Laws are rapidly changing, presenting challenges — and great opportunities — for law firms.
Over the past few years, Americans have been voting in support of the legalization of medical and recreational marijuana. As of this writing, 29 states and the District of Columbia have legalized medical marijuana, and seven states, as well as D.C., have legalized the drug for recreational use.
Still, marijuana is illegal on a federal level, and patients, employers, employees and dispensaries have their own share of legal issues. Attorneys have stepped up to help solve these unique problems and guide their clients on how to function within the confines of the law.
As medical and recreational marijuana increasingly become legal in different parts of the country, the legal industry is seeing a change in their client base and objectives. The following examples are the ways in which the legal industry has been impacted by the medical and recreational marijuana laws.
Before states were voting to legalize medical and adult recreational marijuana use, attorneys were hesitant to represent clients in the industry. Now, that has changed.
Attorney Shanel Lindsay is Founder and President of Ardent and creator of the NOVA Decarb, a tool that allows cannabis patients to transform the plant into a medicine for topical, oral and sublingual use. She says that two or three years ago, lawyers wouldn't dare take on these clients. “[But] as cannabis is becoming legal around the country there is a rush to gain expertise in the industry,” Lindsay says. “You see a shift and incredible interest in this new and very legally intense and nuanced environment.”
Mitchell Kulick, Partner at Feuerstein Kulick LLP, provides legal services for marijuana-related businesses, investors, funds and lenders. “As more professionals enter the space and more states implement highly regulated medical marijuana programs, the demand for quality legal representation will only grow (pun intended),” he says. “Given the expansion of medical marijuana programs throughout the nation (and world) and the increasing public and congressional support for medical marijuana, we have seen more lawyers try to enter, or at least learn about, the space.”
“As cannabis is becoming legal around the country there is a rush to gain expertise in the industry. You see a shift and incredible interest in this new and very legally intense and nuanced environment.”
Lawyers are not only representing marijuana clients at their firms. They are also creating entire businesses out of it.
Vicente Sederberg, which has offices in California, Colorado, Massachusetts and Nevada, dubbed itself “The Marijuana Law Firm.” The attorneys there crafted Amendment 64, which founded the legal marijuana industry in Colorado, and sat on the governor’s task force to ensure the law was implemented. “I've been doing marijuana law full time since 2004 when I graduated from law school. I decided to [establish my firm] to advocate for patients who are underrepresented,” says Brian Vicente, who co-founded the firm.
William S. Kroger, Founder of Kroger Law Group in Los Angeles, has been working with the medical marijuana industry for nearly 20 years, and focuses on many areas of marijuana law at his firm. He says he’s passionate about his work because of his personal viewpoints toward it.
“I believe that medical marijuana has many benefits that pharmaceutical drugs have but without the side effects and high costs. I have seen it help hundreds of people and sometimes cure their medical conditions,” says Kroger.
Just recently, if attorneys were representing marijuana clients, they may have only been concentrating on criminal charges and laws. Now, all that has changed. “What’s been interesting is it reaches into a lot of different areas of law,” says Vicente. “Anything to do with marijuana 15 years ago was criminal. Now my firm does corporate law, [represents] marijuana businesses, writes policy, and [takes on] real estate law, compliance, housing issues and civil rights. That’s what has been most remarkable — marijuana laws branched out into traditional types of law.”
Kulick says that these days, the clients he represents in the marijuana sector have similar difficulties to his other clients. “People and companies operating in the legal medical marijuana space face many of the same issues as other companies, including complying with applicable laws and regulations, adhering to securities laws, licensing intellectual property, entering into strategic relationships, and resolving disputes.”
“As more professionals enter the space and more states implement highly regulated medical marijuana programs, the demand for quality legal representation will only grow (pun intended).”
When it comes to the marijuana industry, the laws are not well defined because they differ from state to state and on a state and federal level. As Kroger has seen in California, the laws are still not clear.
