Another challenge in working with NVCA forms is that terms that might all otherwise appear in the same document are spread over a series of documents. If a financing has a shareholder pact, or in the case of an LLC, a business agreement, all conditions are in the same place. Given that the NVCA allocates these provisions across a number of documents, it may be helpful to understand where the provisions in the form series are. Model forms were created to introduce efficiency and some degree of standardization into the process of documenting the financing cycles of start-up companies. NVCA forms have been widely accepted, although most law firms have changed them somewhat when creating their standards. Although form documents may be subject to the laws of each state, they are optimized for Delaware law (the forms also provide some specific instructions in California). There are those who think that formal agreements favour either investors or entrepreneurs. As a participant in the drafting group, I have witnessed a significant effort to balance. A Delaware court may continue to consider this provision applicable, given the trend towards private agreements between discerning investors.

It is not surprising that NVCA forms do not take into account any of the complexities inherent in cannabis transactions. On the one hand, the definitions and the establishment of the documents do not provide that most cannabis businesses are in violation of federal law. This would make the federal court a poor choice of venue and would also complicate different representations in the agreements. Second, there is no mechanism for obtaining regulatory approvals that may be required to obtain, depending on the level of investment and the states holding the licences, either before or after closing. The provisions of the form agreements can generally be categorized into one of three categories: this agreement sets the conditions for the actual sale of shares (for example. B the sale price of the shares and the number of shares that can be sold). It will also include the closing mechanics, z.B. if there will be closures after the initial closure. In addition, the bulk of the agreement consists of insurance and guarantees provided by the company with respect to its activities and by buyers. Sometimes the founders` representations are included individually. These presentations play a key role in the due diligence process and serve as a risk allocation between investors and the company.

Many of the changes to the NVCA agreements are incorporated into different agreements. First of all, we draw attention to these points: updates to the documents have been updated as a result of changes in industry dynamics, national law and other reflections on improving documents from the last round of updates in 2014. In total, five of the documents have been updated, including: 1) the constituent act, 2) the rights of investors, 3) the right to the first refusal, 4) the share purchase contract and 5) the voting agreement. In addition to updates to existing documents, NVCA adds a confidential disclosure agreement. While investors in the technology sector generally avoid these agreements, life sciences investors will generally enter into these agreements before investigating proprietary and confidential information. Consistent with growing awareness of the significant tax benefits associated with qualified small business portfolios (QSBS) and the complexity of determining eligibility for QSBS tax treatment, the NVCA agreements include expanded provisions for QSBS.