With legalization, lawyers turn to business of pot

AP News
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Posted: Apr 25, 2015 11:04 AM
With legalization, lawyers turn to business of pot

SAN FRANCISCO (AP) — Lawyers and pot dealers have long intersected in criminal court, but as marijuana goes mainstream, attorneys have been working to keep sellers and growers legit.

Marijuana divisions are popping up at law firms to advise pot shops on where they can locate, what their websites can say and how to vet new clients.

"It's definitely something that established firms are dipping a toe into, though they are being very cautious, and rightly so," said Sam Kamin, a professor at the University of Denver Sturm College of Law who teaches a class about representing the marijuana industry.

Kamin said the firms see marijuana as a lucrative new industry, but still worry about the potential ethical and legal pitfalls — and how it will affect their reputations.

Marijuana has become a multi-billion-dollar industry. California and more than 20 other states have legalized the drug for medical use, and the pot business has gotten a boost from more recent approvals of recreational use in Alaska, Colorado, Oregon, Washington state and Washington, D.C. Pot advocates hope growth continues, as they push for voters to approve recreational pot in California, Arizona, Nevada, Maine and Massachusetts next year.

The drug remains illegal under federal law, however, and the American Bar Association's rules of professional conduct prohibit lawyers from assisting in criminal conduct.

With this in mind, attorneys say they focus on providing advice about what state marijuana laws do and don't allow, and decline to answer questions about how clients can bend the rules.

"We're not your consigliere. We're not an organized crime family," said Khurshid Khoja, a legalization advocate and founder of San Francisco-based Greenbridge Corporate Counsel. "We're legitimate business people."

Khoja's firm is among a new crop dedicated solely to marijuana clients, including packaging companies and investors.

But for law firms with other practice areas, there is also concern about how non-pot clients will view their marijuana work.

At the Seattle, Washington-based law firm of Harris Moure, the marijuana practice group has a completely separate brand — Canna Law Group — with its own website.

"It was a calculated defense mechanism against the potential legal and reputational concerns," said Hilary Bricken, who heads up the group and boasts a unique accolade on her website — DOPE Magazine's attorney of the year.

Bricken started the practice group in 2010 and now brings in roughly $1 million of revenue to the firm each year, she said.

Marijuana law, in many ways, is no different from other legal practices, attorneys say. It involves contracts, real estate transactions, trademarks and regulatory compliance. What is unique, though, is the constant prospect of running afoul of the law.

"Everybody's question can be summarized like this: How can I engage in this type of activity without going to prison," said Aaron Lachant, an attorney at the Los Angeles-based law firm of Nelson Hardiman.

The legal issues that come up also often have little or no precedent, said Dan Garfield, an attorney at Foster Graham Milstein & Calisher in Denver, Colorado.

Garfield, whose firm got into the marijuana field several years ago, was recently working on an appeal of a federal court's ruling that a couple did not qualify for bankruptcy protection because their assets largely stemmed from marijuana enterprises.

"Lawyers don't like to say, 'I don't know,'" Garfield said, but for marijuana clients, he's says it far more often than for others.

For marijuana entrepreneurs, legal guidance can bring peace of mind.

Shy Sadis, 42, who has medical and recreational marijuana stores throughout Washington state, said Bricken has helped him trademark "The Joint," one of his store names, locate properties that would comply with the state's recreational marijuana rules and create forms that new patients must fill out.

"I haven't been shut down. I'm not in tax trouble," he said. "She's shown me the right way to run these businesses, so I don't get into trouble."