The American Arbitration Association (“AAA”) has released its annual business-to-business case statistics report, which provides data regarding the number of cases filed with the organization and the total claim amounts per industry. This year’s report, covering the year 2023, reveals that a total of 11,553 business-to-business cases were filed with the AAA during this period, up from 10,273 the year prior, amounting to just over $19 billion in total claims. This further confirms the increasing appeal of arbitration as an alternative dispute resolution method among industry figures and corroborates similar data published internationally.
Of particular note is the continued trend of increasing engagement in arbitration among businesses in the cannabis industry, which ranks tenth among all industries in the country in terms of total claimed monetary amount, with roughly $155 million, up $50 million from the year prior. In 2022, the cannabis industry ranked even higher in terms of this metric, placing seventh among all industries. The fact that the industry dropped three spots despite continuing to make greater use of arbitration services speaks to the expansion of these services across a wide range of sectors, as more and more businesses recognize the virtues of alternatives to litigation. Some of the industries that have increasingly utilized this alternative are tangentially related to cannabis businesses’ operations, including the healthcare, construction, commercial real estate, and technology sectors.
The accepted utility of arbitration among cannabis businesses in resolving their disputes should not come as a surprise. The unpredictability and jurisdiction-to-jurisdiction variability of cannabis law in the United States makes this industry uniquely incentivized to resolve their matters out of court. Otherwise, litigants risk having their claims dismissed on grounds of illegality and unenforceability, as the current classification of cannabis under federal law has been interpreted by many courts as a basis to bar it from awarding damages in cases concerning cannabis-related disputes.
Marvin Huberman, arbitration specialist and co-founder of CansultEd, had this to say in response to the report: “In the developing landscape of the cannabis industry, the rise in arbitration utilization indicates a maturing sector seeking fair, efficient, and effective dispute resolution. As conflicts arise, arbitration emerges as an appropriate dispute resolution process which is well-suited to facilitate the cultivation of fairness, equity, and increased harmony as a counter-weight to uncertainty, unpredictability, and instability amidst legal complexities.”