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 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.
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!