Green Means Go? Mitigating Professional Liability Exposure in the Cannabis Arena

Green Means Go? Mitigating Professional Liability Exposure in the Cannabis Arena

February 5, 2019 David Lipson

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Background

Twenty-two years have passed since California voters passed Proposition 215, permitting the medical use of cannabis in the state. Since then, twenty-nine more states have followed California’s lead,1 with nine of those states and the District of Columbia also authorizing recreational cannabis use.2 Legalization at the federal level seems inevitable, but predicting a timeline for meaningful, long-term congressional action has so far been a fool’s errand.

 

In the meantime, cannabis growers, dispensaries, and ancillary service providers (“cannabis clients”), along with the professionals who represent them, are captive to the whims of each successive White House administration. Under President Obama, this meant assurances that the federal government would not interfere with state cannabis regimes pursuant to the Cole Memorandum, issued by the U.S. Department of Justice. President Trump, on the other hand, has offered no such assurances, and U.S. Attorney General Jeff Sessions rescinded the Cole Memorandum in January 2018.

 

Ethical Duties

The primary ethical consideration for attorneys representing cannabis clients is American Bar Association (“ABA”) Model Rule 1.2(d), which prohibits attorneys from “counsel[ing] a client to engage, or assist[ing] a client, in conduct that the lawyer knows is criminal or fraudulent” but adds that “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.” This language has been incorporated into every state’s version of Rule 1.2 with only slight variations.

 

Cannabis is illegal under federal law, and in the wake of state legalization efforts state and local bar associations grappled with the conflict between Rule 1.2 and the cannabis industry’s need for legal services. With few exceptions, the majority of ethics opinions concluded that providing advice to cannabis clients is consistent with Rule 1.2 as long as the attorney also advises the client about related federal law and policy. Exactly what this disclosure might entail is discussed in the following section.

 

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