May 20, 2020 Legislative Update

TIPS Resolutions at the ABA Midyear House of Delegates

By Lisa Dickinson

TIPS had a strong showing in the House of Delegates at the ABA Midyear Meeting, held February 17, 2020, in Austin, Texas. TIPS proposed a few resolutions, and all passed. One of the newest TIPS Committees, the Cannabis Law and Policy Committee, put forth two different resolutions. Once the initial hurdle of approval from TIPS Council went through, the work to reach out to other ABA entities on these cutting-edge legal topics was hurried so that these resolutions could be passed at Midyear. The hard work of the Committee was not futile. Once the resolutions reached the House of Delegates, there was little if any opposition, and no opposition from the floor of the House.

The two resolutions that passed were:

103B: RESOLVED, That the American Bar Association urges 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.

103D RESOLVED, That the American Bar Association urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws; and FURTHER RESOLVED, That the American Bar Association urges that such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.

103B is important for the practice of law, as “marijuana-related” activities could be as far-reaching as landlords housing state-legal marijuana businesses, insurance companies providing coverage information, business and employment lawyers advising marijuana companies (even on topics not related to marijuana), banks and other financial institutions determining whether to allow deposits from marijuana companies or their employees. Litigators defending these businesses in trademark, insurance, or other disputes are engaging in advice to these clients. There are a multitude of other areas in which “marijuana-related activities” touch. A practical example of how it relates to current affairs is during the current COVID-19 shutdown in multiple states, some marijuana businesses are allowed to remain open. Their need for legal advice regarding things like employees not wanting to enter the workplace and how that can affect their paid sick leave, unemployment, and how to comply with government orders on social distancing and making policies for the same is an immediate emergent need. Why do we need such a resolution asking Congress to enact legislation to clarify and ensure it does not constitute a federal crime for lawyers to provide legal advice to these clients? Although remote, it is still possible to be charged with a crime for providing legal advice to these companies. Marijuana remains illegal at the federal level. In our not-so-distant past, attorneys have been charged with civil RICO and other criminal charges for representing their business clients. For these and other reasons, the need to pass this Resolution was great.

103D provides a “safe harbor” for banks and other financial institutions to provide services to businesses and individuals (including attorneys) who receive compensation from any state-legal cannabis businesses. You can also see why this is important. Some individuals who own marijuana stores have had their personal accounts closed down by banks as their income is deemed “illegal.” Employees who work at marijuana stores have had the same issues. Additionally, the marijuana businesses themselves have been currently prohibited from using conventional banking. Some credit unions have relaxed their rules and allow deposits to be held from marijuana stores or producers, however, banks have been generally resistant to such accounts. This resolution would provide a means to allow banks and other financial institutions to hold these deposits without fear of federal penalties. This also assists the marijuana industry to not have large cash-on-hand amounts, which currently make more susceptible to theft, both internal and external.

These two important resolutions are an example of some of the work TIPS has been doing in the House of Delegates as we remain one of the only Sections to house a Cannabis Law and Policy Committee to stay abreast with current emerging issues of law. We also put forth other important resolutions such as training for police officers on reasonable use of force during animal encounters, and a resolution urging Congress to guarantee the Seventh Amendment right to jury trial in all states and territories. TIPS has great representation in the House of Delegates, and we are happy to share these current updates with you.

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By Lisa Dickinson

Lisa Dickinsonis an ABA House of Delegates - Washington State Bar Association Delegate, TIPS Council Member, and TIPS Cannabis Law and Policy Committee Member.