Hemp and CBD Law In North Carolina: A 2019 Update

By Jake Farrar

As the calendar turns to 2019, it feels as though everyone is in the mood to talk hemp, or its well-known derivative, cannabidiol, more commonly known as “CBD.” The uptick in hemp talk is no coincidence. Several recent updates to federal and North Carolina statutes and regulations have opened up the possibility of a vast new market in this area. Comments that refer to the legalization of hemp are likely too simplistic to be useful to entrepreneurs, small businesses, or investors looking to get into the industry, as there are still important regulations that control the cultivation and distribution of the plant, with more clarification and regulation certain to follow from Washington, D.C. and Raleigh.

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Thursday and Friday: Business Law Institute and Business Law and International Law & Practice Annual Meetings

Need CLE? The Business Law Institute and the Business Law & International Law & Practice Annual Meetings will be held on Thursday, Feb. 14 and Friday, Feb. 15.

Find details and registration for the Business Law Institute here and and the Business Law & International Law & Practice CLE here.

Thursday, Feb. 14: Business Law Institute

Focus on emerging business technologies, ESOPs, insurance provisions and issues, and indemnification issues  

Don Reynolds, Andrew Steffensen and Jim Verdonik bring their expertise to the topics of securities, blockchain and cryptocurrencies.  Don will review the basic tenets and structure of U.S. securities law, and provide an update on recent developments in the field, including public companies’ use of block trades to efficiently access the capital markets, and the applications of blockchain technologies to securities law and vice versa (e.g. initial coin offerings or ICOs).  Andrew and Jim will follow with an introduction to blockchain technologies and cryptocurrencies, discussing how these emerging technologies may impact a variety of business transactions in an increasingly digital world.

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Responding To an Unexpected Offer To Sell Your Company

Sponsored Post

High Rock Partners is a sponsor of the NCBA Business Law Section’s 2019 Business Law Institute and Annual Meeting. A boutique firm of strategic and M&A advisors located in Raleigh, N.C., (in the RTP area), High Rock serves leaders of emerging growth and middle market companies. We assist owners and management in selling their company; making acquisitions; making key strategic decisions; navigating and executing on transitions of ownership; accelerating growth to the next level; and to re-position their company to optimize performance.

By Kenneth Marks

Repeatedly we talk with private business owners confronted with an unexpected offer to sell their business… let’s call these “unsolicited offers.” Many times, they haven’t really thought about a succession or exit plan nor have they prepared for a deal if they so desired.  Usually the owner of the company or one of their advisors (i.e. attorney or accountant) reaches-out to us for assistance.

Typical questions that we field in these discussions include –

  • How much is my business really worth?
  • Is the timing right to sell my company?
  • If I want to respond, what information should I share?
  • How do I control the competitive risks of engaging with them?
  • How do I know that what they are offering is the best deal for me?
  • What are my real alternatives and options?
  • Should I negotiate only with this potential buyer or should I try to bring other buyers to the table to create competition?
  • Who on my team should the buyer be talking with?

…. and the list goes on.

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Smoke Signals: No Fiduciary Duty For Minority Shareholders — At Least Not Yet

The following excerpt is reprinted with the permission of and with credit to North Carolina Lawyers Weekly.

By David Donovan

Smoke has long been used for sending signals, but the North Carolina Supreme Court has sent some clear signals to stock owners while resolving a spat over smokes.

On Dec. 7 a narrowly divided court stubbed out a shareholders’ revolt over Reynolds American’s purchase of Lorillard Tobacco and reversed a Court of Appeals decision holding that a minority shareholder could owe a fiduciary duty to other shareholders. See Corwin v. British American Tobacco PLC,  2018 WL 6437701, Lawyers Weekly No. 010-093-18. But the court nevertheless strongly implied that it was inclined to accept the reasoning of Delaware courts that such a duty could exist under the right circumstances.

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Zoning In: New Tax Benefits of Investing in Opportunity Zones

By Jonathan Jenkins and Andrew Steffensen

Overview

If you are a lawyer who represents a taxpayer who recently realized a short-term or long-term capital gain, your client may be looking for ways to avoid recognizing that capital gain and the associated tax bill. Thanks to a new tax incentive program, a taxpayer who has realized capital gains may have the opportunity to invest qualifying capital gains[1] in certain qualifying investments and (i) defer the recognition of such capital gains until December 31, 2026, (ii) reduce the amount of the capital gains required to be recognized by up to 15%, and (iii) entirely avoid paying any capital gains tax on any additional capital gains realized from such an investment. This post summarizes this new incentive, more commonly known as the opportunity zone tax incentive.

