Bylaws are written by or on behalf of a corporation’s owners at the time of its founding. However, even if these are the rules that direct the company’s operations, they’re typically not revisited unless an issue arises. If you haven’t reviewed your bylaws since your corporation’s founding, there are signs that may suggest revision.
Has state or federal law changed regarding cannabusiness bylaws?
The provisions of your cannabusiness’ bylaws must remain consistent with federal and state law. Since they govern your business practices, remaining up-to-date with applicable law demonstrates conscientiousness to its operations.
For example, the Michigan Regulation and Taxation of Marijuana Act (MRTMA) passed in November 2018. This revolutionary set of laws presented the opportunity to license as an adult-use facility.
If your current bylaws only detail obtaining MMFLA licensure and related compliance activity, you may consider making these changes. These changes should go into effect before establishing any interest in the adult-use cannabis industry.
Are you subject to law under a new jurisdiction?
If you recently obtained municipal approval or determined where your corporation will operate, you are subject to new rules that may not have previously accounted for. Local ordinances vary based on the municipality. However, they may include regulation regarding your:
- Employment practices
- Community involvement
- Environmental responsibility
By including a plan on adherence to local laws, you not only establish framework for compliance in your business procedures, but also demonstrate in writing that compliance is a priority.
If your company’s roles/responsibilities changed
Did your company decide to make changes to the board of directors or executive group? Your bylaws should list the details of membership, director or officer positions. This should include an outline of the position, requirements, qualifications and appointment procedures.
Sometimes, the CEO may fill the role of chairman in small businesses. If the board of directors determines that it’s time to instead elect a chairman, your bylaws may require an update to ensure that a fair voting policy exists. You should also confirm the:
- Term limits
- Legal duties
- Standards, and other key factors.
Unquestionably, these will help adequately execute the position’s duties and ensure that it’s thoroughly outlined for any new or existing roles.
Changes in the frequency or dates of board meetings
The bylaws should include:
- A minimum number of meetings that the board of directors hold each year
- Special circumstances in which a meeting should take place
- How to call for meetings
Should an emergency or urgent matter arise, it’s critical for the procedures for these actions already exist.
Annual meetings are required to keep your company in good standing. If upon incorporation the bylaws failed to provide an approximate date for the annual meeting, you may specify a date through a bylaw revision. If you wish to keep your annual meeting unscheduled, you may decide it’s more productive to establish formal procedures for sending out notices of the annual meeting instead.
The annual meeting should discuss the condition of the company and allow for election of any vacant or new positions. Additionally, a clearly written notice of meeting and schedule of other board meetings will promote attendance of the majority of the board members.
If your cannabusiness underwent major growth
This is perhaps the most exciting reason to revisit your bylaws. Any expansion or modification of your business should reflect the amendment. However, this is only if the action is not governed by a provision already. For example, if you feel that the number of board members should expand beyond what’s currently outlined in your bylaws, drafting an amendment becomes necessary. This is unless a current provision exists which allows for votes on the matter.
Similarly, if you’re operating as a small business and are considering a new investor’s offer, you may wish to revisit your bylaws. This is to remain certain that provisions exist on acquiring additional capital.
Keep in mind that this is not a comprehensive list of all reasons for amendment proposal. Regardless of how thorough your corporation’s original bylaws are, change is necessary eventually. Therefore, your bylaws will reflect the company’s actual business practices over time.
The cannabis industry grows and changes rapidly; review of your cannabusiness’ bylaws should occur early and often.