Cannabis is the new hot topic of conversation, moving from the smoky dorm to the board room. The green rush is on, and, and as any gold rush of the past, there is good business in selling the picks and shovels to those seeking their fortunes. Coupled with the most difficult legal market for aspiring and new attorneys in the nation’s history, marijuana law is also a hot topic in law schools and in CLEs.
The Green Rush Is On
Marijuana is now legal for consenting adults in four states and Washington DC. Medical marijuana is legal in 23 states at the time this article was published. The international community is following suit, with an increasing number of nations decriminalizing or outright legalizing cannabis. Colorado now brings in more tax dollars from marijuana than from liquor. The momentum is clear; no matter which party conquers the 2016 presidential election, cannabis is here to stay.
While this nascent industry is growing at a pace unparalleled since the dot-com era, many large law firms refuse to service the clientele because the federal government considers marijuana to be a Schedule 1 drug, as defined by the Controlled Substances Act of 1970.
State v. Federal
Marijuana is still illegal federally. Some states have forged ahead with full legalization for adult use. These states have relied upon, inter alia, the Cole Memo, issued on August 29, 2013 by the U.S. Department of Justice. The Cole Memo informed federal prosecutors that state-regulated marijuana ought to be their lowest enforcement priority but it is only a memo and nothing more. It can be disclaimed or ignored at any time.
While each state’s road to legalization varies, most states will study the experiences of Colorado and Washington in drafting their own laws and regulations. The familiar pattern has taken shape and suggests that other states will first move towards decriminalization. Second, they will permit medical marijuana for qualified patients. Finally, the state will legalize recreational marijuana for adults 21 and over. The state agency that regulates alcohol is usually the best choice to regulate marijuana for consenting adults, because the infrastructure already exists.
Marijuana law, like entertainment law, is an amalgamation of other practice areas, including business law, administrative law, intellectual property, criminal law, employment law and tax law. I would advise that any attorney targeting the cannabis industry should start with a firm foundation in business law. If the governing documents and contracts are subpar, you will very quickly sully the goodwill you earned with your current and future client base. Difficult tax and criminal liability issues arise when dealing with a federally illegal Schedule 1 drug having no [federally]recognized medical value. As the industry transitions from a subversive underground culture to a large and profitable legitimate industry, many unlikely business partnerships form. Before legalization, profits for the growers were substantial, owing mostly to the risk of criminal liability. In the emerging and highly competitive environment, profit margins are thin, and many businesses end up in litigation as the partners fight over shrinking margins.
You should become adept in the subject matter. I am not advocating the consumption of large amounts of cannabis, or even any at all. However, you should know everything there is to know regarding marijuana. If you were to represent a liquor distiller, getting as drunk as the day after law school finals doesn’t (necessarily) help the matter, but you should know how liquor is distilled, bottled, and sold, and the common business practices associated with the liquor business. With marijuana, you should understand the plant, the history, the extraction processes, active cannabinoids, terpene profiles, commonly used terms, and everything that goes into the product/medicine from seed to sale. Expect numerous tours of growing and processing facilities. Some of this knowledge will be technical and scientific, while some of it will more closely resemble folk magic. In either case, your clients and this billion-dollar industry take it seriously, and so should you.
In every state on the path to legalization, marijuana is governed by brand-new regulation, modeled after systems that aren’t quite analogous. This creates an issue that is unique to this area of law. The laws and regulations will change quickly and be applied inconsistently as the governing bodies learn and adapt to the subject matter. As a result, understanding of the law is not enough to best serve your clients. Working with the regulatory body to interpret and enforce the provisions is equally as important as understanding the legal texts. Marijuana law should not be an area to only dip your toe in. Plan to immerse yourself.
To excel in this industry, a cannabis attorney should become politically active. Your city government, state government, city attorneys, and police authorities are actively forming their cannabis policy. With the right approach, they may be quite receptive and work with you to get the laws and enforcement right. Help them understand your clients issues and get to know the best lobbyists. Your clients will need them.
Many clients in the marijuana industry have no experience running a proper legal business. They will be lost and seeking your help in all aspects of starting and growing a business. Legal expertise is what we, as attorneys, provide. Not going further will be a disservice to your clients and leave them vulnerable to an industry that is far more competitive than any they have thus far encountered. Develop your personal relationships and open your contacts to your clients. They will need a location (real estate agent), accountant, security system, bank (if available in your state), master grower, extraction supplier, insurance agent, marketing company, packaging company, etc. Each and every one of these positions will need to cater directly to the marijuana industry to understand the nuances and quickly changing landscape. Be able to offer them contacts and let them know about any upcoming industry events so they can do their own networking.
Does your state bar support a marijuana practice that is advises clients how to break federal law? Check the ethics opinions of your bar association or, if none exists, request an ethics opinion. If you are disbarred, you may be left with little choice but to grow fields of weed for a living. Determining if this is a better career path for you, I will let you discuss with your mom.
Choose Your Clients
It is very important that you choose your clients with care. Do not be afraid to send them to your competitors. Many of the most experienced people in marijuana are long-time criminals. All are criminals under federal law. Most often, veteran marijuana kingpins are rather docile. However, some of the people knocking on your door may be more dangerous and prone to shady dealing. Even organized crime is trying to get into the action. You will be working closely with the marijuana regulatory bodies and it is best to maintain your credibility for yourself and your clients.
Off You Go
Where you can help forge the laws, culture, and trajectory of an entire industry, there is nothing like it. Nothing is boilerplate and everything requires creative thinking. There is no place I would rather be.