Cannabis lawyers say Ga. high court ruling creates 'chilling effect'

3 minute read

REUTERS/Shannon Stapleton

Register now for FREE unlimited access to Reuters.com
  • Attorneys who advise state cannabis businesses could face sanctions
  • State bar wanted professional conduct rules amended

(Reuters) - Attorneys with clients in the cannabis industry are warning that the Georgia Supreme Court may have set the business back when it ruled last week that lawyers can be sanctioned for advising manufacturers and sellers of marijuana oil, which is legal for limited medical use under state law. But the long-term impacts may be minimal, they said.

With cannabis still illegal at the federal level, the court held that legal work related to the state's burgeoning low-THC oil industry amounts to "counseling and assisting clients in the commission of criminal acts."

"The passage of a Georgia statute purporting to permit and regulate conduct that constitutes federal crimes does not change that long-standing principle," the court said in its June 21 order rejecting a state bar amendment to the rules of professional conduct.

Register now for FREE unlimited access to Reuters.com

As more states legalize both medical and recreational cannabis, the ruling highlights that not everyone is on board - and regulatory pitfalls can extend beyond cannabis businesses to include their lawyers, too.

Not surprisingly, lawyers with cannabis-related practices were critical of the Georgia ruling.

"It’s a disservice to the people of Georgia, to not allow attorneys to provide services that guide someone on how to comply with their state law," said Rachel Gillette, a Denver-based cannabis-focused partner at Holland & Hart.

Ian Stewart, the Los Angeles-based co-chair of Wilson Elser Moskowitz Edelman & Dicker's cannabis and hemp law practice, said he doesn't expect the ruling to dissuade lawyers who began advising cannabis companies years ago, back when there "really was a threat of criminal prosecution."

But Stewart said other business lawyers with practices tied to issues like transportation, product development, product labeling and packaging might be more hesitant to work with cannabis companies if there is a threat of disciplinary action.

"I think it will have a chilling effect," Stewart said.

Georgia is now the fourth state that has refused to amend its rules allowing its attorneys to advise their local cannabis industries, joining Oklahoma, Mississippi and South Dakota, according to an Atlanta Journal-Constitution report.

But there's "not a lot of teeth" to the Georgia Supreme Court's order, according to Sanford Posner, a FisherBroyles partner who co-founded the Georgia Cannabis Trade Association.

Posner expressed doubt that the State Bar of Georgia, which sought the high court's approval in changing the state's professional rules, would begin actively policing lawyers' cannabis-related work. He noted that "attorneys, by our nature, work with people who have gone afoul of the law."

"Hopefully this is more of a wake-up call for people in Congress" to reform federal cannabis law, Posner said.

Read More:

Connecticut becomes 18th U.S. state to legalize recreational marijuana

Cannabis pioneer Sederberg: New Big Law competition ‘means we’re winning’

Register now for FREE unlimited access to Reuters.com

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.