Legal Term
cannabis dispensary supplier agreement testing failure penalty
Legal Definition
A contractual provision in a cannabis dispensary supplier agreement that imposes specified penalties, such as financial charges or termination rights, on a supplier when supplied cannabis products fail to meet mandatory testing requirements under applicable state or local regulations, including standards for potency, contaminants, or safety.
In Plain English
A penalty that applies if the cannabis from a supplier doesn't pass required lab tests, forcing the supplier to pay money or cover costs to fix the issue.
Example in a Contract
Section 8.3 Testing Failure Penalty: If any Product delivered under this Agreement fails to comply with the testing protocols mandated by [State] Cannabis Control Board, Supplier shall, within fifteen (15) days of written notice, pay Dispensary a penalty equal to 250% of the affected Product's invoice value, plus all costs for retesting, secure disposal, and expedited replacement shipment. Repeated failures (three or more in a calendar year) may constitute a material breach allowing termination.
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