LOI (Letter of Intent)

An LOI signals serious intent and gets the major business terms agreed before either side spends money on legal drafting, appraisals, or environmental reports. Most LOIs are explicitly non-binding except for a handful of provisions parties do intend to enforce — confidentiality, exclusivity/no-shop periods, and cost allocation for reports commissioned during the LOI stage are the clauses most commonly carved out as binding.

The value of a well-drafted LOI is in surfacing disagreements early: financing contingencies, who pays for what diligence reports, assignment rights, and the length of the exclusivity period are all far cheaper to negotiate at the LOI stage than after a purchase agreement is drafted and both sides have legal fees invested.

In cannabis transactions, LOIs frequently need extra structure around license transferability, sequencing between real estate closing and CRA license approval, and what happens if a municipal opt-in status or licensing cap changes between LOI signing and closing — issues that don't arise in a conventional commercial LOI.