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Escrow Process

Walkthrough

Purpose: To help both the buyer and seller transact and develop a relationship while not placing their business interests at risk. 

CCE Escrow exists to help clear funds in a transparent manner that follows Quality Assurance and the terms of the agreement.

By viewing this Escrow Process Walkthrough you hereby acknowledge that the content is confidential and is the intellectual property of the Canadian Cannabis Exchange. You agree to not replicate, disseminate, reproduce, share or access to this page with any intention other than for the use of the platform for your own company.

Escrow Steps

  1. The agreement is reached on product or service for volume, price, payment terms, and other related criteria of the deal
  2. The Purchase Agreement and Escrow agreement are drafted, reviewed and signed by both parties
  3. Funds are deposited by Buyer to Clark & Associates (CCE Escrow Agent). Please refer to the “Depositing of Funds” section below for more details.
  4. Confirmation of deposit being received is provided to both the Buyer and Seller by CCE or Clark & Associates
  5. Product is shipped
  6. Product is received
  7. Product is handled in accordance with the QA and terms of the agreement (ie. potency retest)
  8. The Seller issues a request for release of funds outlining that they are requesting the funds be released from Escrow. See the “Release Request” section below for more information.
  9. From here three outcomes are possible
    1. The Buyer permits the release by signing the request for release form and sending it to Clark & Associates permitting the release of the funds
    2. The Seller issues a funds release request to which the Buyer issues a dispute and the dispute is resolved between the parties and a holdback release form is issued to Clark & Associates permitting the release of the funds in accordance with the terms and conditions of the Escrow Agreement
    3. The Seller issues a funds release request to which the Buyer disputes and no resolution can be reached. At which point the funds will move to the courts for arbitration between the parties (this stage of the dispute process has never happened before in the history of the Exchange) 

The product can be disputed or funds release request can be issued depending on the outcome of the situation. Please review Sections below for more information depending on the path of the Escrow release.

Depositing Funds

  1. The buyer must wire funds to Clark & Associates. Wire transfer details are provided in the Escrow Agreement
  2. Once funds are received confirmation will be provided as outlined above
  3. Deposits cannot be made using e-transfer or credit card and must be made by bank draft, cheque or wire transfer
  4. Once funds have been sent please provide confirmation they are on their way to client@canadiancannabisx.com or to your CCE Broker

Release Request

  1. Once the permitted window from date of shipment arriving has passed, the Seller fills in Attachment 1 to the Escrow agreement with their banking information and signs on the provided line
  2. Seller then issues the Agreement to Clark & Associates
  3. Clark & Associates then reviews the release request and provides written notice to the Buyer that the Release Request has been issued
  4. The Buyer then has 72 hours from date of notice to take one of the following actions;
    1. Permit the release by signing and returning the form to Clark & Associates
    2. Issue a dispute notice in accordance with the terms and conditions of the Purchase Agreement
    3. Failure to respond to the notice shall be considered a dispute notice and the funds will be sent to the courts for the arbitration proceedings

Example Deal Flow

  1. Strain X sells for $1.00/kg for 50 kg with payment terms of 50% down and 50% net 30 (taxes are ignored for purpose of this example)
  2. Buyer wires $25,000 to Clark & Associates ($1.00/gram * 50,000 g = $50,000)
  3. The Buyer notifies CCE the funds are on their way
  4. CCE/Clark & Associates received the funds and issues a confirmation of receipt to both the Buyer and Seller
  5. The product shipment is made and the product is received by the buyer
  6. The buyer reviews the product over the course of the 3-5 business day window (depending on the agreement)
  7. The Seller at the end of the 3-5 business day window issues a release request form for $25,000 to Clark & Associates
  8. Clark & Associates issues the release request to the Buyer
  9. The Buyer countersigns the release request and returns it to Clark & Associates
  10. The funds are sent from Escrow to the Seller
  11. The Seller is provided with a receipt of deposit from Clark & Associates
  12. The remaining $25,000 is sent directly from the Buyer to the Seller and does not use the Escrow Process for the funds due net 30 unless otherwise outlined and agreed upon in the Purchase Agreement

Dispute Process

  1. Should a dispute be issued it must be in accordance with a term of the Purchase Agreement originally agreed to between the parties
  2. Once a formal dispute has been issued to Clark & Associates the parties then follow the outlined steps of the agreement for resolving the dispute
  3. The resolution of the dispute is to be managed between Buyer, Seller and CCE. Clark & Associates only acts on the permission to release the funds or to withhold the funds and is not privy or responsible for discussions on a solution
  4. Should a resolution not be reached the funds will be interpled to the courts and the arbitration process, as outlined by the Escrow agreement, shall commence
  5. At this point, both Clark & Associates and CCE will make best efforts to ensure all documentation is provided but the arbitration process shall be directly between the Buyer and Seller

FAQ

How many deals have ever reached arbitration or have gone through the full dispute process?
  • None. Buyers and Sellers have always found a solution to the issue through renegotiation or discussions through their CCE Broker 
How long does it take to receive the funds from Escrow once released?
  • Anywhere between a few hours and 2-3 business days depending on the date the payment is made (ie. Before a holiday or year-end).  Clark & Associates (the Escrow Agent) will always provide a receipt proving that the funds have been sent
When should I contact the Escrow Agent?

All communications on disputes, how to sign and what documents to sign should be managed through the CCE by contacting client@canadiancannabisx.com

What is the contact information for the Escrow Agent?

*The Escrow Agent should only be contacted directly when issuing a signed notice of direction (ie. Request for Release of Funds, Permittance of Release, Notice of Dispute)

Can a release request be completed by both parties ahead of the 3-5 business day window?
  • Yes a release request can be completed prior to the end of the provided time window and the full process  can be completed in as short of time possible as long as both parties permit the release of funds and each has an authorized signatory sign the release request

*For this reason, “Seller’s are encouraged to fill out the release form and have it on hand and ready to send as soon as the product review window by the Buyer has passed”

I still have questions regarding the Escrow Process, who can I contact?