Lawyers who advise marijuana vendors warned over ethics
Colorado lawyers who help entrepreneurs sell or cultivate marijuana violate the rules of ethics, according to a Colorado Bar Association committee.
The non-binding opinion could place lawyers who helped medical or retail marijuana vendors set up business at risk of disciplinary action by the state’s attorney regulation office.
It could also discourage lawyers from advising law-abiding businesses that need help understanding what they can and cannot do under Colorado’s complicated marijuana laws, said two Front Range attorneys who specialize in marijuana law.
Lawyers who violate ethical rules can be temporarily suspended from the practice of law or have their license permanently revoked depending on the severity of the breach, but the likelihood of disciplinary action for counseling a marijuana businesses is small, the attorneys said.
The opinion published in the December 2013 edition of “The Colorado Lawyer” is really intended to provoke action by the Supreme Court Rules of Professional Conduct Standing Committee.
Citing T.S. Eliot’s “The Hollow Men,” the committee said that between the bright lines of ethical and unethical conduct, there was a range of activity where application of the rules to counseling marijuana businesses was unclear.
“Between the conception/And the creation/Between the emotion/And the response/Falls the Shadow,” the committee wrote.
“We need a rule,” Boulder attorney Jeff Gard said.
“What they’re looking for from the Colorado Supreme Court Standing Committee ... is a new provision that permits lawyers to provide legal services and advice on marijuana-related conduct ... based on public policy arguments ... that there’s nowhere else for law-abiding people to turn to understand the rules,” Gard said.
“It is unethical for a lawyer to counsel a client to engage, or assist a client, in conduct that violates federal law,” the bar association committee said.
Because federal law makes it a crime to cultivate, sell, distribute or use marijuana for just about any reason, a wide range of conduct otherwise allowed violates the Colorado Rules of Professional Conduct, the committee said.
The opinion applies to all types of marijuana, whether it is sold for medical or recreational purposes.
For example, a lawyer cannot ethically draft or negotiate contracts for the purchase or sale of marijuana. The same goes for leases on buildings or land used to process or grow the weed.
Like lawyers who specialize in criminal law, attorneys can advise a client about past conduct. But advice about future conduct — like when tax preparation for a marijuana retailer becomes tax planning — violates the rules, the committee said.
The opinion by the state bar association ethics committee took effect in October. It is not binding on the Colorado Supreme Court or other officials involved in disciplining lawyers but “does not provide protection against disciplinary actions.”
Denver attorney Brian Vincente, who helped write Amendment 64, the state’s retail marijuana law, said the Colorado Bar Association’s opinion would probably have a “chilling effect” on lawyers.
Some may decide not to take on business clients who want to comply with state marijuana laws because of the risk of attorney discipline, Vincente said.
However, Colorado’s attorney regulation officials have not expressed any intention to pursue disciplinary action against lawyers who practice in this area, he said.
The bar association opinion relies on the federal Controlled Substances Act, which outlaws marijuana use and distribution, Gard said, but that is only a segment of the many federal laws that should be considered.
“Federal law requires a much more complicated analysis than simply citing the Controlled Substances Act,” Gard said.
The U.S. income tax code, for example, allows marijuana businesses to file income tax on the revenue they generate, he said.
More to the point, two memos published by the U.S. Attorney General’s Office make clear the federal government’s enforcement priorities when it comes to marijuana law in states that legalize its use and distribution.
“Think about the recent raids in Colorado,” Gard said. “The federal government has made it very clear that legal actors will be left alone and illegal actors will be prosecuted.”
“This isn’t just an idle threat. They’ve done it. They’re doing it. They destroyed $1 million worth of marijuana and they’re rounding up everybody involved in that case because they violated state law,” he said.
The raids were on businesses allegedly involved in interstate marijuana trafficking, illegally employing foreign nationals and violating gun laws, he said.
The U.S. attorney general already declared businesses that follow state law will not be subject to such raids. For that reason, law-abiding businesses need a lawyer’s guidance to make sure they avoid violating the law, Gard said.
“Law-abiding people can go nowhere else to learn the ever changing and constantly multiplying rules by which they must behave,” the committee wrote, citing a 1947 U.S. Supreme Court decision.