Despite marijuana continuing to be illegal at the federal level, attorneys in California where it is legal have been ramping up their practices serving the burgeoning industry, despite the complications that poses.
The California State Bar decided in November that it was not unethical to represent cannabis business clients in the state after cannabis was legalized statewide in 2018, and since then attorneys have been expanding a practice area that includes disparate areas of the law.
“It’s an industry where having a full service law firm is particularly advantageous and that is because we have the ability to draw from experts in all different areas,” said Joshua Mandell, a Los Angeles-based partner at Akerman LLP and a member of the firm’s cannabis practice.
The legal issues and potential disputes raised by the cannabis industry ranged from intellectual property, to real estate, to corporate and securities law and beyond, Mandell said. His practice in the area dates back to 2014.
Much of Mandell’s practice is advising businesses on complying with the Bureau of Cannabis Control’s regulations finalized in January, including complying with rules prohibiting out of state parties controlling a California cannabis business.
“Some of the legal work we do on the transactional side is on structuring joint venture agreements among parties where one has the capital and one has the knowledge,” he said, noting this kind of work was not necessarily unique to the cannabis industry.
Legal service providers are also hiring because of the burgeoning industry, according to Joe Rogoway of the Rogoway Law Group in Santa Rosa who works with cannabis clients.
“We have eight attorneys including myself,” Rogoway said of his firm, which focuses on a variety of practice areas including cannabis law and compliance. Rogoway added he hired a tax attorney in February and said he intends to continue to expand.
“It is a growing practice for the firm,” Mandell said of Akerman's practice group. He said the firm had a “few dozen” lawyers in the cannabis practice group across the U.S. but added it was not their only focus.
Marijuana’s classification as a dangerous drug at the federal level can still pose speed bumps, if not road blocks, for clients, according to Rogoway.
He said he recently and successfully defended a grower client, Green Earth Coffee, in Petaluma who was sued by neighbors in a federal court in San Francisco under the federal anti-racketeering RICO law.
The neighbors complained a strong odor emanating from the farm was interfering with their quality of life, but U.S. District Court Judge Jon Tigar threw the RICO charges out, despite a 10th U.S. Circuit Court of Appeals decision finding the law can be used to prosecute a state-licensed marijuana business.
The awkward straddling of state and federal law also creates other problems, including cannabis clients’ lack of access to banking services and the impact that has on issues like being able to pay lawyers for legal services, according to Mandell.
“Access to banking is a problem for all (cannabis) clients,” he said. “Once that barrier is removed there will be a lot of additional growth,” in legal services for the cannabis industry, he added, noting the difficulty professional services providers faced in processing cash.
He did not say whether Akerman received payments from cannabis clients in cash and noted only that it was an “ongoing challenge.”