Is Your Practice Ready For the Pot Rush?
There are currently 23 states plus the District of Columbia that have enacted laws to legalize medical marijuana. Other states, such as Ohio, have only legalized the medical use of the drug. Despite this, there are many ohio dispensaries where you can pick up medical weed. Earlier this year both Colorado and Washington opened their doors to recreational pot consumption. In the first six months since Colorado’s recreational marijuana laws came into effect, Colorado collected over $10 million dollars in excise taxes. If you extrapolate the tax data, you realize that over $200 million dollars was spent on the retail end. That is only the tip of the iceberg. In a recent report by the Marijuana Business Daily, legalized cannabis sales are projected to exceed $8 Billion dollars by 2018. That my friend is a lot of weed. If you are interested in getting recreational marijuana, then you could check out something like this michigan recreational dispensary. Just remember that if you take it home with you, then as long as recreational marijuana is legal where you live then you should be fine. If marijuana is legal in your state, it’s common for people to order it online on websites like weedom.
Is your practice ready to take advantage of this “Pot Rush?” Do you have what it takes to guide clients through an ever shifting regulatory maze? Do you have the skill set ready to navigate complex licensing regimes? What are the key strategies to make you a successful Cannabis attorney? To get a better idea on the opportunities and risks associated with entering this emerging practice area, Legal Ink Magazine has asked Hilary Bricken of Canna Law Group to provide her insight into the world of legalized weed.
Hilary Bricken is the lead attorney of the Canna Law Group, a practice group of Harris Moure PLLC based in Seattle, Washington. Regarded as one of Washington State’s premier cannabis business attorneys, she helps cannabis companies of all sizes with everything from corporate structure and intellectual property protection to branding, licensing, and application of cannabis law. Her primary focus is helping cannabis companies navigate the increasingly confusing and murky legal climate surrounding state and local cannabis laws.
LIM: How did you get into providing legal advice to the marijuana industry in Washington state?
Hilary: Our firm first got into representing individuals and companies in the marijuana market back in late 2010. A very well known criminal defense attorney in Seattle approached us. He had a very big book of business, the majority of which where either medical marijuana patients or medical marijuana businesses. Medical marijuana was still a crime and the Federal government did not have anything in place akin to the most recent Cole memo. He wanted a business lawyer to look at what his clients wanted when it came to their business needs.
His clients were less concerned with criminal prosecution and very much wanted learn more about trademark registration, contracts, and business formation. Everything in Business Law 101. The criminal defense attorney neither had the time nor the desire to become a business lawyer overnight. He came to our firm because our firm is known for infiltrating these kind of niche practice areas. One of the name partners approached me with the idea of taking on a medical marijuana business practice and I ultimately saw it as an opportunity.
In November of 2012, when initiative 502 passed, things exploded. We were already in the space, we were a well known firm, we were a good boutique business firm. It didn’t hurt our book of business that recreational use became lawful. And since that time, we have been able to help a few hundred clients apply for licenses with our Liquor Control Board. We have now even gotten clients beyond the state of Washington. There is tremendous growth potential for attorneys in this industry.
LIM: What does your client base look like?
Hilary: The client profile ranges from commercial cultivators with thousands of plants to medium sized processors that make one type of cookie to retailers (of which there are only 334 in the State of Washington). We also represent ancillary businesses, financial institutions, laboratories, glass makers, and commercial landlords.
LIM: How do you determine if a prospective client is a right fit for your practice?
Hilary: Aside from the obvious ethical issues regarding the federal versus state law conflict, you really need to ensure that whomever you are speaking with is a potential client that fits the profile of a responsible business person – that is going to be communicative, that abides by the rules, and is not going to use your legal services to do undertake activities violative of State law. Attorneys need to refine their due diligence on these types of clients. They need to be asking the right questions. They need to ensure their client has knowledge of not only state law but of the regulations in their state.
You also need to define the scope of the representation, not to go outside of compliance with state law. Though I know of one instance where the federal government has indicted an attorney for his participation in a marijuana business – the real issue, in my opinion, is with the state bar. Not every bar has the same opinion on how to handle clients in this space. One recommendation is to check in with your bar. If you can’t, then be as conservative as possible with your advice and ensure that your client understands that this is a federal crime and that they are in violation of federal law.
