Mediation of Cannabis Disputes: Part 2

In Part 1 of this series we discussed how mediation works in most cannabis disputes. Today, we discuss some strategic considerations to increase the likelihood of success in cannabis mediation.

     Know your audience(s): Unlike in litigation or arbitration, where your audience is a disinterested third party judge, jury, or arbitrator, your primary audience in mediation is the other side. After all, mediation will not result in settlement unless both sides agree. But consider the other audiences, i.e., those on your own side. Many cannabis businesses have multiple owners or decision makers. Mediation can be an excellent way for your management team to fully understand the dispute, so that the team itself can decide on a resolution that will best satisfy all the stake holders.

     Look for a resolution, not a victory: The goal in most mediation is for all parties to resolve the dispute, not for one party to emerge victorious at the other’s expense. It is the rare case where a party in mediation will find it in its best interests to completely capitulate. If you expect to get all or most of what you might get at trial, you are unlikely to succeed in mediation.

     Don’t just trade offers: Even when the principal issue between parties seems to be how much money will change hands, just exchanging numbers is not always effective in mediation. The concept of “principled negotiation,” developed by Roger Fisher and Bill Ury in the book Getting to Yes, involves considering the parties’ underlying motivations and interests, rather than just their negotiating positions. Seeking to address each party’s interests can change the dispute from a zero-sum game to one where both parties will benefit. For example, if one marijuana business is suing another for intellectual property (IP) infringement, a possible resolution could involve a cross-license agreement where each party agrees to license its IP to the other party.

     Mediation is a process: It is not uncommon for parties to engage in two or more rounds of mediation before reaching a settlement. During litigation, there are several critical points at which mediation might take place. Early mediations are attractive, because the parties will not have spent time and money litigating. But the parties will be handicapped because they will not have the documents and other information that becomes available during discovery. For this reason, some parties choose to voluntarily exchange critical information, e.g., sales data, very early in a case to enable a more informed mediation. In general, as the parties spend more time and money on litigation they will be less likely to settle. However, certain expensive litigation events, such as expert discovery, summary judgment, and especially trial, may encourage parties to mediate later. Consider your mediation strategy at the beginning of a dispute, and be ready to reconsider your strategy as the case develops.

     Get Authority: Each party must bring to the mediation the person or people who have actual power to decide the case that day, preferably in person. This often include a representative from any insurer who might contribute to a settlement. Most experienced mediators will insist upon this.

     Get it in writing: If a settlement is reached, even if it is partial, that agreement should be reduced to writing and signed by all parties before they leave the mediation session. It is essential that this writing capture the agreed-upon terms, even if the parties contemplate drafting a more detailed agreement later on. It is also essential that this writing be enforceable. An oral agreement, while potentially enforceable, is likely to lead to more litigation, thereby undermining the objective of settling the case.

The majority of cannabis disputes are likely to go to mediation at some point. Making the most out of your mediation can help you get, at least some, satisfaction.