In an answer that I am sure is practically correct in most situations, the following statement was made regarding a possible civil suit regarding unpaid wages for drug dealing after the debtor dies:

The [creditor] does not have a valid contract because contracts for an illegal purposes are void.

It was estimated that the California "legal" cannabis market size in 2023 was $5.9 billion last year. While there is a well publicised issue with banking for this industry, I would assume that there is at least the pretence that contracts in this industry are enforceable. However it is also recognised, in the words of the above document:

The federal government still considers marijuana a Schedule I drug under the Controlled Substances Act.

How exactly does an illegal purpose void a contract? Is a criminal prosecution required? Does the jurisdiction matter? Does the "illegal purpose" require one to demonstrate "mens rea" in some way that would not be required otherwise?

  • 1
    This is a really good question. It seems like 100% of "legal" cannabis-related contracts in the US are 100% void due to it being illegal Federally, but it stands to reason that it is possible that 1) state courts would apply only State law to determine illegal purpose, and not Federal law, or 2) the procedure for proving that Purpose X is unlawful Federally (or in another jurisdiction) is so onerous that such a contract would rarely, if ever, actually be ruled void by a court. Commented Jun 11 at 2:49

2 Answers 2


In the transition period in Colorado (cannabis is likely to no longer be a Schedule I Controlled Substance as soon as sometime later this year), federal courts have tended to apply illegality bars to cannabis contracts, while state courts have generally honored them as legal and valid, disregarding the federal law illegality (which the federal government has formally tolerated).

I know this from practicing in this area in Colorado in this time period in this area of law.

One consequence of this is that marijuana industry contracts routinely waive a federal court forum contractually and marijuana businesses functionally have no access to the bankruptcy courts or to enforceable federal intellectual property rights like patents and Lanham Act registered trademarks. Likewise, when participants in the marijuana industry litigate against each other, they generally do not allege federal law claims or counterclaims (e.g., federal securities fraud under SEC regulations 10b-5).

How exactly does an illegal purpose void a contract? Is a criminal prosecution required?

No. Illegal purpose determinations are made in the context of civil lawsuits to enforce contracts or civil declaratory judgment cases seeking to disavow them.

Does the jurisdiction matter?

Yes. The illegal purpose doctrine is a matter of state law so it can vary from jurisdiction to jurisdiction. Also, as noted above, in practice, federal courts and state courts have not seen eye to eye on the matter.

Does the "illegal purpose" require one to demonstrate "mens rea" in some way that would not be required otherwise?

If the contract is not facially illegal, e.g. "deliver a box to 4567 Fat Street, Pudunk, California 99999", and the party performing the contract doesn't know that the facts that cause the contract to involve illegal transporting controlled substances, it is probably legal and enforceable by the delivery firm.

But, if the contract was to "deliver a box of cocaine to 4567 Fat Street, Pudunk, California 99999" and the party performing the contract doesn't know that cocaine is illegal, this ignorance of the law probably doesn't make the contract enforceable.

  • framed different: Ignorance of facts can be an excuse (e.g. contents of box); Ignorance of the law is never an excuse (e.g. the contents are banned)
    – Trish
    Commented Jun 11 at 7:08

The contract becomes void if the parties agree it becomes void. If the parties disagree, one of them can sue for breach of contract. Eventually, a judge will then dismiss the lawsuit due to the contract being void. Since breach of contract is a civil action, no prosecution is required and mens rea only matters in criminal law, not civil law.

  • If this happened with a contract involving cannabis sales in California, would a judge dismiss the lawsuit based on federal law?
    – User65535
    Commented Jun 10 at 12:26
  • A very bad answer, but at least the author provided a disclaimer.
    – bdb484
    Commented Jun 10 at 13:07
  • Even voidable contracts do not require mutual agreement; a single party can void them. A contract that's void ab initio does not even require any action.
    – MSalters
    Commented Jun 10 at 15:28

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