Following on from my last post, in which I discussed the limited situations in which a lawsuit can be filed against a cannabis business owner, today’s post presents a number of other ways you can protect yourself and pressure yourself in a lawsuit. This is a key question as so many in the cannabis industry are struggling and have limited ability to litigate OR resolve their disputes. Therefore, now more than ever, it is important to ensure that your strategies and tactics are efficient and effective. A powerful tool in this area is the garnishee order, a provisional remedy that can provide significant leverage and protection.
Understand the mechanisms of attachment
A writ of lien is a legal instrument that authorizes a creditor, often the plaintiff, to create a lien on the defendant’s assets while litigation is pending. The lien serves as a security interest and gives the creditor priority over any potential future creditors that may arise as the case progresses. This can be a strong incentive for defendants to engage in settlement negotiations and avoid lengthy (eg, two to three years) litigation.
Prerequisites for an affidavit
While the benefits are clear, it’s important to realize that obtaining a writ of attachment in a cannabis litigation — like any other litigation — is no easy task. The process is characterized by high legal requirements and technical subtleties. These vary by state, but expect to be required to provide some or all of the following evidence:
- Contractual basis: In order to initiate the prosecution of an attachment order, the claim must be based on an express or implied contract.
- Quantifiable Amount: The claim must have a fixed or easily determinable amount greater than $500. This regulation ensures that the damage can be calculated with sufficient certainty.
- Secured by Personal Property: Claim must not be secured by real estate; Instead, it should be either unsecured or secured by personal property.
- Commercial in Nature: The claim must be of a commercial nature and relate to business transactions and not personal disputes.
Benefits of Obtaining a Pledge Order
- Impact on Settlement: A garnishment order can tip the balance in favor of the plaintiff, forcing the defendant to participate in settlement negotiations to protect their assets.
- Senior Creditor Status: By securing a lien on the defendant’s assets, you position yourself as a senior creditor and ensure you are one step ahead of potential future claimants.
- Enforcement of future judgments: In the event of an affirmative judgment, the attached assets can be seized and liquidated to settle the damages awarded, streamlining the enforcement process.
A writ of lien can be an excellent tool in cannabis disputes, providing security and leverage with a pending litigation. Even if it does not make sense to strive for such a solution in all cases due to the complex process, it is perfect in certain situations and can make the decisive difference between a quick and a favorable agreement.