Vice Chancellor Leo Strine famously wrote that "Delaware law does not charter law breakers". In re Massey Energy Co., 2011 WL 2176479, at *20 (Del. Ch. May 31, 2011). Professor William J. Moon picks up on this theme in a forthcoming essay, Havens for Corporate Lawbreaking:

Yet even the fiercest defenders of the firm’s profit motive concede that the corporation’s profit-seeking function cannot justify breaking the law. As a matter of American corporate law, directors and officers are in breach of their fiduciary duties if they facilitate or engage in profit-maximizing illegal activities. Or so we thought.

Professor Moon's essay calls out Nevada and the Cayman Islands as "corporate lawbreaking havens". But are Vice Chancellor Strine and Professor Moon correct that Delaware does not charter corporate lawbreakers? I think not.

In JCCrandall, LLC v. Cnty. of Santa Barbara, 328 Cal. Rptr. 3d 828, 831 (Ct. App. 2025), review denied and ordered not to be officially published (Mar. 19, 2025), a California Court of Appeal pointed out the cannabis is illegal:

It is often said that cannabis is legal in California. The statement is not true. Under federal law, cannabis is illegal in every state and territory of the United States. (See Controlled Substances Act, 21 U.S.C. § 801 et seq.; 21 U.S.C. § 812 (c)(10); City of Garden Grove v. Superior Court (2007) 157 Cal.App.4th 355, 377, 68 Cal.Rptr.3d 656.) Article VI, paragraph 2 of the United States Constitution, known as the Supremacy Clause, provides in part, “The Constitution, and the Laws of the United States . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

Therefore, any Delaware corporation engaged in the cannabis trade is potentially violating the law. Are the directors and officers of these corporation breaching their fiduciary duties when they allow the corporation to engage in the business for which it was formed?

It might be argued that Vice Chancellor Strine was referring only to Delaware law, but the Massey case involved violations of federal law. Thus, it cannot be said that he was referring only to state laws. Does this mean that Delaware charters the breakers of some laws? If so, how do directors and officers know which violations will support a breach of fiduciary duty claim and which will not? 

More fundamentally, the immensity and complexity of state and federal laws and regulations mean that it impossible for most corporations to comply fully with all laws and regulations. Therefore, Delaware does indeed charter law breakers. This is most certainly true.