Cannabis Businesses Are Required to Have Forms of Governing Documents
Video Transcribed: Tulsa Business Cannabis Attorney Isaiah Brydie coming at you with another video. And this video is going to be all about minority/majority member rights, particularly when it pertains to doing accounting and bookkeeping on the company that you are an owner of. So, let’s say you have some questions, as far as the earnings of the company revenue, overhead costs, expenses, things like that.
Where you’re going to start here is, actually, under the Oklahoma Limited Liability Company Act or the Oklahoma Uniform Corporation Act. Both of those can be found under Oklahoma Statutes. And basically, those two statutes say two different things. Number one, they call for, if there is an operating agreement or corporate bylaws on a company, for you to look at that operating agreement or those corporate bylaws to see what methods or modes you have to follow in order to get an adequate accounting and bookkeeping on behalf of a company.
In absence of an operating agreement or corporate bylaws, then the Oklahoma Statutes, themselves, the Oklahoma Corporate Act, sorry, the Oklahoma Corporations Act, or the Oklahoma Limited Liability Company Act control. Normally, and also as a requirement for your Oklahoma medical marijuana cannabis business license, you are required to produce some forms of governing documents on behalf of your company.
So, for a corporation, those would be corporate bylaws. For a limited liability company, that would be an operating agreement. So, let’s just proceed forward, for ease of conversation, under the theory that you’ve made an LLC and that your LLC has an operating agreement.
So, we now, for all intents and purposes, we’re outside of the Oklahoma Limited Liability Company Act, and we’re operating under your operating agreement, say for some particular topics. Normally, what you would see in an operating agreement is a full section on accounting, bookkeeping, and records of a company.
Normally, those provisions say something to the effect of the company is required to keep adequate books and records, and that those same books and records can include financial information, information as to who the owners of a company are, information as to employees, possibly of a company, assets, and inventory of a company, things of that nature, really basic stuff.
Further, in those same provisions, there’s usually some type of language about an individual member of an LLC requesting that same accounting, inventory, assets, accounts receivable, et cetera. Normally, in order for a member to formally request that information, you are required to tender written notice to the company within a certain amount of time.
And then once the company is informal receipt of that written notice, the company will then have a certain amount of days in order to give you the information that you requested. So, writing up a formal letter, actually tendering it to the company, you’ll have to see what rules would apply to actual formal written notice tendered to your company, what that looks like. But normally, you would write up a written letter, tender it to the company.
The company’s manager or accountant or CPA would compile the information that you requested and normally would mail it to you or give it to you in the same format or in a particular format that you might want to request.
So, if you want it on a thumb drive, or if you want it mailed, then the company could actually satisfy those requests. However, the company may not be required to give your requests to you in a particular fashion.
Maybe, under your operating agreement, the company is only required to give you actual hard copies of all of the documents. So, you could find yourself in a situation where you have 200, 300 pages of documents, all financials, and all of this other stuff that you may or may not be able to understand.
So, also going along with requesting documents from the company, I highly recommend that you secure the services of an accountant or a CPA to actually go through all of that documentation. You might also think about securing the services of an accountant or a CPA before you even tender that written notice so that you can get more precise on exactly what documents you are requesting. So relying on that accountant or CPA to use certain terms of art.
Maybe they understand like, “Hey, in order for this company to file taxes, this company needs to have X, Y, and Z documents. And we need to see X, Y, and Z documents to see all of the revenue that the company’s bringing in, to see all of the expenditures that the company is paying out.
And then to see how much money is left for the individual members of the company in order for the LLC to do a distribution.” My name is Isaiah Brydie, I am an Oklahoma marijuana lawyer who is here to help you with any of your Oklahoma Cannabis business legal needs.