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California Says OK to Counsel Clients on State Marijuana Laws

California, the nation’s largest bar and the world’s largest cannabis market, is now giving guidance to attorneys who advise marijuana businesses on how to represent their clients and protect their licenses. The combined influence of having the most lawyers and the greatest market could easily make the state’s decision influential elsewhere.

The tax, trade, intellectual property, local licensing, employment, environment, and other issues for which a cannabis business would consult an attorney are similar to that which would compel any federally legal business to seek counsel.

The wrinkle, of course, is marijuana is illegal under U.S. law. While other state bars have issued advisory opinions addressing cannabis, the opinion issued in recent days was the first from the Golden State, said Jessica McElfresh.

The state bar, with 260,000 licensed attorneys, said that it’s O.K. for California lawyers to counsel clients on how to comply with state cannabis laws that may violate federal law as long as they explain the state-federal law conflict, and don’t help the client break U.S. law.

It basically says that California lawyers can’t be subject to discipline for practicing cannabis law if they follow some basic steps, said McElfresh, a cannabis lawyer in San Diego.

More than 30 states and the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands permit cannabis use for medicinal purposes and about a third of them also allow it for recreational use. But regulations vary, and state legalization conflicts with federal law that bans it outright.

California pot sales last year hit $2.9 billion and the market is expected to reach $3.7 billion in sales this year and $7.1 billion in 2024, according to a forecast by BDSA, a cannabis market analytics company.

Late to the Game

California was a bit late to the game on the advice because it permitted the San Francisco and Los Angeles bar associations to give guidance while other states took the lead on a state-wide basis, said Amy McDougal, an International Cannabis Bar Association board member.

The state, however, has now “issued the most comprehensive state formal opinion,” said McDougal, echoing language found in the text of the opinion by the bar’s Standing Committee on Professional Responsibility and Conduct.

McDougal is founder and president of CLEAResources LLC, which advises clients about mitigating business risks associated with ethics and compliance failures.

California Rule of Professional Conduct 1.2.1 says lawyers can’t counsel a client to “engage, or assist a client in conduct that the lawyer knows is criminal, fraudulent, or a violation of any law, rule, or ruling of a tribunal.”

To Read The Rest Of This Article By Patrick T. Fallon on Bloomberg Law

Published: May 28, 2020

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