Many Illinois cannabis contracts, including intellectual property licensing agreements, development agreements and supply agreements, contain force majeure clauses. Depending upon the language of these clauses, the COVID-19 pandemic may be an event that triggers these clauses and provides a defense to nonperformance of the contract.
Companies that are experiencing difficulties complying with or enforcing compliance with their contracts should carefully examine their contracts to determine if a force majeure clause may excuse performance.
On March 20, 2020, Illinois Governor J.B. Pritzker issued a stay at home order for all Illinois residents. (Executive Order 2020-10.) On April 30, 2020, Governor Pritzker extended the stay-at-home order through May 30, 2020. (Executive Order 2020-32.) Many other state and local government agencies have taken similar measures. And, while cannabis dispensaries and cultivation facilities are deemed to be “essential businesses” under the Illinois orders, some other states, such as Massachusetts, have not exempted such facilities. As a result of the restrictions placed on businesses due to the COVID-19 pandemic, companies operating in the cannabis industry in Illinois may be experiencing compliance-related difficulties with their contracts.