Attorneys are moving slowly in pot industry
As of Sept. 8, medical marijuana is permitted in Ohio, but whether attorneys can, or should, provide legal services to enterprises supporting that industry remains hazy.
The Ohio Supreme Court, which sets rules for lawyer behavior, has acknowledged this. That’s why the court recently said it’s reviewing the rules of professional conduct for lawyers, potentially amending them to clarify ethical responsibilities under House Bill 523, Ohio’s new medical marijuana law.
In an announcement by the court, Chief Justice Maureen O’Connor emphasized the need to move quickly yet diligently in updating behavioral rules. The intent is to collect commentary on the issue through Sunday, Sept. 18.
“We will revisit the issue after examining public comments, which serve as a backstop to identify any unintended consequences that haven’t been uncovered so far,” O’Connor said in the August announcement.
HB 523 includes language encouraging professional service providers, from attorneys to accountants, to work with businesses affiliated with medical marijuana by suggesting they wouldn’t get in trouble for doing so, despite the drug’s federal prohibition.
However, the state Legislature doesn’t set the rules for lawyer behavior. The high court does.
And an August advisory opinion from the court’s committee overseeing lawyer conduct effectively established that there are certain things lawyers shouldn’t do, said Thomas Haren, an associate with Seeley, Savidge, Ebert & Gourash Co. LPA in Westlake. Haren is also affiliated with the National Organization for the Reform of Marijuana Laws, a nonprofit better known as Norml.
Attorneys can provide some degree of counsel and help clients generally understand (currently unclear) marijuana laws — Gov. John Kasich has mandated that over the coming months and years, more regulations will be established — but precluded actions including negotiating leases for potential growers or sellers, helping someone apply for licenses to grow or sell, or enabling entrepreneurs to form companies.
It’s not a legally binding opinion, but it still carries a lot of weight.
After all, a lawyer disciplined by the court for violating conduct rules could face sanctions that, in extreme cases, could include disbarring.
As a result, many Ohio attorneys understandably are leery of getting involved with clients tied to the legal cannabis industry here.
“Right now, our concern is complying with the ethical responsibilities,” Haren said.
Haren and his firm want to develop a marijuana practice, but they don’t want to face any seemingly unnecessary risk. His firm, notably, requested the Supreme Court to clarify its rules.
“We take the approach that if our licenses are in jeopardy, then we can’t protect our clients,” he said. “And if we don’t have the judgment to protect ourselves, why would clients think we have the judgment to protect them?”
Kevin Murphy, a partner with Cleveland-based Walter | Haverfield LLP, has been working with clients in the legal marijuana industry for about seven years. That includes work both in and out of Ohio. His clients include dispensaries in some of the various states where cannabis is legal in some form and some local companies like Westlake-based Cannasure, which insures companies working in the marijuana industry and related products.
“I’m glad the court is revising its advisory opinion because you’re going to have clients looking for guidance on how to navigate these laws and (the court is) effectively advising lawyers not to represent these clients,” Murphy said. “And that’s a problem. That’s what lawyers are there for.”
As far as the state’s advisory opinion, and prior ethics rules that preclude lawyers working with clients in this industry — The American Bar Association, for example, prohibits lawyers from engaging in illegal conduct and accepting money earned through illegal means — Murphy hasn’t been worried.
With those advisory opinions, you can “choose to take the advice or not,” he said.
Haren doesn’t share quite the same perspective.
“That cavalier attitude, especially with the advisory opinion, that makes us nervous,” Haren said. “This is not an industry to be cavalier in.”
Murphy, though, points out that lawyers themselves never actually touch the plant. They’re just providing legal help.
“I felt the need to advise clients in this industry is so compelling that it’s unrealistic and unreasonable to think you could just essentially bar Ohio lawyers from representing clients,” he said. “The advisory board is saying they don’t recommend that lawyers in the state help with navigating state law because this is prohibited under federal law. That’s the big conundrum in this industry. It’s a tug of war between state and federal law. So at what point does the federal government change this law?”
James Simon, a partner at Akron-based Buckingham, Doolittle & Burroughs LLC, said he and his colleagues are following the marijuana laws closely because of the implications it could have for various clients, including employers in general and clients in health care, like doctors who could prescribe marijuana.
But as far as working with a grower or dispensary, the firm doesn’t plan to get involved until ethics and conduct rules are clarified and more regulatory laws are passed.
“The point is, we have a law that doesn’t answer all these questions,” Simon said. “We are waiting to see what regulations are promulgated that could clarify some of the law.”
Legitimizing the industry
According to an August report by Marijuana Business Daily, Ohio’s medical marijuana industry eventually could generate $200 million to $400 million in annual retail sales through dispensaries alone.
Attorney ethics aside, a lack of legal support could effectively stymie that production.
So for Ohio’s medical cannabis industry to flourish, and for the legal sector to truly develop effective and expectedly lucrative marijuana practices, clarifying attorney conduct in this space is seemingly crucial.
Many lawyers have been reluctant to get involved in the marijuana industry for reasons beyond state conduct rules, though.
Naturally, the drug’s federal classification will still keep some people away.
Bruce Reinhart, a partner with McDonald Hopkins who co-chairs the firm’s government compliance, investigations and white collar defense group, has said many firms — including his — will provide advice to a business regarding the legal climate they’re facing because that’s OK. They won’t, however, help with actual legal work, like negotiating operating or lease agreements.
There’s also a sense that some lawyers — particularly those at large, national law firms — are staying away because of concerns over their reputations and whether working in that industry could impact their relationships with high-profile clients.
It’s not uncommon to hear attorneys talking about forming a marijuana practice to half-jokingly emphasize the unsolicited caveat that they aren’t going to be the “Bob Marley” firm, or rename their firm “Cheech and Chong.”
Coincidentally, the bulk of the lawyers in Ohio involved with the marijuana industry today seem to operate solo practices or belong to relatively small, local firms. That’s something attorneys listed on Norml’s website generally have in common. It’s worth noting that any attorney can appear on that list if they pay a fee to Norml.
Ultimately opening up conduct rules to permit attorneys to work in the marijuana industry will add more teeth in legitimizing the legal marijuana sector overall.
“So that’s definitely a good thing for the industry,” Murphy said. “The more professional service you have in the industry, the more legitimate it becomes.”