Opinion: Marijuana Moneyball
I may have found my next career. A neighbor of mine in Provincetown is making progress towards obtaining a license to grow and sell medical marijuana. I offered to do quality control for him. He demurred, but I haven't given up. Of course, I might to offer to be his lawyer, but that might be more difficult.
The Connecticut Bar Association's Standing Committee on Professional Ethics recently tried to give lawyers wishing to do this work some guidance. You see, even though many states have passed medical marijuana laws, and two states have decriminalized personal possession and use of the drug, it still remains illegal under federal law to grow and sell marijuana. Though the White House seems to have decreed that enforcement policy is something between benign neglect and "don't ask, don't tell," no one knows where the whole thing is going to end up.
Talking with my friend, I discovered that there are robust market developing to serve the business and legal needs of those involved in this enterprise. He mentioned that he reads something called the Medical Marijuana Daily Newsletter for guidance and to keep abreast of breaking developments. Who knew?
As I understand it, the licensing regime, at least in Massachusetts, requires applicants to set up a non-profit to operate the business. The facility must not only grow the weed, but also process it into consumable forms (dried leaves or buds, oils), bake and otherwise manufacture products containing the drug (brownies, cookies, lollipops, balms), and then sell the goods to customers with prescriptions. All of this has to be tracked "from seed to sale" according to stringent regulations.
Because trafficking in marijuana is frowned upon by the federales, much of the business has to be transacted in cash. Banks are very wary of doing business with drug sellers, whether tolerated by state authorities or not. And recent developments with Bitcoin suggest that this may be more of a hindrance than a help in that regard.
As we talked, I realized that the problem of creating one of these businesses required legal advice in many specialized areas. Can a for-profit company be set up to supply goods and services to the non-profit? What potential liability do members of the board of the nonprofit face? Is product liability insurance available? What are the zoning and land use implications of such an operation? How do you manage record-keeping in a business where those records might be used to prove a federal criminal violation? And how do you handle pesky neighbors who want free samples?
As the ethics solons correctly noted, lawyers may assist clients in understanding the law and complying with it, but cannot assist in conduct that is illegal. So what do I tell my friend? "You need to create a nonprofit, but you'd better buy your incorporation papers and operating documents from LegalZoom. I can't do that for you." Or, "You will be forced to do business in cash, but if you start bringing large amounts of folding money to a bank, a suspicious activity report will certainly be generated and the feds will soon be tracking you."
I understand that at a recent American Bar Association meeting someone proposed a resolution asking folks like Pat King, who is Connecticut chief disciplinary counsel, to refrain from enforcing the disciplinary rules with regard to lawyers assisting clients in the medical marijuana business. That was a non-starter for many reasons, not the least of which was that disciplinary folks should not be making drug policy decisions with their prosecutorial choices. Disciplinary prosecutorial decisions are not binding on courts. A judge might well disbar a lawyer even though disciplinary counsel declines to prosecute the case.
So what are lawyers to do when clients need help and there is money to be made in marijuana? Give them hints, but not advice? Put nothing in writing? Do it and worry about the consequences later? Wait for the law to change? We probably need a rule change to settle the matter, but even though there is a model in Washington state's ethics code, I have trouble imagining a group of superior court judges giving the green light to conduct that might violate federal law.
I posted the Connecticut ethics opinion on a legal listserv in response to a question related to how (and whether) lawyers should venture into this field. One wag said it reminded him of the old joke where the operator of a hot-air balloon dropped down near a farmer and asked where he was. After looking at the balloon and taking a drag on his pipe, the farmer replied, "You're in a balloon." Harsh but true. •