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Arbitration Ordered In Pot Contract Despite Illegal Provision

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The estate of a Los Angeles cannabis entrepreneur must arbitrate litigation over contracts created as part of a partnership with the entrepreneur to help set up a cannabis business, a state judge has ruled, because one contract has a valid arbitration clause despite an illegal provision.

A management agreement executed in 2021 required Thrive Social Equity Manager VIII LLC to start paying Herbovena LLC, mostly owned by entrepreneur Brandon Shubunka, at least $35,000 per year.

But the agreement breaks a city of Los Angeles rule that Shubunka, as a socially disadvantaged cannabis businessman, must have unconditional ownership of at least 51% of his business, Los Angeles County Superior Court Judge Elaine Lu decided on Monday.


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