Ohio Supreme Court formally adopts Amendment to Rule 1.2, clarifying that Ohio lawyers can advise medical marijuana companies

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Bringing the uproar surrounding attorney representation of Ohio medical marijuana clients largely to an end, on September 20th the Ohio Supreme Court formally adopted an amendment to Prof.Cond.R. 1.2(d). The new Rule 1.d(d) reads:

(d)(1) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is illegal or fraudulent. A lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client in making a good faith effort to determine the validity, scope, meaning, or application of the law.

(2) A lawyer may counsel or assist a client regarding conduct expressly permitted under Sub. H.B. 523 of the 131st General Assembly authorizing the use of marijuana for medical purposes and any state statutes, rules, orders, or other provisions implementing the act. In these circumstances, the lawyer shall advise the client regarding related federal law.

As amended, this rule change would resolve the concerns of many lawyers (including our firm) regarding the representation of clients in the medical marijuana industry. As previously noted here, however, new subsection (d)(2) differs from language used in other states in that it only authorizes attorney assistance with conduct “expressly permitted” under H.B. 523, while also advising about the consequences of federal prohibition. Other states, such as Alaska, clarify that an attorney may assist clients in conduct the lawyer “reasonably believes” is permitted under state law. This important distinction means that Alaska recognize that an attorney’s role is often to make a good faith determination regarding what is (or is not) authorized under existing law.

In Ohio, it is conceivable that a client may ask something like, “The law isn’t clear on whether my proposed conduct is allowable. Research whether it is permitted, and if so, advise me regarding how I can engage in it.” If the lawyer concludes  that the conduct is permitted, but is wrong, the lawyer could (in theory) be subject to discipline because the Rule only authorizes conduct “expressly permitted” — there does not appear to be an allowance for reasonable mistakes as to the scope of the law.

In addition, this change does not address whether the Rules authorize an attorney to use medical marijuana or whether an attorney may own and/or operate a medical marijuana establishment. Those issues continue to be addressed only by the August advisory opinion.

All things in consideration, Ohio lawyers and the Ohio medical marijuana community in general are in a better position than they were a few weeks ago. The Ohio Supreme Court moved astonishingly fast to address this issue, and for that they should be commended. Let’s hope the Department of Commerce and State Board of Pharmacy act as quickly as they draft the industry rules over the coming months.

Read more on this topic on Cleveland.com by clicking here. 

Attorney Ethics and Legal Marijuana: Ohio Supreme Court Proposes Partial Fix

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We’ve covered the ethical issues associated with legal marijuana on this blog previously, including the August 2016 advisory opinion issued by the Board of Professional Conduct. Today, the Ohio Supreme Court proposed a rule change to Rule 1.2 that would allow attorneys to represent medical marijuana clients regarding conduct “expressly permitted” under H.B. 523.

The August advisory opinion held that Rule 1.2(d) barred attorneys from offering traditional legal services to medical marijuana clients. The opinion also left open the possibility that an Ohio lawyer’s use of medical marijuana and ownership interest in a medical marijuana business could lead to discipline under Rules 8.4(b) or 8.4(h).

The proposal offered today by the Ohio Supreme Court only addresses the first issue: lawyer representation of marijuana businesses under Rule 1.2. As proposed, Rule 1.2 is separated into two subsections, with a new subsection (2) reading:

(2) A lawyer may counsel or assist a client regarding conduct expressly permitted under Sub.H.B. 523 of the 131st General Assembly authorizing the use of marijuana for medical purposes and any state statutes, rules, orders, or other provisions implementing the act. In these circumstances, the lawyer shall also advise the client regarding related federal law.

This language is notably more limited than language used in other states. In Alaska, for instance, the state adopted a new Rule 1.2 (f) that allowed lawyers to advise regarding conduct the lawyer “reasonably believes” is authorized by Alaska’s marijuana laws. The rule proposed by the Ohio Supreme Court, however, specifies that a lawyer’s advice must relate to conduct “expressly permitted” under H.B. 523.

