Practicing in a specialized area such as commercial cannabis law requires a significant amount of tolerance and flexibility. Although many other legal specialties may also require the same set of skills, practicing as a cannabis law attorney requires not only a vast knowledge and understanding of general areas of law practice but also a concrete understanding of the commercial cannabis laws and applicable regulations in the state in which you practice. State laws and regulations are your focal point for understanding how businesses or individuals can begin their path toward operating a cannabis business in this newly regulated industry.
Currently, cannabis is illegal under federal law. Cannabis is classified as a Schedule I controlled substance under the federal Controlled Substances Act (along with heroin, ecstasy, and peyote), meaning it is considered to have a high potential for abuse and no recognized medical use or value. However, it should be noted that on August 30, 2023, the U.S. Department of Health and Human Services completed a scientific review of cannabis and provided an official recommendation to the U.S. Drug Enforcement Agency (DEA) to reschedule cannabis as a Schedule III controlled substance (along with ketamine, anabolic steroids, and Tylenol with codeine), meaning it would be considered a drug with moderate to low potential for physical and psychological dependence. As of February 2024, the DEA continues to conduct its review as to whether cannabis should be rescheduled, but there is no requirement that the DEA must, in fact, do so.
Individual states, on the other hand, have taken their own approach to the regulation of cannabis. As of November 2023, 40 states and the District of Columbia have legalized medicinal cannabis, and 24 states and the District of Columbia have now legalized adult use or recreational cannabis in some form.
Working in an area of law that has a legal and regulatory framework under state law but remains illegal under federal law can create a lot of confusion. It also tends to create a patchwork of state laws and regulations that continually need to be revised, amended, and/or repealed. Staying apprised of the changes to cannabis laws (both statewide and federally) is a critical part of working in this practice area.
Working as a cannabis attorney also involves significant overlap with numerous other legal practice areas. For instance, potential clients may need assistance with the formation of their business entity, which would require initial entity setup and formation, drafting of the entity’s governing documents (such as bylaws or operating agreements), and drafting of shareholder, partnership, or joint venture agreements. Businesses may also need distinct types of service contracts or sales-of-goods contracts between them and their suppliers. Often, clients also need assistance with reviewing, drafting, and negotiating the terms of their commercial leases with potential landlords. They also may need assistance with registering as an employer in their designated state and preparing employee contracts and handbooks.
Most of California’s commercial cannabis businesses have never used written contracts before—everything was done as a handshake deal, and for some, it’s still done this way. So, reminding this industry of the importance of having even a simple written contract (or invoice) is crucial for their businesses’ success and protection.
For decades, the cannabis industry and the people working in it and associated with it have been considered criminals. They’ve been raided, jailed, and prosecuted in both state and federal courts (in some areas of the country, this is still occurring). Then, almost overnight, that all changed when states began passing laws to legalize and regulate cannabis. States decriminalized the possession, growing, and sales of cannabis and, in turn, adopted regulatory frameworks for these businesses to become licensed and regulated businesses under state laws.
In California, a business first needs to obtain a license or permit from the local jurisdiction (city or county) where it seeks to operate the business. This could be a business license, minor use permit, conditional use permit, or some other type of local authorization available specifically for cannabis businesses in that designated jurisdiction.
Each local jurisdiction must establish its own regulatory licensing framework, and some jurisdictions have outright banned the industry from operating in their jurisdiction at all. Occasionally, a client will retain my services just to attend local governmental meetings to be a voice for the industry and to identify the issues and changes that need to be made to a proposed law that the jurisdiction seeks to pass and implement. Obtaining local licenses and permits requires a competent understanding of real property and zoning laws, as well as substantive due process rights and procedures that relate to public governmental decisions.
Once the business is granted its local authorization, it will then need to obtain building permits and begin construction. It will need to hire architects, contractors, and various consultants to put its plans into action. In California, businesses will then need to apply to the Department of Cannabis Control to obtain a state license. Once the construction is finished and the business is both locally and state licensed, then, and only then, can the business actually open.
