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November 2017

Advising clients on marijuana use, sale

As the country’s rapidly changing views and laws on medical and recreational marijuana evolve, lawyers are tackling various ethical problems regarding advising clients on cannabis-related legal issues as well as their own personal use of the drug.

One pertinent question is whether a lawyer advising a client on the growing, sale or use of marijuana under state law runs afoul of professional conduct rules since marijuana is still illegal under federal law regardless of whether it is permitted by state law. To help lawyers weed through these issues, the ABA presented a panel of cannabis law experts in the webinar, “Ethical Legal Representation: Advising Clients on the Sale and Use  of Marijuana.”

Moderator Hilary Bricken, a dispute resolution and corporate law attorney with Harris Bricken LLP in Los Angeles, provided an overview of the business of marijuana and the evolving state and federal regulation of this growing industry.

As of July 2017, adult recreational use of marijuana is legal in eight states (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington state) and the District of Columbia. Medical use is permitted in an additional 19 states:  Arizona, Arkansas, Connecticut, Delaware, Florida, Hawaii, Illinois, Louisiana, Maryland, Michigan, Montana, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Pennsylvania, Rhode Island and West Virginia.

Since 1966, when California became the first state to legalize marijuana for medical purposes, the state and federal governments have been doing “a dance” regarding regulation, Bricken said. Marijuana is still illegal under federal law and is classified by the Drug Enforcement Agency as a Schedule 1 drug, the most serious category of illegal substances alongside heroin, ecstasy, LSD and Quaaludes as a drug “with no currently accepted medical use and a high potential for abuse.”

The “dance” Bricken referred to involves the federal government not remaining silent as more and more states legalize marijuana either for medical or recreational use. Over the years, the Department of Justice has issued a series of enforcement memoranda for states attorneys general that provide insight on how the government deals with and thinks about marijuana legalization use.

In 2012, when Washington and Colorado became the first states to legalize adult marijuana use, Assistant Attorney General James M. Cole responded by issuing his second memo in two years. In the memo, the department outlined eight enforcement priorities for the feds and states to focus on:

  • Prevent distribution of marijuana to minors

  • Prevent marijuana revenue from funding criminal enterprises, gangs or cartels

  • Prevent marijuana from moving out of states where it is legal

  • Prevent use of state-legal marijuana sales as a cover for illegal activity

  • Prevent violence and use of firearms in growing or distributing marijuana

  • Prevent drugged driving or exacerbation of other adverse public health consequences associated with marijuana use

  • Prevent growing marijuana on public lands

  • Prevent marijuana possession or use on federal property.

“But written in between the lines was that the federal government would stay in abeyance so long as the states had robust enough regulations to support control of licensure and regulation of these businesses but that the feds would not hesitate to step in with enforcement,” said Bricken, adding that “the memo can be rewritten or repealed.”

And it appears that under the Trump administration the federal government’s position has changed, with Attorney General Jeff Sessions having asked Congress in a May 2017 letter to reverse federal medical-marijuana protections that have been in place since 2014.

This confluence of federal and state law regarding the legality of marijuana presents a problem for lawyers as they advise their clients in the sale and use of marijuana. Lawyers are sworn to uphold the law and are guided by the ABA Model Rules of Professional Conduct, which were the topics covered by panelists Matthew E. Primm, managing attorney of the cannabis law department for Bremer Whyte Brown & O’Meara in Newport Beach, Calif.; and Andrew King, litigation partner and member of the cannabis engagement committee for Kutak Rock LLP, based in the firm’s Little Rock, Ark., office.

ABA Model Rule 1.2(d) states that a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent. . . .”

“When marijuana started to become legal, lawyers ran headlong into this model rule and the policy consequences were overwhelming because this was new business in a highly regulated area,” King said.

So, the question became one of ethics – can lawyers advise clients about marijuana-related business if it is legal in their state but illegal under federal law? King said states were confronted with three options:

  1. Not enforce the rule

  2. Interpret the rule as though it does not apply to medical marijuana if the conduct is legal under state law

  3. Change the rule or provide some guidance whether the rule applies or not.

What has resulted is a state-by-state application of Rule 1.2(d). According to King, 16 states’ lawyer disciplinary offices as of July have modified the rule, adding official commentary and issuing binding ethics opinions, or announced a policy to permit counseling and assistance of a client with conduct permitted by state marijuana laws. Those states are Arizona, Colorado, Connecticut, Florida, Hawaii, Illinois, Maryland, Minnesota, Nevada, New York, Ohio, Oregon, Pennsylvania, Vermont and Washington, along with the District of Columbia.

“This gives lawyers some guidance on how they can represent clients,’’ King said. But he cautioned that this might not apply for federal court practitioners.

“In those states without a modification or official guidance regarding enforcement of 1.2(d), the majority view among state bar associations and regulatory committees has been that the rule bars assistance with conduct that violates the Controlled Substance Act,’’ King said. He noted that ethics opinions have been issued in Arizona, New York, Colorado, California and Illinois.

Primm, whose firm has attorneys in a number of states to handle cannabis clients, highlighted ABA Model Rule 8.4 (b) and (d). This says it is professional misconduct for a lawyer to:

  • (b) commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects

  • (d) engage in conduct that is prejudicial to the administration of justice

“This rule implicates an attorney’s personal conduct with respect to state-legal marijuana, such as when you are hanging out at home are you allowed to partake in cannabis or is that something that could cause you to be disciplined by the local state bar,” Primm explained.

Primm says that unlike Model Rule 1.2, there are no state-level modifications of the rules in 8.4. “So, the best thing you can do is to go with what the local law is telling you,” she says.

Can a lawyer invest in a marijuana business? Primm said it is not against the law but that the academic view is that a lawyer’s financial participation violates Rule 8.4 (b). He said Washington has issued the only ethics opinion addressing the issue. It reminds lawyers that ABA Model Rule 1.8(a) states that “a lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless. . . ”

But, Primm said, the laws are evolving and it is always good to adhere to the local laws in your state.

The program was presented by the ABA Center for Professional Responsibility, Section of Litigation, Young Lawyers Division, Health Law Section, Section of Science & Technology Law, Division for Public Services, Government and Public Sector Lawyers Division and Center for Professional Development.

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