Ethics authorities in New York and Georgia recently issued opposing opinions on whether lawyers can represent clients in navigating what Justice Clarence Thomas last month called the “half-in, half-out regime” related to both recreational and medical marijuana, “a contradictory and unstable state of affairs” that “conceals traps for the unwary.” The issue, which we have commented on before here and here, is of course that cannabis remains illegal under federal law, while numerous states have liberalized their approaches to the drug.
Expanding counseling opportunities in NY
On July 8, 2021, following New York’s enactment of legislation legalizing recreational cannabis for adults, the New York State Bar Association gave attorneys the green light to counsel clients in the recreational marijuana industry. Similar to its prior opinions in 2014 and 2019 (post here) approving of attorneys counseling clients in the medical cannabis industry, the NYSBA focused on the federal government’s almost non-existent enforcement of marijuana laws in states that have legalized either medical or general adult-use marijuana.
Rule 1.2(d) of the New York Rules of Professional Conduct, like the analogous Model Rule, prohibits lawyers from assisting clients in illegal conduct. The NYSBA found that the federal enforcement policy created a “highly unusual and unique circumstance” and that the prohibition in Rule 1.2 was not intended to “preclude lawyers from counseling or assisting conduct that is legal under state law or to provide assistance that is necessary to implement state law and to effectuate current federal policy.”
The NYSBA further opined that lawyers may use state-legal marijuana and, so long as they otherwise comply with Rules 1.7 (conflicts) and 1.8(a) (business transactions with clients), they may accept equity ownership in a cannabis business as payment for legal services.
Not peachy in the Peach State?
The NYSBA’s opinion comes on the heels of the Supreme Court of Georgia taking the exact opposite position in its June 21, 2021 order denying a motion to amend Rule 1.2(d) of the Georgia Rules of Professional Conduct. The State Bar of Georgia had sought to amend Rule 1.2 to allow lawyers to assist clients in state-legal cannabis business, including the growth, manufacture, and sale of low-THC oil, which Georgia legalized in 2015.
In denying the motion, the Supreme Court of Georgia relied on the federal illegality of cannabis and held that passage of state laws permitting and regulating conduct that is still a federal crime does not change the long-standing prohibition against “counseling and assisting clients in the commission of criminal acts.” The court also noted that the requested amendment to Rule 1.2 would not necessarily be limited to state-legal low-THC oil, but “might well apply to a wide range of conduct constituting a crime under federal law that simply has no corollary state criminal sanctions,” perhaps hinting that it might leave the door open to a more-focused amendment.
Balancing act for lawyers
While Georgia’s position appears to be in the minority, the opposing opinions demonstrate the cannabis balancing act that state ethics authorities have tried to perform. While a few states, including Oklahoma, South Dakota, and Mississippi, have not allowed an exception to Rule 1.2 to enable attorneys to advise cannabis clients, others have taken positions similar to New York’s, either through advisory ethics opinions or formal amendments to their state ethics rules. For example, Alaska, Colorado, Hawaii, Pennsylvania, Ohio, Oregon and others have amended Rule 1.2 to allow attorneys to counsel clients in state-legal conduct, including state-legal marijuana business. (The International Cannabis Bar Association has a chart with an overview of jurisdictions and their approaches here.)
If you are considering counseling a cannabis client, you should be familiar with the relevant jurisdiction’s position on cannabis and Rule 1.2. Unsurprisingly, many commentators note that lawyers are simply ignoring ethics opinions that prohibit advising cannabis clients and some expect that will be the case in Georgia as well. That seems risky. While it is unclear whether lawyers have yet faced disciplinary consequences for violating state ethics rules related to cannabis clients or will in the future, this is a continually developing area that requires caution.