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New Comment Gives Colorado Lawyers Green Light to Counsel Marijuana Industry

Thursday, April 10, 2014

By Samson Habte  

April 8 --A March 24 order from the Colorado Supreme Court makes that state the first U.S. jurisdiction to recognize in its lawyer conduct rules that attorneys may advise clients on now-decriminalized marijuana-related activities and transactions.

The order, which adds a new comment elucidating Colorado Rule of Professional Conduct 1.2, aims to resolve an ethics pickle that lawyers in a handful of jurisdictions have found themselves in since the enactment of new state laws that authorize recreational or medical cannabis use at the state level.

The dilemma--in Colorado and elsewhere--stems from state versions of Model Rule of Professional Conduct 1.2(d), which prohibits assisting or advising clients to engage in criminal conduct.

Because the sale and use of marijuana remain illegal under federal law, it is unclear whether attorneys violate Rule 1.2(d) if they counsel pot industry clients in states that now authorize recreational or medicinal use of marijuana.

Such clients include dispensaries that sell the drug, growers that cultivate it, doctors and pharmacies that write and fill prescriptions for it and municipal officials working on zoning and licensing issues.

The Colorado court's solution was to add a new Comment [14] to Rule 1.2. It states in part that a lawyer may “assist a client in conduct that the lawyer reasonably believes is permitted” under state law but must “also advise the client regarding related federal law and policy.”


Ethics and Marijuana: Debates in Nevada and Washington

While Colorado is the first jurisdiction to address the intersection of marijuana and attorney ethics in its lawyer conduct rules, courts in two other states have been asked to weigh in on the issue.

The debate in Washington state--which also liberalized its recreational marijuana laws this year--largely mirrors the one in Colorado. Deliberations were triggered there when the King County Bar Association asked the state supreme court to adopt rule changes to insulate attorneys from professional discipline for their legal advice to marijuana industry clients or for personal use of marijuana.

The Washington State Bar Association opposes the county bar's proposal. In an October 2013 letter, WSBA Chief Disciplinary Counsel Doug Ende said the requested changes were unnecessary because his office “does not intend to discipline lawyers who in good faith advise or assist clients or personally engage in conduct that is in strict compliance” with state law.

Meanwhile, the Nevada Supreme Court is considering a proposal to amend that state's Rule 1.2(d) to clarify lawyers' ability to advise clients on compliance with a recently enacted statute that authorizes medical marijuana.

Nevada Bar Association President Alan J. Lefebvre, a partner at Kolesar & Leatham, Las Vegas, told Bloomberg BNA that the court will hear arguments on the proposal May 6.


High(er) Hopes

The order did not go as far as some advocates had hoped.

The court's rules committee, the state bar and most responders who submitted public comments had urged the court to adopt a broader proposal that would have added an entirely new provision, Rule 8.6, to the state's lawyer conduct rules. See 29 Law. Man. Prof. Conduct 808.

The proposed rule would have insulated attorneys from discipline for personal cannabis use as well as legal advice on marijuana-related activities.

But the court avoided entirely the issue of whether lawyers may be disciplined for ingesting marijuana. And it chose to address the legal advice issue through a comment, rather than a rule.

Two members of the court, Justices Nathan B. Coats and Allison H. Eid, voted not to approve the new provision.

Even with the addition of Comment [14], questions may remain about how much clarity it provides to lawyers who have or may acquire marijuana industry clients.

Writing on the Legal Ethics Forum blog, Suffolk University law professor Andrew M. Perlman said “Colorado lawyers concerned about advising the pot industry can rest a little easier.”

Safe Harbor?

The new comment to Rule 1.2 states that lawyers in Colorado can work with marijuana businesses whose activities violate federal law--so long as they “advise the client[s] regarding related federal law and policy.” In his blog post, Perlman asked:

[W]hat exactly does it mean for a Colorado lawyer to “advise the client regarding related federal law and policy”? How much advising does the Colorado lawyer need to do in order to fit within the safe harbor? Is it sufficient for the lawyer to advise the client about federal law and policy once at the outset of the relationship? Does the lawyer have to do it in the context of each new matter? And are there any limits on what the advice can be? For example, what if the lawyer says, “Well, federal law says you can't sell pot, but Colorado law says you can. I think you can safely ignore federal law, because it is unlikely to be enforced in this instance.” Can a lawyer say that? I think the answer is yes, but I'm not entirely certain that the Colorado Supreme Court would agree.  

 

Good Enough

Phil Cherner, who counsels marijuana industry clients at the Denver office of Vicente Sederberg LLC, says he is less concerned about the perceived inadequacy of the safe harbor. Cherner told Bloomberg BNA that while he “would have preferred to see a rule rather than a comment,” he is confident that the new comment sufficiently insulates lawyers in his practice area.

Cherner said lawyers also should take comfort in assurances from the Office of Attorney Regulation Counsel that it will not initiate disciplinary charges against lawyers who advise clients about activities that comply with state law but remain subject to federal prosecution.

Regulation Counsel James C. Coyle, who heads the OARC, repeated those assurances in comments to Bloomberg BNA. Coyle said March 27 that his office will not pursue disciplinary charges against lawyers who advise marijuana industry clients--so long as those lawyers comply with the new edict in Comment [14] to discuss the federal implications of their clients' activities during consultations.

Coyle also suggested a risk management tip: lawyers for marijuana industry players, he said, would be wise to add language to their retainer agreements stating that those clients have been advised about the federal law implications of their business activities.

Lawyers' Personal Use

The supreme court declined to adopt a proposed comment stipulating that attorneys' personal use of marijuana does not constitute a “criminal act that reflects adversely on a lawyer's honesty, trustworthiness or fitness” under Rule 8.4(b). The state bar examined one aspect of this topic in Colorado Ethics Op. 124 (2012), which addresses lawyers' use of marijuana for medicinal purposes.

In a February 2014 letter, Coyle sought to assuage anxieties on this issue. “Colorado attorneys,” he wrote, “already have sufficient assurance that should they engage in medical or personal use of small amounts of marijuana in compliance with state laws, such conduct standing alone will not result in discipline proceedings.”

Coyle reiterated that promise in his interview with Bloomberg BNA. He called recreational pot smoking “a lawyer's personal decision,” and said the OARC has “no interest in getting that far into [lawyers'] personal lives, unless or until [marijuana use] raises a competence or diligence issue.”

To contact the reporter on this story: Samson Habte in Washington at shabte@bna.com

To contact the editor responsible for this story: Kirk Swanson at kswanson@bna.com


Full text at http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Rule_Changes/2014/2014(05)%20redlined.pdf.

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

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