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Cannibus Connondrum: The Legal Dilemma Posed By Marijuana Legalization

Sep 21st, 2016 Marijuana Laws

While medical marijuana is now legal in the state of Michigan, marijuana nevertheless remains an illegal controlled substance at the federal level.  This leads to a potential ethical quandary for lawyers in states where Marijuana has been legalized, and so, the ability of lawyers to work with cannabis entrepreneurs is in a state of flux.  In Michigan, this ethics question has not yet been definitively answered.

The reason for the state of flux is that even though involvement in a licensed cannabis business may be permitted under state law, lawyers who represent a cannabis client could nevertheless be subject to sanctions or even possible disbarment.

For example, the American Bar Association’s Model Rule of Professional Conduct 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.”   However, until recently, states did not bother attorneys who represented clients that worked within their state’s licensing guidelines.  The American Bar Association has not issued any guidelines or specific policies yet but is studying the issue.

Because of this, some lawyers are choosing to avoid any involvement in the cannabis industry until resolution of conflicting state and federal laws occurs.  Unfortunately, this results in entrepreneurs operating within the bounds of state law yet with limited or no ability to obtain legal representation.

Medical marijuana entrepreneurs in Michigan are not alone. In some states, attorneys have been explicitly warned against representing clients who are involved in cannabis businesses.  Other states have yet to address the issue while a few states are trying to reach a compromise.

In Ohio, the ethical dilemma was acknowledged and addressed.  In August 2016, the Ohio Board of Professional Conduct issued an advisory option cautioning that lawyers who worked with cannabis business clients would be violating federal law and also Ohio professional rules of conduct. Consequently, the Ohio Supreme Court is currently rewriting ethics rules to permit attorneys to help cannabis businesses. The lawyer will also be obligated to advise the client regarding related federal law.

In Arizona, the Arizona Supreme Court is taking a hard line approach.  The court recently refused to repeal rules that threaten lawyers with disbarment if they assist cannabis businesses and other clients who may buy, sell, or use marijuana under a 2010 voter-approved medical marijuana law.   In an interesting twist, Arizona residents will vote in November 2016 on Proposition 205, an initiative to legalize adult-use cannabis.  Under current law, who will represent future cannabis clients in Arizona?  New Mexico, Connecticut, and Maine fall somewhere between Ohio and Arizona as the entire industry tries to figure out how to deal with conflicting state and federal laws.

In May 2015, the State Bar of Michigan established the Marijuana Law Section with a purpose designed to “foster and advance the profession of Michigan Marijuana law.”  In July 2016, the Section requested that the Michigan Rules of Professional Conduct be revised to make clear that an attorney can represent cannabis businesses.  As of the date of this writing, these rules have not yet been finalized.

With new opportunities in the cannabis sector emerging, legal representation will be necessary in finance, land use, regulatory work and criminal law, essential to ensure state guidelines compliance and adherence.  To have lawyers sitting on the sidelines and unable to help clients is counter-productive to this burgeoning industry.  Hopefully clarity for attorneys and cannabis entrepreneurs will come soon on a uniform and consistent state and federal basis.

The author would like to acknowledge and thank Barone Defense Firm associate Kathy Fink who conceived of and helped draft this blog.