Chris Farella Quoted in "Law Firm GCs Must Be Wary as Firms Vie for Cannabis Work"

As more states legalize cannabis for medicinal or recreational use, law firms may be eager to participate in the burgeoning industry, but general counsel must be aware of the potential landmines that lay ahead …

With a patchwork of state laws and ethical opinions to navigate and the conflicting federal law, attorneys seeking to operate in this space need to proceed with caution, said James J. Grogan, former chief counsel of the Attorney Registration & Disciplinary Commission of the Supreme Court of Illinois. …

There are still many unanswered questions and potential risks, said Christopher Farella, general counsel at Epstein Becker Green. Among them is the question of how to handle retainers and payments from clients who may be legally allowed to operate a cannabis business but may have to deal only in cash or other tenders, such as Bitcoin.

There’s little guidance out there on that front that will provide firms with “any level of comfort” on the payment issue, Farella said.

Another factor to consider is that if federal prosecution ever occurs, a federal court won’t recognize attorney-client privilege and confidentiality could be lost, he said, meaning attorneys should be guarded in communications with these clients.

One way for attorneys to protect themselves is by putting the proof they told their client about the federal law issues into the firm’s engagement letter with them, Farella said.

“If the state makes it legal to intake marijuana — medical, recreational or both — you’re allowed as a lawyer to give them advice on how to comply with those laws,” he said. “But you need to advise clients on the federal areas. You want to make sure you documented that.”

A safer approach may simply be to just expand the practice to provide an ancillary service to an already existing client base, where the risk is low, Farella said. Companies not directly operating in the cannabis industry still have lots to navigate as cannabis is legalized in more states, purely from the employment context, such as drug testing and updating policies and handbooks.

“We already provide that service to our clients. It just made sense we can also answer the questions if it has to do with a cannabis issue,” Farella said. “Generally, the type of work we do stays in the confines of our expertise, but we’ve added this as an augmentation.”