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Collaborative Training At The Grandover Feb. 6-7

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The NCBA has offered five basic training courses in Collaborative Law Practice in the past, and is offering the next one Feb. 6-7 at the Grandover in Greensboro. Click here to view the brochure with all the details.

The Early Bird registration deadline is Jan. 16. Click here to register.

This 14-hour training is for any lawyer who wishes to add the collaborative approach to their practice, including both family lawyers and other civil lawyers, including those practicing in the areas of construction, employment, small business, probate, as well as litigation. Because collaborative is practiced entirely out of court, it is not necessary to have training or experience as a litigator to become a collaborative lawyer.

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February Annual Meeting and CLE Programs

The Business Law and International Law Sections will hold their annual meetings and joint CLE program on Feb. 14 and 15 in Pinehurst.  This year’s program includes sessions about securities law, emerging technologies, indemnification of company owners and principals, GDPR, dispute resolution issues in international practice, and a host of others, including the Friday morning favorite, the N.C. case law update from Professor Tom Molony.  Ethics, substance abuse and statutory updates are included as well.

Click here to register for the joint CLE on Feb. 15 and here to register for the 2019 Business Law Institute on Feb. 14.

 

Solution for Dilution Confusion

By J. Dain Dulaney, Jr.

Imagine this day for a moment: you are the CEO and announce to your investors and employees that the company is issuing additional equity ownership and that their equity ownership percentage is being diluted. Chaos ensues. You have panicked existing investors. Employees are up in arms. All because a new investment, or some other issuance of stock in an acquisition, is going to cause their ownership percentage in the company to be diluted. They feel cheated out of hard-earned company value because they have heard that dilution is a bad thing and automatically assume that this lower percentage ownership is going to make their stake in the company worth less. Who can blame them? Who wouldn’t rather own 5% of a company instead of only 3% of a company?

Do not despair! If the company is issuing equity at a higher valuation, the below explanation should help calm this fear.

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To Dissolve or Not to Dissolve

By Benjamin W. Baldwin

The North Carolina Court of Appeals recently addressed a claim asserting a shareholder’s right to a judicial dissolution of a business corporation in Brady v. Van Vlaanderen, 2018 WL 3977437 (N.C. Ct. App. August 21. 2018).

In Brady, the plaintiff was a shareholder in a family business, United Tool & Stamping Company of North Carolina, Inc. (“United Tool”). At the time the plaintiff’s claims arose, and after giving effect to a conversion of nonvoting stock to voting common stock, all of the voting common stock of United Tool was divided among the plaintiff, her siblings and her in-laws, and the plaintiff held a one-third interest in this voting stock, which regularly paid substantial dividends over the years.

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NC Loan Broker Act Remains an Important Lending Statute and Litigation Tool

By Adam Altman

The North Carolina Loan Broker Act was enacted in 1979 “to protect the public from unscrupulous loan brokering practices.”  Brief of Amicus Curiae Roy Cooper, Attorney General of North Carolina at 4, Printing Services of Greensboro, Inc. v. American Capital Group, Inc. 361 N.C. 347, 643 S.E.2d 586 (2007).

The North Carolina Loan Broker Act (the “Act”), codified in Article 20 of Chapter 66 of the General Statutes, requires that loan brokers provide prospective borrowers with a disclosure statement, obtain a surety bond or establish a trust account, and file certain disclosures with the North Carolina Department of the Secretary of State.  See N.C.G.S. §§ 66-107, 66-108, 66-109.  The Act prohibits loan brokers from collecting an advance fee from prospective borrowers prior to the closing of the loan.  See N.C.G.S. § 66-108(c).  There are several categories of persons and entities that are expressly excluded from the provisions of the Act.  See N.C.G.S. § 66-106(b).  If loan brokers fail to comply with the Act, prospective borrowers may void the loan brokerage contract and sue for damages, recover attorney’s fees, and obtain treble damages.  See N.C.G.S. § 66-111.  The treble damages component is available because the violation of any provision of the Act “shall constitute an unfair trade practice under G.S. 75-1.1.”  N.C.G.S. § 66-111(d).

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