Clauses to Include in a Contract between a Medical Director & a Dispensary

Question:  Are there any special clauses my dispensary should include in its contract with its medical director?

Answer:  Yes.  The contract should be an independent contractor agreement, not an employment agreement.  The contract should contain the standard clauses found in a good lawyer drafted independent contractor agreement plus the following clauses unique to this agreement:

• The medical director will provide the specific duties of the medical director set forth in the rules.

• The medical director must obtain and maintain at all times a dispensary agent registration from the Arizona Department of Health Services.  See R9-17-309.A.4.b., which states:

“A dispensary shall . . . Not allow an individual who does not possess a dispensary agent registry identification card issued under the dispensary registration certificate to: . . . Serve as the medical director for the dispensary“

• The medical director will comply with the applicable laws contained in Arizona Revised Statutes Section 36-2801 et.seq (Arizona’s medical marijuana statutes), and all applicable DHS rules in effect as of the date of the agreement and during the term of the agreement.

• The doctor represents and warrants that he or she satisfies all of DHS’ requirements to be a medical director not later than April 1, 2012.

• The doctor will obtain a license from Arizona Department of Health Services to be a medical director not later than April 1, 2012.

• If at any time the medical director ceases to be eligible to be a dispensary agent or if he or she cannot perform his or her duties for any reason, the contract must terminate without prior notice to the medical director.

• The contract terminates if the dispensary loses its dispensary registration certificate or ceases to operate.

• The medical director must grant a license to the dispensary to copy and use the copyrighted content the medical director gives to the dispensary as required under the rules.

• The medical director must represent and warrant that all content he or she gives to the dispensary does not infringe on anybody’s copyrights.

• The medical director must maintain at all times the types of insurance appropriate for the position in amounts not less than $500,000 or what is recommended by the medical director’s insurance agent.

• The medical director must give to the dispensary proof of insurance satisfactory to the dispensary.

• The medical director’s insurance company must be instructed to notify the dispensary of any change to or cancellation of any insurance policy.

• The compensation payable to the medical director will be reduced by X percent for every additional dispensary the doctor acts as the medical director, but the compensation will not ever be less than Y percent of the compensation payable if the doctor is a medical director for only the dispensary.  If I’m representing a dispensary, I’ll try to put this clause in because the duties of the medical director are nonexistent once he or she does the initial set up so why should a doctor who is a medical director for multiple dispensaries get paid the same as a doctor who is the medical director for a single dispensary?