LIM: Can you describe your vetting process when considering taking on a new client? Do you do background checks?
Hilary: We do not do background checks, that’s a little too intense for us. We do have a litany of questions that we ask depending on what the client wants to do. If they respond in a way that tells me that they have not done their homework in their state, then I do not typically take them on as a client until they have done that homework. What I look for in a client is that they know what they can do versus what they want to do. If a client tells me that they want to do something that is wildly out of bounds of what they should in fact know, I know that the prospective client is not a good fit for our firm. When we do get a referral from an attorney I know and trust, this client is most optimal because they have already been vetted by someone who has the necessary brains and experience in the industry.
After Initiative 502 passed, we received a ton of people from out of state that wanted to become residents in order to participate in recreational marijuana sales. That vetting was more challenging because those folks really thought you could just come in with no issues. Now, some of those people have become good clients of ours because they have been educated on the applicable regulations. It’s the people that come to me for actual business advice that I know are not mature clients. You need to make it clear that your job is not to tell a client how to run their dispensary or what is a good opportunity for a dispensary in order to be profitable; your job as the lawyer is to dispense advice regarding legal consequences and compliance. Any client that wants our firm to do more than that is ultimately not a good fit.
LIM: Of the number of prospective clients that approach your firm for assistance, how many do you turn away?
Hilary: In the beginning, it was very high. Medical marijuana in our state is a breeding ground for bad behavior. We currently turn down about half of prospective clients that come to our firm. I see the trend changing for the better because the laws are becoming more strict and the clients are becoming more sophisticated, and are more willing to be conservative with their key business decisions.
LIM: What are the top services that prospective clients ask of your firm?
Hilary: The number one request right now is assistance on navigating the state licensing regimes. People are dying to find lawyers that have experience in these really strict regulated industries and specifically in the marijuana industry. It’s great if you have had experience in health care, casinos, or liquor – but even this is vastly different where marijuana use and distribution is still federally illegal. You are not just advising your clients on how to obtain a license, you are also advising your clients on the real world impacts after acquiring the license, which in some ways remains unpredictable as states continue to make rules on the fly.
The second service most in demand is corporate transactional work. There is unbelievable demand for these services. This includes everything from commercial leaseholds, shareholder agreements, options agreements on purchase and sales of businesses, to trademark registration and policing and taking ancillary businesses public.
Marijuana commercial litigation is also an emerging practice area. This can involve litigation between licensees, against the state under its administrative procedure act, or against a city or county if they decide to ban marijuana businesses.
Another emerging area is marijuana intellectual property; trademark registration, branding, licensing, and franchising. Though the USPTO may not approve a federal mark for pot products, the states will and have already. As national pot-related brands emerge – licensing and franchising services will be in greater demand.
LIM: What should attorneys be concerned about when considering entering this emerging practice area?
Hilary: It is certainly not for the faint of heart. If you are not a risk taker, you probably aren’t going to fit into this practice area very well, because this is nothing but risk. Currently, it’s a very difficult industry because it is a nascent industry where you’re dealing with federal prohibition and ever-changing state regulations and political attitudes. And if you think your client is going to bend over backwards to make your life easy because of industry political and policy flux, you are sorely mistaken.
The other concern is the ethical conundrum, nobody wants to be slapped by their bar. If you are worried about a bar complaint for simply practicing in this area, you need to move on. While federal prohibition looms large, the state versus federal law conflict is going to fluster many attorneys because their respective bars may be very conservative in how they treat this practice area.
If you are an attorney in a state that is contemplating marijuana legalization or currently has it on the books, you also need to brush up on your regulatory practice. This is not an easy task. If you have been doing transactional work for a city for 20 years, it is going to be difficult for you to transition into a regulatory practice. Even though you can certainly learn, this practice area is steadily becoming saturated and you want to learn quicker rather than not.
Basically, do your homework on the industry and rules in your state and develop a thick skin and hold on, because this practice area is ever changing and isn’t going away anytime soon.