In addition, the Supreme Court has not amended Rule 8.4 in any way — which continues to leave open the possibility that a lawyer’s use of medical marijuana could lead to discipline. This is still a big problem.

The Court will accept comments on this proposal through September 18, 2016. Comments may be forwarded either by mail or email to:

John VanNorman, Senior Policy and Research Counsel
Ohio Supreme Court
65 S. Front St., Seventh Floor
Columbus, OH 43215
or
John.VanNorman@sc.ohio.gov

At the end of the day, there is no question that proposed Rule 1.2(d)(2) represents real progress when it comes to attorney involvement in the Ohio medical marijuana industry. While the language may need tweaked, even as written it allows an attorney to represent a medical marijuana business with the traditional legal services the Board deemed prohibited in the August advisory opinion. Plus, kudos to the Court for acting so quickly.

You can view the full proposal from the Ohio Supreme Court by clicking here.

Attorney Ethics and Legal Marijuana: Amendments Proposed to Rules 1.2 and 8.4

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The recent advisory opinion issued by the Ohio Supreme Court Board of Professional Conduct has led to a myriad of concerns among lawyers and others in Ohio’s medical marijuana community. Thankfully, the Chief Justice of the Ohio Supreme Court is aware and the Court is moving to address these concerns:

“Although non-binding, the Court is aware that the advisory opinion has led some lawyers to question whether they can assist clients in complying with the new law,” Chief Justice Maureen O’Connor said. “The Court hopes to act expeditiously in addressing their concerns and, if necessary, amend ethics rules to clarify the role of attorneys in light of the new law.” She noted that attorneys in other states have faced similar ethics challenges.

The Court will consider the proposed amendments to the Rules of Professional Conduct later this month and, if approved, publish the rules for public comment. “Again, the Court intends to act as swiftly as possible,” Chief Justice O’Connor said. “However, we do not want to rush the process to the point of creating additional problems,” the Chief Justice concluded.

On August 17, our law firm submitted proposed changes to the Board of Professional Conduct as outlined below. These proposals, if accepted, would open legal services to the medical marijuana industry and further specify that lawyers may use medical marijuana as long as that use does not adversely affect the lawyer’s practice and client representation, and also that lawyers may own or operate a medical marijuana business.

We proposed that the Ohio Supreme Court should adopt a new Rule 1.2(f) that uses language similar to that used in Alaska:

(f) Notwithstanding division (d) of this rule, a lawyer may counsel and advise a client regarding Ohio’s marijuana laws, and may assist the client to engage in conduct that the lawyer reasonably believes is authorized by those laws. If Ohio law conflicts with federal law, the lawyer shall also advise the client regarding related federal law and policy.

This amendment would clarify that Ohio lawyers can advise and assist clients under Ohio’s medical marijuana laws, as long as the lawyer also advises regarding federal law and any consequences of conflicts between state and federal policy. We also proposed adopting a new comment to Rule 1.2, explicitly identifying that lawyers can ethically provide services that are prohibited by Advisory Opinion 2016-6.

As it relates to an attorney’s use of medical marijuana and ownership in a medical marijuana business, we proposed adding a new comment to Rule 8.4 that provides:

[6] Divisions (b) and (h) of this Rule do not prohibit a lawyer from engaging in conduct that the lawyer reasonably believes is authorized by Ohio’s marijuana laws, including R.C. 3796, et seq. and all administrative regulations promulgated pursuant to Ohio’s medical marijuana control program.

Therefore, an Ohio lawyer may use medical marijuana in a method the lawyer reasonably believes is authorized under Ohio law as long as such use does not adversely affect the lawyer’s work or representation of clients.

In addition, nothing in divisions (b) and (h) of this Rule prohibits a lawyer from having an ownership interest in, being employed by, or lending money to a medical marijuana enterprise that the lawyer reasonably believes is authorized under Ohio law.

This comment is necessary to protect lawyers using medical marijuana from discipline, as long as the lawyer’s use does not adversely affect the lawyer’s clients — similar to situations where an attorney chooses to use alcohol or when an attorney is prescribed medication to treat a medical condition.