The entire licensing process can take anywhere from two to five years to complete. During this entire process, the business will not be allowed to operate and will generate almost no income. Most businesses are fraught with the issue of having to pay rent on a vacant building while waiting for local government officials to approve their applications. The process isn’t cheap, either. Some of these licenses and permits cost anywhere from thousands of dollars to hundreds of thousands of dollars.
In college, I was a member of Students for Sensible Drug Policy (SSDP), a global organization focused on reducing the harms caused by the war on drugs. At the time, SSDP was focused on repealing the drug provision in the Higher Education Act, which denied federal financial aid to students who had a drug conviction on their record, even though individuals with other types of criminal convictions were not barred from receiving the same financial aid.
While in law school, I interned with various criminal defense attorneys and both the state and the federal public defender’s offices. I thought I would end up working in criminal defense, but when it came time to find a job after I passed the bar exam, I came across a job posting for a part-time cannabis law clerk at a local insurance defense law firm. It was posted by a fellow former student member of SSDP, and so I applied for the position. I ended up getting the job, and over time I moved my way up to a full-time associate and continued on to other larger law firms. Then, in September 2022, I took the leap and started my solo law practice. I still focus most of my law practice on assisting cannabis businesses in California, and I’m grateful that most of my clients have stayed with me since day one.
What steps should aspiring lawyers (new or seasoned) take to make a transition to this practice area?
First and foremost, if you live in a state that has a licensed commercial cannabis industry (and even if you live in a state that doesn’t), print out the applicable laws and regulations and read them. If you live in a state that doesn’t have a state regulatory framework, then also look to other states that do; when drafting these laws and regulations, governments tend to look to their predecessors and neighboring states to understand what has and has not worked. Some will even use similar, if not identical, language and terminology in their licensing frameworks.
Additionally, laws and regulations that apply to a non-cannabis business will almost always apply to a cannabis business. But the same is not true in reverse. For instance, a state compliance regulator may ask a cannabis business to provide it with detailed business record information over a specific period of time; these records could include customer names, birthdates, the specific product that was purchased, the amount of cannabis purchased that day, and the applicable costs and taxes applied to the sale. In California, a cannabis business is required to keep this information as part of its recordkeeping requirements. Upon request, that business would then have to immediately provide the information to the state regulator. Failure to do so, or failing to abide by the recordkeeping requirements, could result in fines, penalties, or disciplinary action against the business. I’m not aware of any non-cannabis business that is asked to or required to provide the same information.
Operating a commercial cannabis business comes with a lot of governmental red tape, and it will only get more involved if or when federal legalization occurs. Be aware of the prior and current laws and regulations in place for these businesses so that you can properly advise your clients. Doing so will not only help you be a better attorney but also will ensure that you’re properly prepared to advocate and/or defend your client as needed.
Unlike other legal areas or specialties, commercial cannabis laws are new and still evolving. There are many types of organizations, both locally and nationwide, that host events and webinars and provide news alerts and updates for the cannabis industry. Attending business events is a great way to get your name out there, meet the people involved in the industry, and learn how you might be able to better serve it.
Finding clients in this industry is not difficult, but finding a client in the cannabis industry that trusts an attorney—that can be difficult. Many of my clients have come as direct referrals from other businesses or attorneys or from speaking engagements and business events. For decades, this industry was, and continues to be, victimized by the war on drugs. As a direct result of that criminalization, the industry does not trust people easily.
When I first started working in this area of law, my focus was solely on legal compliance and licensing. That’s a significant amount of work in and of itself. Because California requires a local jurisdiction to issue a license or permit first, each jurisdiction has its own regulatory process and procedure for the business to obtain that license or permit. Some jurisdictions have limits on the number of licensees that can operate in their jurisdiction (which makes the process extremely competitive), while others have outright banned the business activity altogether. In any event, knowing the applicable laws and licensing process in the local jurisdiction is usually the first step.
But once the business is licensed, it will also need legal assistance with everything that any other new business will need—entity formation, contracts, leases, employment, insurance policies. There are a lot of cannabis businesses that need assistance and plenty of legal work to go around.
