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No Legalization Yet, But 'Shift' Sees NJ Firms Firing Up Cannabis Practices

May 16 2018

As the dialogue about possible legalization of marijuana in New Jersey once again ramps up, a number of firms have announced the formation of cannabis law practice groups.

As the dialogue about possible full legalization of marijuana in New Jersey once again ramps up, a number of firms have announced the formation of cannabis law practice groups.

There seems to be something of a blueprint: Lawyers who have experience with cannabis clients—or at least those whose practices are pertinent to the current market for medical marijuana, or the potential market for recreational marijuana—are brought together. Like any business, marijuana businesses generate a range of legal needs: land use, licensing and regulatory, to name a few.

Also ranging widely are the levels of experience that lawyers offer. Some say they’ve been advising on marijuana-related issues since New Jersey’s medical cannabis movement began years ago, while some have seen clients ask an increasing number of questions about an evolving, and apparently lucrative, industry.

In recent years, there’s been a “shift in midsize and big firms, and how they’re going to embrace cannabis practice,” and “people are trying to create full-service practices,” according to Shabnam Malek, a co-founder of the National Cannabis Bar Association and an Oakland, California-based attorney at virtual law firm Brand & Branch, which handles intellectual property law and represents numerous cannabis industry clients.

“It’s not just one area of law,” she said, adding, “Firms that are trying to grow cannabis practices really fast” run the risk of “ending up in situations where the wrong attorney is working on the wrong matter.”

Small firms specializing in cannabis work have cropped up, particularly in pot-legal jurisdictions in the West, in large part because “big and midsize firms hadn’t stepped up with those solutions yet,” Malek said.

But larger firms taking on representation of cannabis industry clients? “That is obviously the future,” she said.

For at least some practitioners in New Jersey, the future is now, it seems, and the reasons for that are clear enough. Efforts to legalize recreational marijuana in the state go back years, and speculations that such efforts might actually come to fruition began early on in the candidacy of Gov. Phil Murphy, who actively campaigned on his pro-legalization stance, in contrast with his predecessor, Chris Christie, who was outspoken against a legalization movement he characterized as a misguided attempt to generate tax revenue.

Some lawmakers have expressed concerns about legalization, including users driving under the influence in a pot-legal New Jersey. Still, the state’s medical marijuana program has expanded under the Murphy administration, including the recent opening of a new dispensary in Bellmawr, and the Atlantic City mayor recently proposed creating a district in his resort town where visitors could enjoy a smoke if and when recreational pot becomes the law in New Jersey. There are many more examples of politicians, government officials, businesspeople and others banking on an expanded marijuana marketplace in one form or another.

Among those stakeholders are law firms. At least three in New Jersey in recent months have announced the creation of cannabis law practices. Which of them can claim some true level of pot-specific expertise appears to vary by case.

“This really isn’t new to us,” said Michael Schaff of Woodbridge-based Wilentz, Goldman & Spitzer’s April 25 announcement of a cannabis law group made up of 17 firm lawyers. “We just never formalized it.”

“It doesn’t change what we do, it doesn’t change how we service our clients, but it’s a perception,” added Schaff, one of the practice group’s leaders, and head of the corporate and health care practices at Wilentz Goldman. “It looks like we’re just throwing our hat in but … we’ve been a player.”

As an example, Schaff said Wilentz Goldman already has represented landlords of marijuana growers and dispensaries on zoning issues, as well as employers of medical marijuana users. He also noted that when medical marijuana was legalized in New Jersey, on enactment of the Compassionate Use Medical Marijuana Act in early 2010, the firm advised on the issue of whether hospital patients would be allowed to bring the drug into facilities without pharmacy labeling.

Cannabis practice co-chairman Angelo Cifaldi, a registered pharmacist, said, “We actually understand the science of cannabis. That’s what distinguishes us.”

The marijuana industry, added Schaff, “doesn’t only affect growers and dispensaries these days. It’s really created its own captured industry.”

Schaff said clients outside the cannabis marketplace are “all looking at how this industry is going to affect their business,” and “whether they decide to go down that path or not, they need appropriate legal counsel.”

Such questions spurred the launch of a cannabis practice at another New Jersey firm, Flaster/Greenberg in Cherry Hill.

“We were seeing an increased need with clients” with ties to the marijuana industry, or who have sought to develop ties, said Adam Gersh, a management-side labor and employment lawyer and member of the cannabis law practice group. Formation of the practice group was announced April 20.

“We wouldn’t be doing this if there weren’t a regulatory climate change,” he added.

The climate change includes not only the potential for recreational use in New Jersey, but the implementation of medical marijuana in Pennsylvania, where Flaster/Greenberg has a considerable presence.

The firm already has advised some clients in the medical field on marijuana-related issues, and has tackled questions of tax and land use law as it relates to the cannabis industry, he noted. In other cases, the practice group and its lawyers are learning as they go.

“You start with the clients asking the questions, and you develop the expertise,” Gersh said.

“It’s really consistent with our overall approach of serving the business community in New Jersey,” Gersh added. “A lot of the clients getting into this are entrepreneurial clients who are already with us.”

According to Malek, those practicing cannabis law, or attempting to, come in four basic forms: longtime defense lawyers, often marijuana activists themselves, who have defended criminal actions and have seen their practices expand in scope; those (including lawyers at Brand & Branch) transitioning from mainstream law to practices increasingly serving the cannabis industry; plus, full-on cannabis lawyers who entered the legal field in order to launch industry-specific practices.

And the fourth group is made up of law firms launching practices—some with just a “toe in,” perhaps through advising cannabis or cannabis-related clients on investment or securities matters, she said.

There are still large law firms concerned over the stigma of an outward cannabis practice, or of handling cannabis-related matters at all, Malek said, noting that two such firms (she declined to name them) refer work to Brand & Branch.

Malek, however, sees it as more of a professional imperative than a marketing opportunity to earnestly dive into the cannabis practice. The National Cannabis Bar Association was formed in 2015 not only to connect potential clients with cannabis lawyers, but to connect cannabis lawyers themselves, who over the years have formed a network where very small cannabis law firms refer around work in various areas of law based on client need, she said.

“Businesses need lawyers, and we need to be stepping up to the plate,” she said. “You can’t do this kind of work in a vacuum in your own law firm.”

Hence, more lawyers doing cannabis work is in principle a good thing, but launching a cannabis practice can be “incredibly dangerous … if you don’t really know what you’re doing.” Forming the wrong kind of corporate entity or writing a bad licensing agreement makes for “a different risk exposure” when the client is in the marijuana industry, Malek said.

However or whenever lessons are learned, firms in New Jersey are forging ahead.

In early March, Hackensack-based Cole Schotz announced the creation of a cannabis law practice group. Jordan Fisch, one of the group’s co-chairs, told the Law Journal at the time that several firm attorneys “were already involved in various cannabis interest ventures and we thought it would be a benefit to have a consolidated group.”

And several other firms based in New Jersey, or with a presence in the state, have launched some version of a cannabis practice: Ansell Grimm & Aaron, Archer & Greiner, Brach Eichler, Connell Foley, Fox Rothschild, Hoban Law Group, Riker Danzig Scherer Hyland & Perretti, Saiber and Sills Cummis & Gross.

The Wilentz Goldman and Flaster/Greenberg lawyers declined to go so far as to call for the legalization of recreational marijuana in the state. But just as state leaders might find the tax revenue calculus too good to pass up, it’s clear the lawyers want their piece of the pie if and when a law change comes to pass.

“I think it’s inevitable,” Schaff said. “It’s happening all over the country and all over the world.”

By David Gialanella