Praetorian Global v. Eel River Organics CA1/1

I.

FACTUAL AND PROCEDURAL

BACKGROUND1

ERO is a California limited liability company that “owns a farm in Humboldt County . . . on which it cultivates high quality cannabis plants.” Praetorian is a Delaware corporation, headquartered in Colorado, “that owns and licenses cannabis-related intellectual property” and “the ‘Binske’ brand, a line of cannabis products.” ERO is licensed to conduct “commercial cannabis activity” in California under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA or the Act), Business and Professions Code2 section 26000 et sequitur, and Praetorian is not. In January 2019, ERO and Praetorian entered a contract under which Praetorian licensed portions of its intellectual property to ERO and provided certain related services to enable ERO to sell cannabis products under the Binske brand (the contract). In exchange, ERO was to pay a monthly royalty, with a minimum total of $1 million due for the first year and $2 million due for the second year without regard to the volume of products sold. The contract contained an arbitration clause under which the parties agreed to submit disputes to binding arbitration in Colorado.3 Praetorian…