USA: Law Firm, Seyfarth Shaw Publish Article On Their Blog “The Blunt Truth”

USA: Law Firm, Seyfarth Shaw Publish Article On Their Blog “The Blunt Truth”

5 October 2016

Attorney  Stanley Jutkowitz writes….

 

Lawyers Beware: Navigating the Legal Ethics of Counseling or Participating in the Marijuana Industry

Posted in Federal – State Law Conflict, General, Legal Ethics
As state laws regarding medical and recreational marijuana evolve, lawyers face a variety of ethical issues relating both to counseling clients in marijuana related businesses (MRBs)and to financing or participating in MRBs.

The ethical dilemma stems from the fact that while state laws continue to expand the legality of marijuana, its use and possession in any form is still against federal law.  Most state ethical rules contain a rule similar to Rule 1.2(d) of the American Bar Association Model Rules of Professional Conduct (Model Rules) which states:

A lawyer shall not counsel a client to engage, or assist a client in, conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of a proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, meaning, or application of the law.

The dilemma created by Rule 1.2(d) is that it does not make a distinction between state and federal law.

Counseling Clients Regarding State Marijuana Laws

The first state ethics rule on the question of counseling MRBs came from Maine.  The Maine Board of Overseers of the Bar issued Opinion 199 in which it instructed lawyers to perform an analysis required by the rule.  In other words, it did not take a position and is really of no help.  The only other state to follow Maine’s lead is Connecticut.

Other states, such as Colorado, Washington, Alaska, Illinois and Oregon, have taken what many consider to be a more enlightened approach and allow lawyers to counsel MRB clients consistent with what was permissible under state law, but all of the states also urge lawyers to counsel clients on the differences between state and federal law and monitor changes in these laws.

Two states that have most recently ruled on the question of lawyers counseling MRBs are Maryland and Ohio.  In Maryland, attorneys may advise clients as to medical marijuana business related activities and may negotiate contracts or other matters to advance medical marijuana projects legal under Maryland law.  In Ohio, the Ohio Supreme Court reversed a non-binding advisory opinion and amended the Ohio Rules of Professional Conducts to allow lawyers to counsel or assist a client regarding conduct expressly permitted by the state’s medical marijuana laws. It is not clear whether an Ohio lawyer is permitted to negotiate contracts related to MRBs. In fact, the question of whether a lawyer can negotiate contracts and otherwise provide advise in establishing an MRB must be examined on a state by state basis.

Participating in an MRB

If a lawyer is permitted to counsel clients on state marijuana laws, is that lawyer permitted to invest in or otherwise participate in an MRB?  Well, there is another rule for that.  Rule 8.4(b) of the Model Rules defines professional misconduct as, among other things, committing “a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.”  So, is investing in an MRB allowed under state law but in clear violation of federal law committing “a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects?”

Colorado has answered “no” to that question and permits its lawyers to invest in MRBs.  In Maryland, lawyers are also allowed to participate in MRBs.  The ruling in Ethics Docket 2016-10, states that the Maryland Rules of Professional Conduct do not limit attorneys from engaging in business activities available to other members of their communities.  The Ohio Supreme Court did not address this issue in its most recent amendment to the Ohio Rules of Professional Conduct discussed above.

Summary

The legal framework for the marijuana industry is a rapidly changing environment.  So, too, is the ethical environment for lawyers working in the industry.  With recreational marijuana on the ballot in several states, more changes are inevitable and are likely to vary state by state.  Lawyers working or investing in the industry must carefully and frequently parse through their states’ rules to determine what conduct is permissible and what conduct may result in their license to practice law going up in smoke.

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