“Medical marijuana and the legal industry in Los Angeles has [been] and continues to be such a gray area, and the way the new laws are written, will be for some time to come,” says Kroger. “The laws that they are trying to enact are like trying to build an airplane while it is flying. They are so behind in time as to compared to what is going on.”
However, Kroger says he does not have to worry about federal laws as much where he is. “In Los Angeles, the feds do not really take part in the marijuana industry. They do not have the money and resources. Although it is totally illegal under the federal law, they don’t bother with it much here.”
Michael Clarkson, an Attorney at Ogletree Deakins who is the Chair of his firm’s Drug Testing Practice Group, represents employers who have dealt with medical marijuana issues. He says national employers have trouble determining how to take action in some cases. “It’s a state by state question. Multistate employers are grappling for some kind of clear answers. I spend a lot of time counseling multistate employers on what to do,” he says.
In one case, an employee from Minnesota was using medical marijuana for his glaucoma. Though the drug is legal for medical purposes in the state, his employers were concerned about how it would affect his job working in sterility control. “They flipped out,” says Clarkson. “They were asking for advice. We worked through it in many steps.”
Eventually, the patient decided to switch from medical marijuana to a more traditional drug. “[But this case] could have been harder,” says Clarkson. “As an employer, you have to ask if you want a one-size-fits-all policy across the country. It better be broad enough to accommodate people’s rights and not cause them to lose their jobs.”
When representing dispensaries, Vicente says that compliance could be tricky because there is a prohibition on interstate travel of the product. “[They ask] ‘How can I establish my brand across multiple states?’ We structure those legal arrangements.”
“Anything to do with marijuana 15 years ago was criminal. Now my firm does corporate law, [represents] marijuana businesses, writes policy, and [takes on] real estate law, compliance, housing issues and civil rights. That’s what has been most remarkable — marijuana laws branched out into traditional types of law.”
A dispensary in Colorado can cultivate its branding by producing a vape pen with its name on it. However, if the pen is sold in Colorado, it needs to contain Colorado marijuana. If it is shipped to California, it needs to have California marijuana inside of it, says Vicente.
According to Kulick, any lawyer who is advising industry participants should ensure that their clients know the state and federal laws.
“While marijuana, including medical marijuana, is considered a Schedule I controlled substance, the Department of Justice has released a guidance to prosecutors known as the Cole Memo that sets forth the government’s priorities in prosecuting matters relating to marijuana,” Kulick says. “While there is no guarantee how the federal government will act, operators in the space should make sure that they meticulously follow applicable state laws/regulations as well as the Cole Memo.”
Also, Kulick points out the other problems this industry faces when dealing with federal laws — taxes. “[Many medical marijuana businesses] that comply with applicable state laws and regulations are still unable to open bank accounts, which has created a problematic cash industry. In addition, under a provision in the tax code known as 280e, legal businesses operating in the space cannot make normal business deductions,” says Kulick.
“It’s really interesting to see how quickly the industry is starting to require legal assistance and not just fighting to make it legal. There are so many facets of this industry that need legal help.”
Thankfully for attorneys and those in the marijuana industry, there may be some clarification coming. “While there’s no immediate sign that marijuana will be removed as a controlled substance, there have been bipartisan bills introduced in Congress that are intended to resolve those and other issues facing the industry,” says Kulick.
According to Lindsay, federal and state laws must coincide soon. “There has to be resolution at some point,” she says. “We will not see the states roll back. The trajectory is very clear. We are at critical mass when it comes to medical marijuana.”
While the laws don’t move quickly, the law firms are in their response to this flowering industry. And it won’t slow down anytime soon. “This is an area that’s really growing,” says Lindsay. “It’s really interesting to see how quickly the industry is starting to require legal assistance and not just fighting to make it legal. There are so many facets of this industry that need legal help. That's exciting to me and I’m hoping attorneys realize there is a future in this.”