The Legal Ethics Of Advising The Cannabis Client

As the federal government continues to treat marijuana as a Schedule 1 controlled substance, attorneys across the nation face ethical concerns in providing professional services to cannabis-related businesses in the 29 states where marijuana has been legalized in some form.

Federal law makes it a crime for any person to knowingly or intentionally manufacture, distribute or dispense a controlled substance. (Controlled Substances Act, 21 U.S.C. § 831(a).). Federal law also makes illegal certain financial transactions connected to unlawful activity, including transferring monetary instruments or funds with the intent to promote the carrying on of specified unlawful activity, including the manufacture, importation, sale or distribution of a controlled substance. (Money Laundering Control Act of 1986, 18 U.S.C. §§ 1956, 1957.) Nevertheless, since 1996, more than half the states, the District of Columbia, Guam and Puerto Rico now allow comprehensive public medical marijuana and/or recreational marijuana programs, and marijuana has become the fastest-growing industry in the United States.

With this confusing mix of federal prohibition and state legalization in the absence of federal enforcement, providing legal services to cannabis industry−related clients has become a source of ethical concern for lawyers. There are two main categories of potential clients: (1) businesses that directly manufacture, distribute or sell marijuana in compliance with state law ("plant-touching" clients) and (2) third parties who help these businesses operate or refer customers to them, including doctors, bankers, investors, lawyers, landlords, real estate brokers, accountants and ancillary service providers ("ancillary" clients).

Providing legal services to both plant-touching and ancillary clients has become permissible under many state laws and ethical opinions, but could still be considered a violation of federal law. Most states do not prohibit attorneys from advising clients on the content and interpretation of state marijuana laws, but others restrict the scope of such legal assistance through ethical rules.

Many state bar associations have addressed this issue through Rule 1.2(d) of the Model Rules of Professional Conduct, which holds:

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...

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