Jul. 25, 2019
Bar offers opinions on ethically advising cannabis clients
The California State Bar Ethics Committee recently joined the discussion regarding legal services to cannabis clients in a proposed new opinion.
Ever since California officially rolled out the green carpet by legalizing recreational marijuana, enterprising green collar capitalists have stepped up to meet the demand. As with business people in any industry, they need legal advice. Many lawyers, enterprising businesspeople themselves, are happy to oblige. But legally, can they?
California may have gone green, but federal law has not. Marijuana is still illegal as a Schedule 1 substance under the Controlled Substances Act (21 U.S.C. Section 841(a)(1)), meaning that the Food and Drug Administration have determined it possesses no medical use.
Accordingly, sworn to obey and uphold the law, can lawyers counsel clients to violate federal law?
Or is there a way they can ethically both recognize and respect the contradiction between state and federal law regarding cannabis, and advise clients to do the same?
California Green Lights Legal Advice
Although some jurisdictions have reached contrary results, in terms of providing legal advice and assistance to marijuana business clients, California ethics committees have tuned on the green light
The Los Angeles County Bar Association Professional Responsibility and Ethics Committee in Opinion No. 527 concluded that lawyers may advise and assist clients with respect to complying with California's marijuana laws as long as they do not advise or assist client to violate federal law.
The Bar Association of San Francisco in Opinion 2015-1 concluded that a lawyer may ethically represent a client in connection with forming and operating a marijuana dispensary and related matters, because such activity is legal under California law, even though it is in violation of federal law.
The California State Bar Ethics Committee recently joined the discussion in a proposed new opinion.
The State Bar of California Standing Committee on Professional Responsibility and Conduct Formal Opinion No. 17-0001, currently out for public comment, poses the question of whether a lawyer may render assistance and advice to a client regarding behavior permitted under California´s cannabis laws, even though such conduct might violate federal law. If adopted, it will be the first opinion to analyze this question under the new California rules of professional conduct, adopted Nov. 1, 2018.
The proposed opinion concludes that lawyers may ethically advise clients regarding compliance with cannabis laws in California, and may assist in such conduct as is permitted under state law, despite the fact that it may violate federal law.
Regarding the scope of advice and assistance, the proposed opinion states that such advice and assistance "may include the provision of legal services to the client that facilitate the operation of a business that is lawful under California law." The examples they give are "incorporation of a business, tax advice, employment advice, contractual arrangements and other actions necessary to the lawful operation of the business under California law."
The proposed opinion is clear, however, about the lawyer´s role regarding advising a client about federal law. It states, "a lawyer may not advise a client to violate federal law or provide advice or assistance in violating state or federal law in a way that avoids detection or prosecution of such violations." The opinion also advises lawyers to inform their clients about the conflict between federal and state law regarding cannabis, as well as potential penalties and criminal liability that might be associated with a violation of federal law.
In addition, the proposed opinion covers the practical reality of how the legal quandary surrounding marijuana use in California might impact the lawyer-client relationship. It advises that when such discussion is appropriate, the lawyer must advise the client of any potential impact upon the attorney-client privilege that could potentially result from the fact that the client's conduct, although permissible under state law, may be federally prohibited.
Incorporation of Legal Ethics Rules and Statutes
Proposed Formal Opinion No. 17-0001, which analyzes a fact pattern about representing a client interested in doing business growing, distributing, and/or selling marijuana in California, incorporates discussion of multiple ethics rules. One of the main rules implicated by the fact pattern is advising or assisting the violation of law, addressed in Rule 1.2.1, which provides as follows:
(a) A lawyer shall not counsel a client to engage, or assist a client in conduct that the lawyer knows is criminal, fraudulent, or a violation of any law, rule, or ruling of a tribunal.
(b) Notwithstanding paragraph (a), a lawyer may: (1) discuss the legal consequences of any proposed course of conduct with a client; and (2) counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of a law, rule or ruling of a tribunal.
The proposed opinion notes that rule 1.2.1 Comment  specifically addresses conflicts between state and federal law, stating in pertinent part: "Paragraph (b) permits a lawyer to advise a client regarding the validity, scope, and meaning of California laws that might conflict with federal or tribal law."
The proposed opinion discusses other rules as well, including competence (1.1), client communication (1.4), confidentiality (1.6), conflict of interest (1.7), and misconduct (8.4), among others, and also analyzes the fact pattern under Business and Professions Code sections 6068(a), which states that it the duty of an attorney "to support the Constitution and laws of the United States and of this state," and 6106, discussing the penalties associated with "the commission of any act involving moral turpitude, dishonesty or corruption."
Opinion 17-0001 represents the latest effort to assist California attorneys navigate the still hazy landscape of permissible client assistance in the area of cannabis practice in one of the most recent states gone green.