We should know within the next few weeks how the Court intends to move forward and whether the Rules of Professional Conduct will be amended. One thing seems clear, however: the Court recognizes the untenable situation facing Ohio lawyers and the medical marijuana community and the Court intends to fix the problem.

You can view our firm’s submission in its entirety by clicking here. 

Attorney Ethics and Legal Marijuana: Advisory Opinion 2016-6

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Summary

This past June, a number of Ohio attorneys (including our firm) submitted a request to the Board for an advisory opinion on three distinct issues (for a primer on the professional issues involving Ohio’s medical marijuana law, click here):

  1. Whether an Ohio lawyer may ethically counsel, advise, and represent medical marijuana cultivators, processors, retail dispensaries, testing laboratories, caregivers, and/or patients as each may be licensed or seek to become licensed under Ohio state law;
  2. Whether an Ohio lawyer (or a member of a lawyer’s immediate family) may ethically operate or hold an ownership interest in a medical marijuana cultivator, processor, retail dispensary, and/or testing laboratory as each may be licensed (or may apply for a license) under Ohio state law; and
  3. Whether an Ohio lawyer may ethically use medical marijuana as provided by Ohio state law.

The Board responded by announcing a non-binding opinion on August 11, that essentially prohibited lawyers from representing the Ohio medical marijuana community. The only remedy to the untenable situation existing in Ohio is a change to the Ohio Rules of Professional Conduct — something that Chief Justice O’Connor has asked the Board to consider. Recently, our firm proposed changes to the Rules clarifying that lawyers can represent Ohio medical marijuana companies, and also that Ohio lawyers can use medical marijuana and own/operate medical marijuana businesses.

Advisory Opinion 2016-6: Ethical Implications for Lawyers under Ohio’s Medical Marijuana Law

Advice and Legal Services Provided to Clients Engaged in Conduct as a State Regulated Marijuana Enterprise

The Board began its analysis noting that Rule 1.2(d) prohibits a lawyer from assisting a client engaging or seeking to engage in conduct the lawyer knows is illegal. Importantly, the Board notes that the Rule precludes attorney assistance with respect to conduct that is illegal under either state or federal law — and the Rule does not distinguish between federal laws that are not being enforced.

The Board decided that a lawyer “cannot deliver legal services to assist a client in the establishment and operation of a state regulated marijuana enterprise that is illegal under federal law.” The prohibited services include, but are not limited to:

  • Completion and filing of marijuana license applications;
  • Negotiations with regulated individuals and businesses;
  • Representation of clients before state regulatory boards responsible for the regulation of medical marijuana;
  • Drafting and negotiating of contracts with vendors for resources or supplies;
  • Drafting of lease agreements for property to be used in the cultivation, processing, or sale of medical marijuana;
  • Representation of clients relating to commercial paper, tax, and zoning issues;
  • Corporate entity formation;
  • Representing a property owner, lessor, supplier or business in transactions with a marijuana regulated entity, if the lawyer knows the transferred property, facilities, goods or supplies will be used to engage in conduct that is illegal under federal law ; and
  • Statutory agent services.

Notwithstanding the above, the Board did conclude that Ohio lawyers may advise clients about the conflict between state and federal law, the consequences of engaging in conduct that is permissible under Ohio law but contrary to federal law, and the likelihood of federal enforcement under the current administration. Ohio lawyers can also counsel and advise about the meaning of Ohio law, and the requirements imposed by Ohio’s medical marijuana law. While a lawyer can advise how the medical marijuana law would be applied to a client’s proposed conduct, the Board’s counsel indicated to me in a conversation that this is essentially limited to a one-time conversation and does not involve ongoing advice.

Ohio lawyers can also represent clients in the following situations:

  • A client charged with violating Ohio’s medical marijuana law;
  • A professional license holder before professional licensing boards;
  • An employee in a wrongful discharge action arising out of the use of  medical marijuana; and
  • Aiding a government client in implementing and administering the state’s medical marijuana program (including state or local governments involving the establishment, operation, or implementation of the regulatory system).

