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Lawyers With Cannabis Clients Face Ethical Challenges, Panel Says

Sara E. Payne, of Barclay Damon and Robert Volynsky of Sichenzia Ross Ference speak at Tuesday's session titled "Disclaimers: Ethical Considerations Assisting as a New York Attorney" as part of Hot Topics in Cannabis Law 2019: What Lawyers Need to Know at the New York State Bar Association conference at the New York Hilton. (Photo: David Handschuh/NYLJ)

As marijuana continues to be subject to a patchwork of laws in the United States, lawyers with clients in the cannabis industry must walk a fine line when weighing ethical considerations, attorneys from the New York State Bar Association’s cannabis law committee explained on Tuesday at a panel discussion.

The panelists were discussing ethical issues that may arise for cannabis counsel while, at the same time, Gov. Andrew Cuomo announced during his State of the State address his proposal to legalize recreational marijuana for adult use.

Sara Payne of Barclay Damon in Syracuse, who serves on the committee, said the committee is not aware of any cases in which an attorney was hit for ethics violations simply because they have clients in the cannabis industry, but said that representing clients in the industry could become an ethical issue for attorneys who take part in unrelated illicit activity.

“If you’re trafficking cocaine on the side and you’re driving drunk while representing cannabis clients, you can bet when the DA is charging you he’s going to throw that in to your ethics folks,” Payne said.

Medical marijuana is legal in 32 states, Washington, D.C., Guam and Puerto Rico. It is also legal for recreational use by adults in 10 states and D.C. The legal pot industry raked in $10 billion in 2017, according to Payne’s presentation.

But even in states with legal pot, attorneys should still advise cannabis clients that it is still outlawed at the federal level, Payne said.

Attorney ethics watchdogs in states across the U.S. have adopted three general positions as to how lawyers should approach potential clients in the cannabis industry: don’t do it at all, advise clients in a limited capacity or, like New York, “advise and assist.”

In states where attorneys have been advised to take the third approach, lawyers may assist cannabis clients in following the law but are not allowed to break the laws themselves.

But Payne said that where attorneys could cross the line is offering up business advice such as working on negotiations or business strategy, an undertaking that she said would be considered drug trafficking.

Attorneys should include disclosures in their engagement letters with cannabis clients to remind them of the federal prohibition and inform them that they might not have full attorney-client privilege, they are subject to getting raided by law enforcement and their attorneys may have to testify against them.

Advice about the current state of the law should be conveyed not only to “plant-touching” clients such as cannabis manufacturers and distributors, but also to ancillary parties such as bankers and landlords. Investors in the cannabis industry, for instance, should be warned that they could lose their money.

In 2014, after New York passed its medical marijuana law, the State Bar issued an ethics opinion that is tied to the medical marijuana regime, stating that attorneys can advise clients on medical marijuana laws and emphasizing that it’s still illegal on the federal level.

The State Bar’s cannabis law committee is developing a new ethics opinion that would be based on legalized marijuana in New York.

“It’s going to create a lot more problems than it will solve if we don’t have an updated ethics opinion,” said Robert Volynsky of Sichenzia Ross Ference, who also took part in the panel.

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