Complex Marijuana Laws Leave Lawyers in Legal Limbo
The limbo where "legal" cannabis exists is keeping many of the country's best lawyers and law firms from representing any business that in any way receives income from cannabis sales, no matter how tenuous.
March 05, 2020 at 11:00 AM
5 minute read
In few places are lawyers more necessary or more helpful than in emerging industries where the rules are made up as the industry grows up. Few industries today need lawyers—and good lawyers—more than the growing cannabis industry.
Marijuana is now legal in some form in 33 states and Washington, D.C., each with its own complex and evolving set of regulatory and tax regimes. Navigating these laws and regulations, and knowing when and how to challenge them in order to help clarify and define the law, requires lawyers skilled in advising their cannabis-industry clients on the requirements of law at all levels. States that have passed such laws and regulations are counting on skilled attorneys to make these complex regimes work in practice. Without lawyers, they are unlikely to accomplish the goal of ensuring a safe, well-supervised, industry.
But, "legal" is a relative term. Marijuana is still illegal under federal law, which supersedes contrary state and local laws. This means that those acting "legally" in states like Colorado, Connecticut or California—which allow people to grow, sell and consume marijuana—who are working in or benefiting from the industry are likely unindicted felons. Yes, the grandma growing pot in her backyard to treat her arthritis, the veteran who smokes weed every day to help his PTSD, the electrician who wires a dispensary, the banker who holds a growers cash, and the cashier at a dispensary are criminals just like the dude on the corner selling blunts. And of course, the lawyer assisting a client to comply with state law and regulation.
The limbo where "legal" cannabis exists is keeping many of the country's best lawyers and law firms from representing any business that in any way receives income from cannabis sales, no matter how tenuous. Why? Because good lawyers want to abide by the law, and the law here is clear: If a lawyer helps someone in the cannabis industry and receives money for that help, he or she is aiding and abetting a federal crime.
Obviously, this is not ideal, particularly for the clients at all levels who need help understanding their rights and the law—from the entrepreneur looking to enter the business to the janitor seeking to understand his rights as an employee. Nor is it good for society as a whole, where lawyers help companies comply with regulations and laws meant to protect the health and safety of all Americans. It strikes at the heart of the concept of rule of law, and the special role of the legal profession.
Lest one think this just affects "hippies" in San Francisco, Seattle and Denver, it's important to remember that cannabis is "legal" in the reddest of red states—including Utah, Arkansas and Oklahoma. Making sure lawyers can help clients in the industry is one of those rare problems where both right and left agree—it should be solved and Congress can act in a bipartisan fashion to do so.
Recently, the American Bar Association, at their biannual House of Delegates meeting, voted by acclamation to endorse a resolution urging "Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers' professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.
The ABA also passed a resolution urging Congress to provide banking facilities for the state-legalized marijuana industry, in the form of the SAFE Banking Act or similar legislation. The House recently passed the SAFE Banking Act, intended to address an analogous conflict facing banks and credit unions, which is now awaiting a hearing in the Senate and may very well pass before the end of the session. Congress should act expeditiously to introduce and pass a companion legislating making clear that providing legal services in states that have made cannabis legal shall not be a violation of federal laws criminalizing cannabis, most notable the Controlled Substances Act.
Whether we like it or not, there is a large and growing cannabis industry, operating under complex and critical state law and regulation. We should all agree that we want this activity to follow those state laws, and that requires good (and lawful) legal advice. It will make us all safer and more secure. Congress needs to act.
Steven Cash is counsel at Day Pitney and co-chairs the firm's regulated substances practice group.
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