The Board stated that when assisting clients pursuant to Ohio’s medical marijuana program, Ohio lawyers should enter into a written fee agreement that “encompasses a mutual understanding about the exact scope of services the lawyer is ethically and lawfully able to provide under Prof.Cond.R. 1.2(d).”

The practical effect of this opinion and lack of access to an attorney raises some serious problems:

  • Patients will be unable to consult with legal counsel regarding legal possession of medical marijuana pursuant to the “affirmative defense” provision in House Bill 523;

  • Businesses will be unable to draft meaningful contracts or obtain advice regarding tax and regulatory compliance; and
  • Medical marijuana business will effectively be shut out of court when disputes arise, as corporate entities cannot proceed pro se (with the exception of small claims) – this largely leaves “self-help” as the only effective remedy should contractual breaches occur or other disputes arise involving a legal medical marijuana business.

However, the result of the Board’s advisory opinion relating to attorney representation does not bring Ohio into uncharted territory. Following the passage of Amendment 64, the Colorado Bar Association issued a similar opinion, concluding that Colorado lawyers should not engage conduct similar to that referenced by the Ohio Board of Professional Conduct. Soon thereafter, the Colorado Supreme Court added a comment to its version of Rule 1.2 specifying that Colorado lawyers could represent clients in conduct the lawyer reasonably believed was authorized by Amendment 64.

A Lawyer’s Personal Use of Medical Marijuana and Participation in a Medical Marijuana Enterprise

The Board’s analysis involving an Ohio lawyer’s use of medical marijuana applies equally to situations where an Ohio lawyer seeks to own, operate, or lend money to a medical marijuana business. In this context, the Board concluded that the single use of medical marijuana (illegal under federal law) would not violate Rule 8.4(b) but that repeated use might. In addition, the Board concluded that other misconduct relating to the use of medical marijuana, such as “lying to federal investigators or obtaining a prescription for medical marijuana for purposes of resale o providing it to a minor” could implicate Rule 8.4(b).

The Board did clarify, however, that Rule 8.4 (h) — engaging in misconduct that adversely reflects on the lawyer’s fitness to practice law — can be violated even when no other Rule is violated. Interestingly, the Board specifically cites to the case of Disciplinary Counsel v. Bowling, 2010-Ohio-5040, and describes that case as one where a magistrate was charged, but not convicted for marijuana possession under state law and violated Rule 8.4(h). However, in Bowling the parties actually stipulated that the magistrate violated Canon 2 of the former Code of Judicial Conduct by using marijuana occasionally to self-medicate after a stroke, and Disciplinary Counsel dismissed the alleged violation of Rule 8.4(h).

The Board’s caution that “repeated” use of marijuana is troubling in light of the fact that Ohio lawyers with chronic conditions would likely use medical marijuana on a repeated basis to manage the condition. In fact, the Board’s conclusion would allow a lawyer using marijuana once for the purposes of getting high to escape discipline, while a chronically ill lawyer could be disciplined for using medical marijuana under the treatment of a physician. Furthermore, it is not clear how an Ohio lawyer can own or operate a medical marijuana business in accordance with Rule 8.4 — for instance, is owning one business allowable, even though the business engages in repeated transactions?

In any event, the Board’s statement that Rule 8.4(h) can be violated even if all other rules are complied with should caution lawyers from owning or operating a medical marijuana business.

Proposed Changes to the Ohio Rules of Professional Conduct

So where do we go from here? As stated above, the Chief Justice of the Ohio Supreme Court has indicated that the Court is aware of the issues presented by this advisory opinion, and will consider amendments to the Professional Conduct Rules later this month.

Our firm has submitted proposed amendments, and you can read about them by clicking here.

Breaking: Devastating Advisory Opinion from the Ohio Supreme Court Board of Professional Conduct

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We’ve previously covered the topic of Ohio attorney professional ethics relating to House Bill 523 and the coming medical marijuana industry in Ohio. Well, today Ohio lawyers received the much-anticipated advisory opinion from the Board of Professional Conduct and it was…. less than encouraging.

