Thirty-eight states have legalized cannabis for medical purposes while twenty-four states and the District of Columbia also allow its recreational use.  And yet, the use and possession of cannabis remains illegal under federal law.  The consequences of this prohibition on the commercial aspects of the industry are significant: it limits interstate activities and thus hinders growth as well as basic routine activities such as acceptance of credit card payments.  A number of businesses and investors interested in dealing with the cannabis industry have been reluctant to do so given the risk of running afoul of the federal laws and operating in a gray legal and regulatory landscape.

The concern is multi-faceted and includes questions related to mechanisms for the resolution of disputes arising from transactions with cannabis businesses: Will federal law be applied to negate a transaction or to penalize transaction parties? How will federal and state courts handle such disputes?