Representing Clients in the Marijuana Industry: Navigating State and Federal Rules
| Publication year | 2015 |
| Pages | 61 |
| Citation | Vol. 43 No. 8 Pg. 61 |
Articles Professional Conduct and Legal Ethics
Representing Clients in the Marijuana Industry: Navigating State and Federal Rules
By Eli Wald, Eric B. Liebman, Amanda R. Bertrand.
Professional Conduct and Legal Ethics articles are sponsored by the CBA Ethics Committee. Articles published here do not necessarily reflect the legal interpretation of the Committee.
Coordinating Editor
Stephen G. Masciocchi, Denver, of Holland & Hart LLP— (303) 295-8000, smasciocchi@hollandhart. com
This article discusses the practical consequences of the District of Colorado's partial rejection of Colo. RPC 1.2, Comment 14.
On November 6, 2012, Colorado voters added Amendment 64 to Colorado's constitution.[1]Amendment 64 legalizes many aspects of, and requires regulation for, the personal use (for adults 21 and over), commercial cultivation, manufacture, and sale of marijuana. Following an implementation period, the first recreational stores officially opened on January 1, 2014, and the industry has been growing since then. This occurred against the conspicuous backdrop of federal law, specifically the Controlled Substances Act, 21 USC §§ 801 et seq. (CSA), which makes illegal all of the above-described personal and commercial conduct relating to marijuana.
Rather than invoke the Supremacy Clause and assert that the CSA preempts conflicting state law, the U.S. Department of Justice (DOJ) has attempted to provide guidance in a series of memoranda. While affirming the DOJ's authority to enforce the CSA, the memoranda suggest that direct enforcement is not a high priority for the federal government in states that have legalized or decriminalized marijuana and have their own effective regulatory systems.[2]Nevertheless, the tenor of these oft-quoted documents is advisory and interpretive, underscoring the ephemeral nature of any wisdom divined from them. The reaction of the federal Executive Branch thus is impermanent and uncertain on several levels.
Before recent amendments, Colorado lawyers wishing to represent clients in the growing marijuana industry faced a serious impediment arising from the conflict between the CSA and Amendment 64. Colorado Rule of Professional Conduct (Colo. RPC or Rule) 1.2(d) states:
A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.[3]
Because the CSA criminalizes conduct permitted under Amendment 64, a straightforward reading of Colo. RPC 1.2(d) suggested that a lawyer counseling or assisting a client with respect to conduct consistent with Amendment 64 was in violation of the Rule.[4]On the other hand, reading Colo. RPC 1.2(d) to deny clients the assistance of lawyers in navigating a complex and evolving area of law seemed unreasonable to some.[5]
On March 24, 2014, the Colorado Supreme Court undertook an effort to reduce uncertainty for Colorado attorneys wishing to represent clients in connection with Amendment 64 by adding Comment 14 to Colo. RPC 1.2(d). Comment 14 created an exception to Rule 1.2(d). It states in relevant part that a lawyer may
assist a client in conduct that the lawyer reasonably believes is permitted by these constitutional provisions [Amendment 64, §§ 14 and 16] and the statutes, regulations, orders, and other state or local provisions implementing them. In these circumstances, the lawyer shall also advise the client regarding related federal law and policy.[6]
Comment 14 thus removed some uncertainty by clarifying that Colorado attorneys (at least under Colorado law) are permitted to "assist" clients with conduct related to Amendment 64. The Court, however, did not define "assist" and left the contours of acceptable representation consistent with Colo. RPC 1.2(d) and Comment 14 to the common law and/or future regulation.
On November 17, 2014, the U.S. District Court for the District of Colorado (USDC) announced that it had "reviewed and approved revisions to its Local Rules which bec[a]me effective December 1, 2014." While the USDC has adopted most of the Colo. RPC as its rules,[7] it added a new exception to Local Attorney Rule 2(b), stating:
Exceptions. The following provisions of the Colorado Rules of Professional Conduct (Colo. RPC) are excluded from the standards of professional responsibility for the United States District Court and the United States Bankruptcy Court for the District of Colorado:
Colo. RPC 1.2(d), Comment [14] (counseling and assisting client regarding Colorado Constitution art. XVIII, §§ 14 and 16 and related statutes, regulations, or orders, and other state or local provisions implementing them), except that a lawyer may advise a client regarding the validity, scope, and meaning of Colorado Constitution art. XVIII, §§ 14 and 16 and the statutes, regulations, orders, and other state or local provisions implementing them, and, in these circumstances, the lawyer shall also advise the client regarding related federal law and policy.[8]
Importantly, with respect to the application of the Local Attorney Rules, Rule 1(c) provides:
Scope. These rules shall apply to all attorneys who are admitted to the bar of this court, or who purport to appear in the United States District Court or the United States Bankruptcy Court for the District of Colorado.[9]
The Colorado Supreme Court's adoption of Comment 14 and the USDC's subsequent rejection of Comment 14 have created an uncertain playing field for Colorado lawyers admitted to practice in the USDC who wish to represent clients in Amendment 64 matters. Specifically, these lawyers face two challenges. First, which jurisdiction's rules of professional conduct apply to their representation of clients in the marijuana industry—the Colo. RPC, which permit assisting such clients, or the USDC Local Attorney Rules, which prohibit assistance? Second, if the USDC Local Attorney Rules apply, what is the scope of permitted advice regarding related federal law and policy as opposed to (the at least negatively implied) prohibited assistance? Both of these thorny issues are explored below.
Reconciling Colo. RPC 8.5, USDC Local Attorney Rule 8.5, and the USDC's Inherent Power
Consider the following examples: Suppose Colorado is sued in USDC by sheriffs from Colorado and neighboring states arguing that Amendment 64 puts an undue economic burden on other states.[10] Attorney A is admitted in the USDC and enters an appearance on behalf of Colorado in the matter. Has Attorney A violated the USDC Local Attorney Rules by representing Colorado?
Attorney B represents Client X, a marijuana dispensary owner, negotiating a commercial real estate lease. Attorney B is admitted in the USDC and represents Client Y in an unrelated litigation matter pending before the USDC. Has Attorney B violated the USDC Local Attorney Rules by representing Client X?
Having not opted out of Colo. RPC 8.5, the USDC is bound by its provisions.[11] Colo. RPC 8.5(a) deals with disciplinary authority and states in relevant part:
A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction, regardless of where the lawyer's conduct occurs. ... A lawyer may be subject to the disciplinary authority of both this jurisdiction and another jurisdiction for the same conduct.[12]
The rule provides that an attorney's conduct is subject to discipline in "this jurisdiction" regardless of where the conduct occurs. The plain language of the rule establishes that because Attorneys A and B are admitted to practice before the USDC, they are both subject to the disciplinary authority of the court. The pertinent question becomes: Which rules of professional conduct would the USDC apply if it were to discipline Attorneys A and B? Is it the Colo. RPC, which permit, per Comment 14, attorneys' assistance to Amendment 64 clients, or its Local Attorney Rules, which reject Comment 14 and therefore prohibit it? Clearly, only one set of rules of professional conduct may apply to any particular attorney conduct.[13]
Colo. RPC 8.5(b), adopted by the USDC, provides choice of law provisions that instruct the court as to what...
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