Opportunities in Cannabis Law
Now’s the time to get in on the ground floor of this billion-dollar industry.
When Rachel Gillette started a solo cannabis law firm in 2010 after Colorado enacted the Colorado Medical Marijuana Code, she called an old law professor for guidance. “She told me to be careful. She feared I might lose my license,” Rachel recalls. “That same law professor called me recently to present to her constitutional law class on cannabis law. It’s incredible how quickly it’s come full circle.” In 2016, Rachel joined Greenspoon Marder, an AmLaw 200 firm, as the firm’s first cannabis lawyer.
Today, it has 29 of them.
From the recent legalization in Canada, to the several states with legalization initiatives on their ballots this year, it’s clear cannabis law is making its way into mainstream practice. 31 states now allow medical marijuana and 15 others have approved THC products for medical use. Nine states and Washington, D.C., have legalized recreational pot, also known as “adult use”.
But “legalization begets litigation” as one recent article put it. So “it’s definitely a good time to get into this industry,” Rachel says. “Because this industry truly touches every area of the law.” To give you an idea of the magnitude of opportunities for lawyers, here’s just a sample of the legal areas that emerging Cannabis businesses touch:
Regulatory Compliance and Corporate Law
A decade ago, there were very few lawyers practicing cannabis law. Most were reluctant to because marijuana is [still] illegal under federal law, and the Rules of Professional Conduct prohibit lawyers from advising clients on how to break it.
But as more and more state regulations and tax laws take effect—most of which are in direct contravention of federal law—businesses need legal advice to navigate and understand them. These regulations affect not only starting a legal marijuana operation; they also reach the investment in and financing of them, insuring them, and the importing of marijuana from Canada. The complexity of these regulations varies widely by state, so those seeking advice on the business of cannabis need local expertise, explains Gilette.
The patchwork of Cannabis legalization raises many employment issues. Of the states where medical marijuana is legal, only nine specifically ban employment discrimination against medical users–leading to charges of wrongful termination and discrimination in several states where medical marijuana is permitted. Just last month, a federal jury ruled against a nursing home that rescinded a job offer to a potential employee who tested positive for THC. The company cited federal law, but the jury nonetheless found that it violated an anti-discrimination provision of Connecticut’s medical marijuana law.
In the national wave of employment litigation more lawsuits are being decided in employees’ favor. These recent decisions reflect an “emerging trend that employers have to be aware of,” says Darryl G. McCallum in the ABA’s Litigation News. The most urgent need for employers will be guidance on ensuring a safe work environment, andhandling employee requests for reasonable accommodations. “Employers should address medical marijuana use while not at work through carefully crafted written workplace and drug testing policies with the help of counsel to avoid any potential litigation landmines,” write Catalina Avalos and Stephanie Mazzola of Tripp Scott in Florida. Employers with multi-state presences will need to be made aware of their legal obligations in different jurisdictions.
Emerging Marijuana growing operations will also need advice on how to comply with environmental laws. In California especially, companies face a plethora of environmental regulations involving emissions, water, and the use of pesticides. One California operator spent tens of thousands of dollars to fulfill California’s environmental impact requirements including producing a 126-page report describing his growing operations and the steps he was taking to minimize his business’s impact on the environment.
Land & Leasing Law
Land and leasing lawyers will also have to help clients navigate the uncharted waters of leasing and insuring property to cannabis producers. Civil nuisance cases in both state and federal courts are emerging. In a recent one in Colorado, closely watched by the cannabis industry, a federal jury found for a marijuana grower in an anti-racketeering suit brought by his neighbors who claimed the neighboring marijuana business drove down their property value.
Product Liability, Negligence & Class Action
Of course, on the other side of businesses and investors entering the cannabis industry, are the consumers as these new products flood the marketplace. As corporate lawyers help clients avoid litigation, there are plenty of opportunities for plaintiffs’ practices.
Class action suits are of particular concern, as more mass products enter the marketplace. Any company planting, cultivating, testing, packaging, transporting and dispensing cannabis has potential exposure to consumer claims. Lawyers would be wise to limit their clients’ exposure as much as possible through contracts, waivers, and other means—but most lawyers already practicing in this industry acknowledge that as more and more states legalize cannabis, a wave of personal injury and tort litigation will follow.
This is far from an exhaustive list of potential opportunities; M&A, intellectual property, tax practices, and others will all have a place in the budding marijuana industry. Cannabis companies will—at least in short-term—continue to be under higher scrutiny than others, which will necessitate the ongoing need for legal counsel.
“No one was doing this eight years ago,” Rachel says, “and now we have local law schools placing externships in cannabis practices, and law firms dedicating attorney groups to these issues. It is an exciting time, especially for young lawyers. We have a whole new area of law unfolding right before our eyes.”