Cannabis Musings - April 18, 2024

Lotsa Lawyer Love.

Friends – this 4/20, I’d like to pay tribute to lawyers.  It’s a group that gets little love, but the cannabis industry owes a lot to its attorneys, tirelessly fighting to make this system work (and get paid by their clients).  As a former lawyer (though, one never really loses that stigma), I respect the work that they do, and you should too.

I was reminded of this fact when I read about a new federal lawsuit claiming that the Drug Enforcement Agency’s review process is unconstitutional.  The question is whether the application could go before an administrative law judge who was appointed by a DEA official who is not constitutionally authorized to make the appointment.  The judge reportedly has an office at the DEA and is paid by the Department of Justice (of which the DEA is a part of).  Judge, jury, and executioner.

The case strikes me as somewhat similar to a successful challenge to the Securities and Exchange Commission’s own administrative proceeding process, which a Federal court of appeals struck down in part as unconstitutional.  That case is now being reviewed by the U.S. Supreme Court. 

This skirmish is part of a larger battle by the plaintiff, MMJ BioPharma, to move along the DEA’s years-long review of its applications for permits to cultivate cannabis for research.  One that’s being fought not by a Goliath of a law firm, but by a small firm out of Rhode Island fighting for fairness.  On the other end of the spectrum, the fabled Canna Provisions case challenging the constitutionality of the application of the Controlled Substances Act to intrastate cannabis (which we’ve discussed previously), is being prosecuted by a premier litigation law firm, Boies Schiller LLP.  In-between, you’ve got lawyers at all sizes and types of law firms providing necessary and critical services to the industry. 

Indeed, I’ve seen very few law firms refuse to work with the industry.  In my experience, it’s only the very largest firms that have held back, probably only because there’s yet not enough billings to make it worth their while.  For the rest of the legal world, though, they were some of the first service providers to dare work with the nascent licensed cannabis industry, despite the risks facing ancillary businesses.  Heck, legal ethics rules (insert joke here) had to be changed in order for lawyers to provide legal advice to state-licensed cannabis operators that are nonetheless actively breaking federal law.  Remember, lawyers don’t like risk, and neither do their malpractice insurance carriers. 

Lawyers are the ones not only making sure that regulators get the laws right and apply them fairly, but they’re also the ones helping to prepare applications, form startups, advise on tax, and help get stuff done.  Now, to be fair, lawyers aren’t always grease for the wheel.  But I’ve come to praise lawyers, not to bury them.  This industry has a lot to thank them for.

So, this coming 4/20, hug your lawyer.  (With all due respect to The Simpsons,) they’re the cause of, and solution to, all of our problems.

Happy holiday, and be seeing you!

© 2024 Marc Hauser and Hauser Advisory.  None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form.