debt should not be permitted to arbitrarily prejudice a junior creditor who may resort to only one of the funds. Meyer v. U.S., 375 U.S. 233, 236, 84 S.Ct. 318, 11 L.Ed.2d 293 (1963)

Bankruptcy and Ag Financing Issues

The greatest challenge to any secured transaction arises when a borrower files a proceeding under the Bankruptcy Code. Originally enacted in 1986, Chapter 12 of the Bankruptcy Code provides a procedure by which family farmers, as defined by the Code (see 11 U.S.C. §101(18)), can restructure debt. A permanent extension of Chapter 12 was enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub.L. No. 109-8, 119 Stat. 23. See Terrell Lee Sharp and Bentley J. Bender, Ch. 7, Chapter 12 Bankruptcy Tips and Procedures, CONSUMER BANKRUPTCY PRACTICE (IICLE®, 2011, Supp. 2013).  In 2019, the Family Farmer Relief Act (H.R. 2336) raised the debt limits on Chapter 12 to dramatically expand its application for farmers with debts totally $10 million, up from the previous $4.4 million.

      Whenever a dispute arises in a bankruptcy case as to the lien rights of a lender, an adversary proceeding will be filed to determine the validity, priority, or extent of a lien under Rule 7001(2) of the Federal Rules of Bankruptcy Procedure. Regardless of whether the adversary proceeding is brought by the lender, the debtor, or the trustee, the adversary proceeding provides the vehicle by which all legal and equitable theories may be tested. See, e.g., Illini Bank v. Clark (In re Snyder), 436 B.R. 81 (Bankr. C.D.Ill. 2010).

Problem Ag Loan

the equitable doctrine of marshaling

At issue in Illini Bank was whether the equitable doctrine of marshaling should be applied to the benefit of Tri Ag, Inc., the holder of a junior lien against certain crop proceeds held by the Chapter 12 trustee. Illini Bank, as the assignee of the senior lienholder, wanted the funds for itself and opposed marshaling. In the debtors’ Chapter 12 petition and schedules, Mr. Snyder listed himself as a farmer and Mrs. Snyder listed herself as retired. However, the schedules for real property and personal property listed them as jointly owned.

      Tri Ag’s debt of $123,342 was the oldest. In February 2006, only Mr. Snyder signed a security agreement covering all crops grown on real estate farmers in bankruptcylocated in Logan and Mason Counties. To perfect that security interest, a UCC financing statement naming him as the sole debtor was filed on April 7, 2006.

      Unfortunately for Tri Ag, AG-LAND loaned money to the debtors and, on February 27, 2006, filed a UCC financing statement naming both as debtors. AG-LAND was owed $130,897.05. Thus, AG-LAND had the prior security interest in all growing and harvested crops. In 2007, both debtors borrowed money from Illini Bank and granted it a security interest in crops, machinery, and equipment, among other property. After the bankruptcy case was filed, Illini Bank purchased AG-LAND’s position and thereby leapfrogged from third to first priority on the crop lien. Tri Ag and Illini Bank filed cross-motions for summary judgment on the issue of marshaling an application of the total crop proceeds of $100,520.88.

      The first issue the court decided was that the direct and circumstantial evidence supported the conclusion that Mrs. Snyder owned half of the crop proceeds. Consequently, because she failed to sign the Tri Ag security agreement, Tri Ag acquired and held a lien on only one half of the proceeds.

      Next, the court rejected Illini Bank’s argument that the doctrine of marshaling should fail. Instead, the court held that marshaling could be applied to protect the one-half interest held by Tri Ag. The court noted that if AG-LAND had not sold its claim to the bank, AG-LAND, because it held a first priority lien on crop proceeds and on machinery equipment, would have been substantially oversecured. As a result, Illini Bank took the assigned claims subject to the marshaling rights of Tri-Ag.

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer

Michigan Cannabis Lawyer Are you from the great lake state and want to start a cannabis company or need assistance with an existing one? You probably need a Michigan cannabis lawyer. As the cannabis industry gets more recognition and the market expands, recreational...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer

Virginia Cannabis Lawyer Earlier this year, Virginia voted to legalize adult-use marijuana becoming the first southern state to do so. Under the newest legislation on the matter, home cultivation and personal possession will become legal as of July 2021, but retail...

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens