Cannabis Clients-high Times, or Buzz Kill?
| Publication year | 2019 |
| Author | Neil J. Wertlieb |
Neil J. Wertlieb
Neil J. Wertlieb is an experienced transactional lawyer, educator, and ethicist, who provides expert witness services in disputes involving business transactions and corporate governance, and in cases involving attorney malpractice and attorney ethics. He is a Founding Member and Co-Chair of the California Lawyers Association Ethics Committee. The views expressed herein are his own. For additional information, please visit www.WertliebLaw.com.
In November 2016, California legalized marijuana for recreational use.2 The new law created tremendous business opportunities for entrepreneurs, investors, and others—including attorneys, many of whom jumped into a new practice area of advising operators, growers, distributors, dispensaries, and other participants in the cannabis marketplace.
However, while recreational and medical use is now legal in California, marijuana remains a Schedule 1 restricted drug under the Federal Controlled Substances Act,3 which prohibits the production, distribution, sale, use, and possession of marijuana.
So, what are the implications to all those newly minted cannabis attorneys?
Effective November 1, 2018, a comprehensive set of new Rules of Professional Conduct (the "Rule(s)") went into effect governing the conduct of attorneys in California. New Rule 1.2.1 (Advising or Assisting the Violation of Law) provides that "a lawyer shall not counsel a client to engage, or assist a client in conduct that the lawyer knows is criminal, fraudulent, or a violation of any law, rule, or ruling of a tribunal."
On its face, the literal language of the Rule suggests that cannabis attorneys may be in violation of the Rule due to the status of marijuana under federal law. However, comment [6] of the new Rule addresses this issue and makes clear that an attorney may "advise a client regarding the validity, scope and meaning of California laws that might conflict with federal or tribal law." Even where there is such a conflict, the attorney "may assist a client in drafting or administering, or interpreting or complying with, California laws, including statutes, regulations, orders, and other state or local provisions, even if the client's actions might violate the conflicting federal or tribal law." Where there is such a conflict, the attorney "must inform the client about related federal or tribal law and policy and under certain circumstances may also be required to provide legal advice to the client regarding the conflict."
The addition of new comment [6] is not necessarily a change in how Rule 1.2.1 (or its predecessor) would be interpreted, as both LACBA's Professional Responsibility and Ethics Committee and the San Francisco Bar Association's Ethics Committee had previously issued opinions supporting the same conclusion.4 But, because those are opinions of local bar associations and not pronouncements by the California State Bar, the addition of new comment [6] should provide a great deal of comfort for those attorneys who want to enter the cannabis space.
That is the good news.
Cannabis lawyers, and those attorneys interested in entering this practice area, should be mindful of the following risks:
Dazed and Confused: The wording of comment [6] is not at all clear. What does it mean to "assist a client in drafting or administering, or interpreting or complying with, California laws?" Is this language intended as a limitation on the types of assistance an attorney can provide, and if so...
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