California  |  Business Law

Legal Question

Asked on: 6/01/13, 4:50 pm

If a medical marijuana dispensary operates as limited liability corporation, who is liable if it gets shut down? The shareholders? The employees? (e.g. If someone has an ownership stake in a dispensary but takes no management role, is he liable? What about an employee who works at the dispensary but does not own any of it?)

2 Answers

Answered on: 6/02/13, 9:00 am by Bryan Whipple

First, an LLC isn't a corporation. The term is "limited liability company."

As to who is liable if it gets shut down, I think it depends upon whether you're talking about financial liability for business debts, or some other kind of liability (civil or criminal) for some other transgression of the law, such as violation of federal narcotics law.

The limited liability aspect of an LLC generally protects its owners, officers, etc. from liability for business debts in excess of the company's net worth, i.e., an LLC is unlike a partnership in that the creditors cannot reach the personal assets of the business owners. (This assumes the LLC is properly capitalized and operated so there is no reason to "pierce the LLC veil" with a suit claiming "alter ego" liability). This would probably include administrative actions such as zoning enforcement and permit actions, or at least most such actions.

On the other hand, no one -- owners, managers, employees, and the LLC itself included -- is shielded from possible prosecution for some kind of civil or (more likely) criminal action arising out of some violation of law related to drug enforcement, or something of that ilk.

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Bryan R. R. Whipple, Attorney at Law P O Box 318 Tomales, CA 94971-0318

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Answered on: 6/02/13, 6:25 pm by Anthony Roach

Liable for what?

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Law Office of Anthony A. Roach 9909 Topanga Canyon, Ste.313 Chatsworth, CA 91311

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