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Escrow Trust Account vs. Attorney IOLTA

420Escrows is the Ultimate Escrow equalizer in industry transactions!

The use of Escrow services in the Cannabis space “will become the next great equalizer in this industry. When the Farm Bill was signed and certain regulations changed, the way was paved for the use of licensed and bonded escrow services in certain aspects” in the transactional nuances of the industry. Attorneys have always been a vital part in facilitating these deals and they still have a very relevant role in these deals closing in today’s atmosphere but an Escrow Holder is the ultimate equalizer by maintaining the transactional integrity and neutrality that is all too often absent but vital key needed to make it to the point of a successful closing.

420Escrows

Until just recently, all Proof of Funds (POFs) and other necessary contractual verifications have been handled by and passed through various attorneys. Attorneys and their respective clients have an inherent attorney-client privilege that permits the discussion of literally anything amongst themselves without the responsibility of having to disclose what was discussed and the attorney is responsible for keeping their own clients’ best interest at hand, which is unlikely to serve all parties best interests within the transaction.

Escrow Trust Accounts:

Escrow Trust Accounts are offered by a neutral third party fiduciary service, the Escrow Holder, whose primary fiduciary responsibility is to the contractual obligations of the transaction. An escrow agent is an impartial and independent party from both the buyer and the seller who holds funds and documents in trust based on terms outlined in a contract. Essentially, escrow operates as a proctor of sorts on behalf of the contract itself, making sure all terms, conditions and contingencies, if any, are met followed before funds are disbursed.

Attorney IOLTA’s:

Attorney IOLTA accounts disburse directly to the supplier and other parties, as applicable, on the buyer’s behalf and once the buyer’s attorney is in contact with the supply side, the attorney has the opportunity to  renegotiate pricing and other terms on buyer’s behalf, confidentially. If the attorney opts to take this opportunity and is successful in renegotiation, they can then proceed to cancel the original transaction and go directly to the supplier with new pricing for their client, all while having no requirement to disclose any details to anyone who was involved in the original transaction because they have attorney-client privilege in place with their client. This is often the method that is used to circumvent the broker chain who is often the procuring cause of the deal to begin with.

Why would an Attorney use 420Escrows?

420Escrows is mitigating risk for Cannabis closings and assisting attorneys!

We offer solutions that parallel similar attorney services such as paymaster accounts, IOLTAs, contract/service agreement, personal property sales, license transfers, holdings and more! Our team handling the escrow enables attorneys the time and freedom of being able to thrive in their field of expertise and let us absorb the risks associated with holding funds in Trust Accounts and alleviate the burden on the attorney of the task heavy process of escrow.

Attorneys have been involved in Cannabis transactions in a much larger scope and at a level of minutiae exceeding that which they would normally do for any other “traditional” client. Due to the legalities and stigma surrounding the Cannabis industry, many clients have been left with no other options outside of an attorney handling the myriad of transactions that principals need. 420Escrows is here to lift the burden from, and work in tandem with, the Attorneys that have been forced into an Escrow Holder role because there were no other options. We offer solutions that parallel similar attorney services such as paymaster accounts, IOLTAs, contract/service agreement, personal property sales, license transfers, holdings and more! Our team handling the escrow enables attorneys the time and freedom of being able to thrive in their field of expertise and let us absorb the risks associated with holding funds in Trust Accounts and alleviate the burden on the attorney of the task heavy process of escrow.

Why would a Broker use 420Escrows?

420Escrows is facilitating Broker needs and navigating the hurdles of Cannabis transactions!

The 420Escrows team understands the specifications of and desires for double-blind transactions while also understanding the legal limitations and requirements of having a proper transaction take place. Many brokers  in the Cannabis industry spend countless hours putting together the pieces of a puzzle for a deal only to have it fall apart because of circumvention and transparency issues. Our team recognizes the issues at hand and manages all facets of the transaction while maintaining privacy in all escrows and ensuring the appropriate parties are paid in accordance with the agreed upon terms of the transaction. We require all principals to provide documentation in non-redacted form that we maintain in trust and subject to standard privacy laws, bridging the gap for the industry brokers and facilitating successful closings.

As the Cannabis and Hemp Industries continue to evolve and mature it will become increasingly imperative to keep the Broker’s transactional position secure and ensure payments to all relevant parties are made, as required, which is an inherent role of the Escrow Holder. Many Brokers in the industry are employing our escrow services for “Master” escrows which allow Brokers to maintain some control of the transactional nuances without the required role of the Seller/Supplier and Buyer becoming minimized as a result. Ask how our Master Escrows can help you close more deals!

The Cannabis & Hemp Industry

The 420Escrows team has definitive knowledge and understanding of the nuances and sensitivity of cannabis-related transactions. We have experience in a myriad of topics and various facets of the industry ranging from a fully executed bulk sale transaction including the transfer of licenses to a simple raw, undeveloped land sale. 

In providing our services we are highly cognizant of the unique financing requirements and other industry-specific issues and challenges that are unique to the cannabis industry, which enables us to effectively and efficiently facilitate the needs of your specific transaction while protecting all parties interests.

Don’t let your closing go up in smoke!

Partial Content credit to: DPPK

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