Corporate Law

Recognized Corporate Law Expertise

Cannabis and hemp businesses in California operate in one of the most volatile regulatory and commercial environments in the country. From formation and capitalization to restructurings, buyouts, and exits, careful corporate planning is essential to preserve value and keep state and local regulators onside. The firm structures entities, boards, and ownership in ways that satisfy the Department of Cannabis Control’s ownership and financial interest rules while still meeting business and tax objectives.

Corporate mandates often require navigating distressed counterparties and incomplete prior work. Recent matters have included stepping into deals midstream after other counsel were unable to close, redesigning transaction structures to obtain regulatory approval, and coordinating with receivers, lenders, and other stakeholders in high‑profile restructurings of publicly traded cannabis groups. The practice also regularly leads controlled takeovers and reorganizations in situations where bankruptcy protections are unavailable because of federal prohibition.

The firm’s corporate work spans new company formation, shareholder and operating agreements, recapitalizations, redemptions and buy‑outs, and governance advice for closely held and investor‑backed operators. It frequently coordinates with litigation, tax, and insolvency co‑counsel where necessary, while remaining lead regulatory and corporate adviser for California license and ownership issues across the capital structure.

Can You Help Me Sell or Buy a Cannabis Business?

From Shay’s interview for the Master’s series on ReelLawyers.com

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Absolutely, I can help you purchase or sell a cannabis business in California. I can guide you through the regulatory landscape, including both the state regulatory environment and the local regulations that apply to the business.

If you’re looking to purchase a cannabis business, I can assist in identifying a suitable opportunity for acquisition. And if you’re looking to sell, I can help determine the value of your business by working with you to conduct an evaluation—taking into account intangible assets—and help you develop a marketing strategy for the sale.

Business structure directly impacts legal liability for owners if the company becomes involved in any disputes with third parties, or if there are ownership disputes. Our corporate law practice includes all the services a cannabis or hemp business needs, including but not limited to restructuring business forms, ensuring that your business is adequately capitalized, protecting officers and directors, and advising about ongoing corporate governance. The Law Office of Shay Aaron Gilmore provides legal services for cannabis and hemp operators and investors related to:

Distressed Deals, Receiverships, and Alternatives to Bankruptcy for Cannabis and Hemp Businesses

One of the sharpest corporate‑law distinctions between cannabis and industrial hemp is what happens when a business becomes distressed. In the vast majority of cases, cannabis businesses cannot access federal bankruptcy protection because cannabis remains a Schedule I controlled substance, and federal courts have overwhelmingly dismissed Chapter 11 filings by cannabis operators on the ground that the bankruptcy system cannot be used to administer assets tied to ongoing federal crimes. That bar extends beyond plant‑touching companies — courts have also dismissed cases involving cannabis landlords and ancillary service providers. Industrial hemp businesses, by contrast, were removed from the Controlled Substances Act by the 2018 Farm Bill, and federal bankruptcy courts have accepted hemp‑company filings, most notably the GenCanna Global Chapter 11 liquidation in the Eastern District of Kentucky, which confirmed that compliant hemp and CBD companies can reorganize or liquidate under federal bankruptcy law. However, hemp companies whose products raise questions under the Federal Food, Drug, and Cosmetic Act or whose operations straddle the cannabis–hemp line may still face challenges at the courthouse door.

For California cannabis operators locked out of bankruptcy, the primary restructuring tools are state court receiverships, assignments for the benefit of creditors, and negotiated out‑of‑court workouts. Under California Code of Regulations, title 4, section 15024, a court‑appointed receiver can, with timely DCC notification, step into the shoes of a failing cannabis licensee and continue operating the business while a buyer applies for new state licenses at the same location — a critical bridge that keeps the site, the workforce, and the license pipeline alive during a transition. Assignments for the benefit of creditors offer a more private, contractual alternative, allowing a distressed company to transfer assets to an assignee who liquidates them and distributes proceeds without ongoing court supervision. Because hemp businesses have federal bankruptcy available as an option, the receivership and ABC tools are less commonly needed on the hemp side — but they can still be relevant where a hemp operator also holds cannabis licenses or where speed and confidentiality outweigh the advantages of a federal proceeding. The firm advises buyers, sellers, lenders, and receivers across both cannabis and hemp transactions, structuring distressed deals so that regulatory approvals, license continuity, and creditor recoveries are all addressed before a transaction closes.

