5th February 2020
Herrick K. Lidstone, Jr. & Kylie R. Santos - Burns, Figa & Will, P.C.
On January 8, 2020, New York State Governor, Andrew M. Cuomo, vowed in his State of the State address to legalize the sale and use of recreational marijuana in New York. If Governor Cuomo follows through on his promise, New York will be the twelfth state to legalize recreational cannabis, following Colorado which was the first. With several other states moving in the same direction and with heavy regulation existing in the states that have already legalized the substance, there is significant need and opportunity for attorneys to enter the cannabis industry. Nonetheless, while cannabis remains a schedule I drug under the Controlled Substances Act (“CSA”), any practitioners wishing to take advantage of such opportunities must be keenly aware of the risks associated, MSI's Colorado law member Burns, Figa & Will P.C. explains more.
Brief Overview of the Current Status of Cannabis Law
Since the enactment of the CSA in 1970, cannabis has been considered a schedule I drug, and the use, possession or distribution of cannabis remains subject to criminal penalties. While the federal law itself hasn’t changed, the federal government’s stance on enforcement has taken many turns. In the most recent turn, Jeff Sessions, then acting as Attorney General, released a memo rescinding the “Cole Memo”, which had previously limited federal intervention in state-authorized cannabis activities. The Sessions Memo decentralized federal marijuana prosecution by giving greater flexibility to each individual prosecutor.
Even in the face of unfavorable policies, the number of states legalizing cannabis continues to grow. According to Business Insider, 32 states have legalized medical marijuana, 11 states have legalized recreational marijuana, and several other states are expected to vote on the legalization in 2020. With the states and the federal government at odds with one another, serious uncertainty looms over the cannabis industry and everyone involved in it.
So what does this uncertainty mean for attorneys wishing to enter this space and represent businesses in a state-legal but federally-illegal industry? It means that an in depth look at the rules of professional conduct and other rules is not only prudent but necessary.
The Professional Ethics of Advising a Cannabis Client
While no two state’s rules of professional conduct are exactly alike, almost all of them have a rule similar to Rule 1.2 of the ABA’s Model Rules of Professional Conduct. Rule 1.2 provides in relevant part that a lawyer shall not counsel a client to engage, or assist a client, in any conduct that the lawyer knows to be criminal or fraudulent. Rule 1.2, when read in isolation, seems to preclude attorneys from assisting cannabis clients at all while the substance is illegal under federal law. Consequently, some states have started to modify their professional rules, either by adding official commentary and issuing binding ethics opinions, or by announcing a policy to permit counseling a cannabis client.
Generally, such guidance provides that attorneys may counsel or assist a client in conduct expressly permitted under the state law, but the attorney must also advise the client about federal and other law and its potential consequences. Still, a startling number of states, including several that have legalized cannabis, do not provide any guidance on the ethics of advising cannabis clients, leaving many attorneys in states where cannabis is legal searching for justification for their work with clients in an otherwise state-legal business.
With all the risks and uncertainties in mind, below are a few suggestions for any attorneys looking to enter the cannabis industry in the near future.
Needless to say, the discrepancies between state and federal law need resolved. Until then, however, a good understanding of your client and of your state’s professional code of conduct is essential when advising clients in the cannabis industry.
 Prevention and Control Act of 1970, 21 U.S.C. §§ 801-889 (2019).
 These states include Alaska, Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Maine, Maryland, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Washington, and West Virginia.
 See Daniel Shortt, The Ethical Marijuana Lawyer, Harris | Bricken, Canna Law Blog (Oct. 3, 2019), https://www.cannalawblog.com/the-ethical-marijuana-lawyer/.
 See C.R.S § 7-80-103 for Colorado LLCs and § 7-103-101(1) for Colorado corporations. See also DGL § 8-101 for Delaware corporations and § 18-106 for Delaware LLCs.
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