Marijuana is now legal under state law in Colorado, Washington, Alaska, Washington D.C., and, most recently, Oregon. It is also legal for medical use in 23 other states. Businesses that enter the emerging marijuana market stand to make large profits if they produce a good product. The Huffington Post reported in January that estimates say the US market for legal cannabis grew from $1.5 billion in 2013 to $2.7 billion in 2014, a 75% increase. However, participants in this so-called “green rush” also face a confusing legal landscape that involves myriad potential difficulties.
Marijuana has created a rift in the legal field because it is still illegal under federal law. In certain states, it is difficult for marijuana businesses to receive comprehensive legal advice out of concern that lawyers will further illegal activities. The American Bar Association has expressed ambivalence about the legal profession’s involvement in cannabis as well. However, where marijuana law is practiced, lawyers are beginning to tackle complex legal issues.
What is the National Cannabis Bar Association?
In some cannabis-friendly states, the legal profession is embracing marijuana law. As attorneys begin to delve into this area of law, they need to be able to share ideas and to stay up to date with the latest legal advances. Enter the National Cannabis Bar Association, or NCBA, which was founded earlier this year. The simple goal of the NCBA is to “educate and connect with other cannabis industry lawyers for the purpose of providing excellent, ethical, and advanced legal assistance to this growing industry.”
The NCBA Board is comprised of a number of firm-based lawyers and solo practitioners who have already embarked on the complex endeavor of representing clients in the marijuana industry. The Executive Director, Shabnam Malek, is a partner in a boutique marijuana law firm, Brand & Branch LLP. She is a specialist in trademark law, a true area of concern for marijuana businesses now. According to her biography, she “also represents clients in disputes, develops worldwide expansion strategies, and negotiates and drafts agreements, including settlement agreements, co-existence agreements, trademark license agreements, and interstate license agreements.” Ms. Malek is the type of lawyer that the marijuana industry may need in 2015— someone with an understanding of several different areas of law, many related to the issues that all modern businesses face.
What are the Legal Needs of the Marijuana Industry?
Meeting a broad demand for a product requires marijuana businesses to seek the same kind of legal advice that any good business would need. In the current climate, the marijuana industry faces new concerns involving corporate, contract, and employment law. As lawyers like Shabnam Malek know, cannabis-related businesses also face intellectual property issues. For instance, a new cannabis cultivar may be patented if it meets certain criteria. And, with the market as lucrative as it is, holding on to a prize variety of marijuana could mean a big difference to a business.
The conflict with federal law also creates certain unique pitfalls in the industry. For example, marijuana businesses have difficulty moving funds through federally regulated banks. Under 2014 federal guidance, banks can now do some transactions with these businesses. However, the banks must still file special reports that show that each marijuana business is following certain procedures. In another example of federal difficulties, businesses may not be able to register certain federal trademarks, based on language in the law that forbids trademarking certain “immoral” or “scandalous” products. This does not mean that nothing is ever trademarked; but this area requires savvy legal advice.
State laws may also create specific obstacles for marijuana businesses. Legalization of marijuana does not always translate into a statewide acceptance of the drug. Local rules and ordinances may place many prohibitions on the distribution of marijuana and other aspects of business. Taxes are often a key rationale for legalization, and so marijuana businesses must comply with specialized state tax schemes designed for their industry. Finally, states that legalized marijuana are in a sense conducting an experiment: the rules are often still evolving and rapidly changing as policymakers grapple with how to implement new laws.
The NCBA will be a welcome voice in dealing with many of the ins and outs of legalized marijuana. The association can help to create best practices for lawyers and policymakers, meeting the goal of ethical and up-to-date understanding of the field. The NCBA will also help businesses conform to the law and ultimately realize the goal of a profitable and well-regulated marijuana industry.