The firm provides Corporate Law services to cannabis and hemp operators and investors in:

Trusted Cannabis and Hemp Corporate Counsel

When well planned and executed, mergers and acquisitions can take an existing business to a level of increased capability, allow it to offer new goods or services, or assist in gaining market share. Since opening in 2018, The Law Office of Shay Aaron Gilmore has successfully closed millions of dollars in M&A transactional value for cannabis and hemp industry clients. To support these transactions, The Law Office of Shay Aaron Gilmore provides the following legal services:

What Business Entity Types Do You Recommend for New Cannabis Businesses?

From Shay’s interview for the Master’s series on ReelLawyers.com

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Yeah, it really does depend on a number of considerations, including legal and regulatory compliance, tax implications, liability protection, access to capital, and management structure. Each of these factors can influence the client’s decision when forming a new cannabis business.

Representative matters

Represented the buyer of a licensed manufacturing subsidiary of a large, publicly traded cannabis company in a transaction exceeding USD 1.8 million, including negotiating satisfaction of historic tax liabilities shortly before the seller entered a court‑appointed receivership.
Took over an acquisition of a Northern California cannabis manufacturing and distribution business from prior counsel, re‑structuring the deal to fit California ownership‑transfer rules and securing regulatory approval after earlier efforts had stalled.
Acted for the seller of a multi‑million‑dollar cannabis cultivation farm in a coastal California county, structuring the sale and ownership transfer in a way that satisfied evolving state guidance on changes of control during a period of severe price compression for wholesale flower.
Led the corporate restructuring of several cannabis cultivation and retail businesses in different California counties, realigning ownership and governance in closely held companies, often in tandem with complex landlord, creditor, and social equity obligations.
Advised on entity governance and restructuring for social‑equity licensees and multi‑member retail ventures, including protecting majority owners who are also landlords while addressing aggressive minority stakeholders and potential litigation exposure.

Related cannabis and hemp business services include:

A complete list of Shay’s recent presentations, white papers, and legal articles is available on the Media page.

Shay regularly publishes Corporate Law updates and insights on his Cannabis and Hemp Law Blog.

Social Equity Structures, Entity Formation, and the Cannabis–Hemp Divide California’s cannabis social equity framework creates corporate‑structuring constraints that do not apply to industrial hemp. The Department of Cannabis Control offers equity fee relief — including license fee waivers and deferrals — to cannabis businesses that are at least 50% owned by qualifying equity applicants who meet criteria related to prior cannabis convictions, household income at or below 60% of area median income, or long‑term residence in communities disproportionately impacted by cannabis enforcement. Equity‑approved businesses may also qualify for the Franchise Tax Board’s cannabis equity tax credit of up to $10,000 per year through 2027, and eligible retailers could until recently retain 20% of excise tax collected under the CDTFA vendor compensation program. Dozens of local jurisdictions — including Los Angeles, Oakland, Sacramento, and San Francisco — layer on additional equity licensing programs with priority processing, technical assistance, and startup grants. Because equity status is tied directly to ownership percentages and individual qualifications, every corporate decision — formation, capitalization, investor admission, equity‑compensation grants, buyouts, and governance changes — must be evaluated against equity‑program thresholds. A funding round that dilutes the qualifying owner below 50%, or a management restructuring that changes who “directs or controls” the business under 4 CCR section 15003, can disqualify the company from equity benefits it has already been receiving. Industrial hemp operates under an entirely different framework. Hemp is regulated by the California Department of Food and Agriculture, not the DCC, and there is no parallel state social equity program for hemp cultivators or processors. Entity formation for hemp businesses is governed by standard California business law and the CDFA’s registration requirements for “key participants” — including sole proprietors, partners, and persons with executive managerial control — but without the equity‑ownership thresholds, ongoing disclosure obligations, or fee‑relief programs that shape cannabis corporate structures. That said, as the cannabis and hemp markets converge — particularly for companies that hold both DCC cannabis licenses and CDFA hemp registrations, or that are pivoting from one to the other — corporate counsel must understand both regulatory tracks to avoid inadvertently jeopardizing equity status, licensing, or registration through routine business transactions. The firm advises equity applicants, investors, and operators on structuring entities and capitalization tables so that equity ownership thresholds and key‑participant disclosures are maintained across both the cannabis and hemp regulatory frameworks.

Explore Our Corporate Law Services

Cannabis Business Entity Formation

How cannabis companies form consistent with corporate law and DCC regulations.

Cannabis Corporate Governance

How cannabis companies create governance systems for compliant operations.

Cannabis M&A Transactions

How cannabis companies structure mergers and deals under complex laws now.

Hemp Business Formation

How founders establish hemp businesses and comply with industry rules set.