I’m on the road coming back from an oral argument in central Ohio (I pulled over at a McDonald’s to write this, don’t worry), so I’ll hit the bullet points here and provide more in-depth analysis at a later time. Suffice it to say that the Board has chosen to follow the lead of the state’s that have drastically limited (if not outright prohibited) lawyer involvement in the marijuana industry.

From the opinion:

Under Prof.Cond.R. 1.2(d), a lawyer cannot deliver legal services to assist a client in the establishment and operation of a state regulated marijuana enterprise that is illegal under federal law. The types of legal services that cannot be provided under the rule include, but are not limited to, the completion and filing of marijuana license applications, negotiations with regulated individuals and businesses, representation of clients before state regulatory boards responsible for the regulation of medical marijuana, the drafting and negotiating of contracts with vendors for resources or supplies, the drafting of lease agreements for property to be used in the cultivation, processing, or sale of medical marijuana, commercial paper, tax, zoning, corporate entity formation, and statutory agent services. See also, Colo. Op. 125 (2013). Similarly, a lawyer cannot represent a property owner, lessor, supplier or business in transactions with a marijuana regulated entity, if the lawyer knows the transferred property, facilities, goods or supplies will be used to engage in conduct that is illegal under federal law. Even though the completion of any of these services or transactions may be permissible under Ohio law, and a lawyer’s assistance can facilitate their completion, the lawyer ultimately would be assisting the client in engaging in conduct that the lawyer knows to be illegal under federal law.

However, there is a range of conduct that the Board has deemed to be permitted:

[The current Rule] permits a lawyer to explain to the client the conflict that currently exists between state and federal law, the consequences of engaging in conduct that is permissible under Ohio law but contrary to federal law, and the likelihood of federal enforcement given the policies of the current administration. A lawyer may counsel and advise a client regarding the scope and general requirements of the Ohio medical marijuana law, the meaning of its provisions, and how the law would be applied to a client’s proposed conduct. A lawyer also can advise a client concerning good faith arguments regarding the validity of the federal or state law and its application to the client’s proposed conduct.

In addition to the permissible range of advice permitted under Prof.Cond.R. 1.2(d), the rule does not preclude a lawyer from representing a client charged with violating the state medical marijuana law, representing a professional license holder before state licensing boards, representing an employee in a wrongful discharge action due to medical marijuana use, or aiding a government client in the implementation and administration of the state’s regulated licensing program. With regard to the latter, lawyers assisting a government client at the state or local level in the establishment, operation, or implementation of the state medical marijuana regulatory system are not advising or assisting the client in conduct that directly violates federal law. The state or a local government is not directly involved in the sale, processing, or dispensing of medical marijuana prohibited by federal law, even though it is arguably enabling the conduct through the issuance of licenses and the maintenance of its regulatory system.

It appears, therefore, that until the Ohio Supreme Court amends the Rules of Professional Conduct Ohio marijuana businesses will be forced to operate without many of the kinds of professional legal advice that lawyers provide to clients in other industries. This result is simply untenable over the long term, given the regulated nature of the industry and the need for competent legal counsel.

I will follow up with an update on the course forward for Ohio lawyers and their clients in the medical marijuana industry.

A link to the full opinion can be found by clicking here.

Join us at the Marijuana Business Daily Crash Course Seminars in Cleveland and Cincinnati!

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I’m excited to announce that I will be one of the featured speakers at the Marijuana Business Daily Crash Course seminars taking place in Cleveland and Cincinnati next month, where I’ll have the opportunity to present and answer questions on the legal issues associated with retail dispensaries, marijuana processors, cultivators, and ancillary businesses in Ohio.

The Cleveland Crash Course seminar will take place on August 17 at the Doubletree Tudor Arms, with the Cincinnati seminar taking place on August 19 at the Kingsgate Marriott. Each seminar will begin at 10:00am and last until 6:00pm, including a networking lunch and networking cocktail reception following the presentations. 

