Regulation .01 Security Interest in a Cannabis License.
Regulation .01 Security Interest in a Cannabis License.LinkCopy Citation
A.
Prior to initiating an agreement that involves a security interest in a cannabis license, a creditor shall register with the Administration in the manner specified by the Administration.
B.
A security agreement may not contain provisions that authorize the creditor to:
(1)
Require the security agreement to become due earlier than the terms specified in the agreement, except if the licensee materially breaches or defaults on its material obligations as set forth in the security agreement;
(2)
Convert the debt under the security agreement to equity whether present, optional, or future, in a manner that violates Maryland law concerning ownership and control of a license, including restrictions on transfers of a license;
(3)
Deprive the licensee of the right to operate the license;
(4)
Restrict the ability of the licensee to make payment on the security agreement through a third party unless the payment restriction would cause the creditor to violate a law by which it is governed; or
(5)
Restrict the ability of the licensee to exercise control over the licensed entity as defined in COMAR 14.17.01.
C.
A creditor or licensee shall make a copy of the security agreement available to the Administration upon request.
D.
The Administration may invalidate a provision of a security agreement if it violates §B of this regulation.