Authored By: Joshua Horn of  Fox Rothschild

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High Times For Lawyers: Cannabis Law and the  Rules of Professional Conduct

As the laws in over half of the states and the District of Columbia have changed to allow for the sale of some form of cannabis (either for medical or adult-use purposes), lawyers have frequently been confronted with a conundrum in the form of the rules of professional conduct that govern the ethical conduct of lawyers. Lawyers who wanted to practice in the space (and businesses who need their assistance) were faced with the dilemma of providing legal advice for conduct that is legal in your state, but not on a federal level. Does this mean that a business looking to get into this space is going to be without counsel?

Before addressing the answer, it is important to understand the issue.

First, the federal Controlled Substances Act (21 U.S.C. § 811, et seq.) provides that cannabis is a Schedule 1 drug. This means – from a federal standpoint – that it is unlawful to “manufacture, distribute, dispense, or possess a controlled substance.”

Second, many states followed some form of the Model Rule of Professional Conduct to govern legal ethics. Of specific import for cannabis law is Rule 1.2(d), which provides: “A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.”

Some states’ legal professional conduct regulators, like Ohio, interpreted their state-law equivalent of Rule 1.2(d) as barring lawyers from providing legal advice in this space because, to do so would run afoul of federal law regardless of whether the state has made the sale of cannabis legal within its borders.

Maine took a less restrictive approach, by prohibiting a lawyer from counseling or assisting a client in the conduct itself; instead, a Maine lawyer can provide advice about making a “good faith” assessment to ascertain the “validity, scope, meaning or application of the law.”  Other states took a different approach.

Some states, like Colorado and Washington, added a comment to their versions of Rule 1.2 to allow lawyers to practice in this space. Others, like Arizona, Connecticut and Hawaii, amended their versions of Rule 1.2 to specifically allow for the provision of legal services relating to a business that is legal within the state.

Pennsylvania has become the latest state to reassess its Rules of Professional Conduct.  Joint Formal Opinion of the Pennsylvania Bar Association Legal Ethics and professional Responsibility Committee and the Philadelphia Bar Association Professional Guidance Committee 2015-100 (Oct. 2015), while not barring the provision of legal advice, called the provision of it into question unless and until the Pennsylvania Rules of Professional Conduct were modified accordingly.  The opinion focused on the conflict between state and federal law associated with the legalization of medical cannabis.

To address this inherent conflict between state and federal law, on October, 26, 2016, Pennsylvania became the latest states to modify its rules governing lawyers to accommodate this burgeoning area of the law. In doing so, the Pennsylvania Supreme Court analyzed what other states had done to remedy this dilemma. After completing its analysis, Pennsylvania adopted the latter approach.

Under Pennsylvania’s new Rule 1.2(e), a “lawyer may counsel or assist a client regarding conduct expressly permitted by Pennsylvania law, provided that the lawyer counsel the client about the legal consequences, under other applicable law, of the client’s proposed course of conduct.”

So what does this all mean?

In its simplest form, the restraints on Pennsylvania lawyers have been lifted to practice in the cannabis legal market on one important condition. Any advice that you provide must include an admonishment to your client that what they want to do is otherwise unlawful under federal law, including the consequences of violating that federal law.

Will this admonishment persuade clients not to enter this space; unlikely. What it will do, however, is provide your clients with full disclosure; a concept generally advanced by the Rules of Professional Conduct in every state. At the same time, these type of changes to the rules across the country foster individuals and businesses access to legal services that they may not otherwise be permitted to get. After all, the leadership of the states (and District of Columbia) who permit the sale of some form of cannabis would rather have cannabis businesses follow and conform to the applicable laws; is there any job not better suited for a lawyer.

If you have any questions about this article, please contact Joshua Horn atjhorn@foxrothschild.com or 215.299.2184 or any of the members of Fox Rothschild’s Cannabis Law practice group.