I’m honored to present alongside some of the most influential voices in the industry, including Robert Carp, Diane Czarkowski, Troy Dayton, Meg Sanders, Leise Rosman, and Chris Walsh. More information about the Crash Course seminars can be found below. If you register to attend one of the seminars, drop me a line in advance so that we can chat at the lunch or cocktail reception. 

You can register for the seminars by clicking here

You can learn about the featured speakers by clicking here.

You can view the Crash Course agenda by clicking here.

If you are at all interested in getting involved in Ohio’s coming medical marijuana industry, you should absolutely attend one (or both!) of the Crash Course seminars in Cleveland and Cincinnati. I hope to see you there!

More about Marijuana Business Daily:

Founded in 2011, Marijuana Business Daily is the most trusted cannabis industry trade publication. Marijuana Business Daily is independent and non-biased, focusing on bringing top-notch professional news, financial information and research data to the marijuana industry. Marijuana Business Daily’s offerings include the Marijuana Business Conference & Expo, The Marijuana Business Factbook, Marijuana Industry Directory and Marijuana Business Magazine.

Attorney Ethics and Legal Marijuana

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With the recent passage of H.B. 523, medical marijuana in Ohio will become a reality this September. Most people are familiar with the fact that the rule-making process will take some time, but Ohio attorneys are presented with a more difficult question: can we even advise medical marijuana businesses? To answer this important question, among others, I recently sought an advisory opinion from the Ohio Supreme Court Board of Professional Conduct Advisory Opinion Committee. The Committee will be considering these questions and the Board will hopefully issue an opinion before the end of the summer.

By way of background, all Ohio lawyers are bound by the Ohio Rules of Professional Conduct. Included within those rules is a prohibition against advising or assisting clients in conduct “the lawyer knows is illegal” (Prof.Cond.R. 1.2(d)) as well a prohibition against committing an “illegal act that reflects adversely on the lawyer’s honesty or trustworthiness” (Prof.Cond.R. 8.4(b)). These provisions are implicated because, while more than half of the country has legalized marijuana in some form, it remains illegal at the federal level under the Controlled Substances Act.

Ohio attempted to address attorney discipline in Section 3796.24(A) of H.B. 523, which provides that a professional license holder “is not subject to professional disciplinary action solely for engaging in professional or occupational activities related to medical marijuana.” The problem, however, is that attorneys are regulated exclusively by the Ohio Supreme Court, so it is not clear that the legislature can prevent the Court from imposing discipline against Ohio lawyers for violating the Rules of Professional Conduct.

I am seeking an opinion on three distinct questions:

  1. Whether an Ohio lawyer may ethically counsel, advise, and represent medical marijuana cultivators, processors, retail dispensaries, testing laboratories, caregivers, and/or patients as each may be licensed or seek to become licensed under Ohio state law;
  2. Whether an Ohio lawyer (or a member of a lawyer’s immediate family) may ethically operate or hold an ownership interest in a medical marijuana cultivator, processor, retail dispensary, and/or testing laboratory as each may be licensed (or may apply for a license) under Ohio state law; and
  3. Whether an Ohio lawyer may ethically use medical marijuana as provided by Ohio state law.

Generally speaking, most states that have considered these issue have come down in favor of attorney representation of legal marijuana businesses, including Arizona, Colorado, New York, Washington (through the King County Bar Association), California (through the San Francisco Bar Association), and Illinois. A minority of states, such as Hawaii, have taken the opposite viewpoint. Connecticut’s opinion on the topic of advice to marijuana businesses offered little guidance, although Connecticut does allow for attorneys to use medical marijuana. In addition, Washington has approved attorney ownership of marijuana businesses and also attorney use of marijuana.

Guidance from the Advisory Opinion Committee has probably never been more imperative than when it comes to medical marijuana. Marijuana businesses not only have to navigate a complicated state regulatory environment, but also have to deal with the ever-changing federal approach to cannabis. Here’s hoping that Ohio lawyers have an advisory opinion sooner rather than later so that our role in this industry can have clarity.

To view my full request for an advisory opinion, click here.

You can also read about the request for an advisory opinion on Cleveland.com by clicking here.

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