I'm an attorney specializing in cannabis industry law, helping legal weed vendors stay on top of rapidly changing rules. Ask me anything!

What is your opinion of the states that have legalized so far? Which states have implemented things in a smart manner and which ones are in need of improvements?

Colorado, Washington, and Nevada all did great jobs with legalization because they created sufficient barriers to entry to enable the programs to survive the Feds, and in those states you can easily spot criminals. They’re not as business friendly as California, let’s say, but you know what you’re getting.

California and Oregon stand to improve a lot because their regulations are pretty soft with little to no barriers to entry, so there’s a lot of bad behavior. It’s also no secret that both states export a HUGE amount of marijuana out of state, so when licensing rolls around old habits die hard and there’s a saturation of product that can inevitably bankrupt certain actors in the chain of distribution because they cannot complete with plummeting prices.

Do you think we're headed for a cliff where suddenly marijuana will be legal nationally or will it continue down the path of chip by chip?

My opinion is that cannabis prohibition will go the same way of alcohol prohibition, and it’s going to be a slow go towards federal reform. The states are leading the way and they’re engaging in marijuana reform through people’s initiatives (on the whole). Congress has shown it has no appetite to take any major steps on legalization or even decriminalization. The states though are creating really comprehensive regulatory codes, licensing structures, and public and health policy standards. I think the federal government is going to rely on that state-by-state marijuana “quilt” in the end just like it did with alcohol.

Do you ever call yourself a Canna bisnis lawyer?

Check my twitter handle @CannaBizLawyer. Close enough.

Can you comment on the status of recreational MJ in Washington DC?

There are many people that appear to openly sell MJ under initiative 71 as a "gift." What is the case law where individuals have said "Hey, I was just "donating" to get a "gift" and not purchasing MJ".

What do you think is preventing New York from transitioning to a more lenient medical program or recreational system?

Also, thanks for doing this!

A combination of regulators and stakeholders. New York is a great example of what happens when a competitive licensing system cannibalizes the greater good. The ones that win the licenses want to keep other competitors out and they want to ensure that they get first dibs on reform (generally. I’m sure there are exceptions here). This slows progress considerably. Also, if a market doesn’t include “chronic pain” on the patient ailment list, that patient population shrinks like crazy.

Since federal law governs banking and interstate commerce, how do you advise your clients on banking/money issues?

In 2014, the financial crimes enforcement network released a memo telling banks and financial institutions how to provide bank accounts to industry licensees. There are about 380 banks participating under those guidelines as of last year. I tell my clients to find these banks if possible and to bank with them.

Those guidelines are very hardcore though in vetting customers to ensure that banks are only working with state-law-abiding operators, so it can be tough on the customer to comply with all of the bank demands. In the alternative, you can’t lie to banks, and you shouldn’t be commingling personal funds with your weed money. As a result, the client often takes their account from bank to bank until they find one, or they use an off-site storage facility to hold the cash with 24/7 security.

How are you still licensed to practice law, given that you're advising clients on what is still illegal activity? Does your state bar have an opinion on this?

EDIT: I'm a lawyer too, Reddit. I know that different states have different rules. I also know that, as a rule, the state bars generally frown on assisting individuals to break federal law.

Here OP is a practicing attorney advising clients who are breaking federal law and he knows it. This can get your license revoked really fast in some places. I am curious how his jurisdiction resolves this tension.

Yep, still licensed. All states have ethics rules, and at least one of those rules says something to the effect of “thou shall not assist a client in the commission of a crime.” There is though a difference between assist and advise. Arguably, an attorney can advise anyone on what the law is. The question is whether you go a step further and assist them in whatever they want or are planning to do.

Several states have looked at this issue again and again because marijuana remains federally illegal, and a lot of them draw the line between assist and advise. Maine for example said, yes, go ahead and tell people what the marijuana laws are, but do not help them form their marijuana companies or even file their marijuana trademarks for them on the state level. Washington State on the other hand changed its ethics rules to allow attorneys to assist and advise state-licensed marijuana operators.

I’m in California now (I’m licensed in CA, FL, and WA) and it doesn’t have a formal opinion one way or the other on this, but it’s not actively going after attorneys for ethical violations just because they’re both advising and assisting their clients on and with getting marijuana licenses.

Do you have family members that are against the legalization of cannabis? If so, how do they feel about your profession?

I do. Some of them won’t even say the word marijuana and they never ask me about what I do. They ask me constantly if I couldn’t take my “skills” and work for a different set of clients. I even had one family member beg me to go in house with a pharmaceutical company they knew because they thought they couldn’t face their friends at lunch club (very dramatic). When I see them at family events, I just make small talk and drink at least three glasses of wine.

What did you have to do to be able to work specifically on this area?

Have nothing to lose and be willing to not care at all how the legal community would perceive me. It was still pretty taboo to engage in this area even back in 2010 when I first started.

I was never a criminal defense attorney—I strictly do traditional business work and M & A. To take that role and apply to mainly to black and gray market cannabis was looked down upon by your more white shoe kind of attorneys and firms. It also helped that I was at a small firm that really likes emerging areas and niche markets.

Do you think that one day the possibility of having restaurants that specialize in THC infused food is realistic?

I do. And if you come to West Hollywood, California in about two years, you’ll see it in action!

Thanks so much for participating in our AMA, everyone! You can find Hilary on Twitter at @CannaBizLawyer and see our article featuring her here. Check back in with Gizmodo on Twitter to stay up-to-date on the next time we host an AMA.

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Until next time!

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EDIT: added a hyperlink

EDIT 2: We ran out of time to answer your questions this afternoon, but we really appreciate your interest in this topic! Thanks for the excellent questions!

Do you think texas will ever legalize weed?

That’s a tough one. I think they will, but they’ll likely be one of the last states to do so alongside North Carolina and Indiana.

How has all the roadblocks Massachusetts has put up been legal? We legalized... And everything keeps getting pushed back?

I haven’t specifically followed MA, but this is generally what happens: a state’s legislature passes medical marijuana form (it’s usually small or not really providing that much access to patients, but it expands over the years as politicians warm up to the idea); state’s people then pass recreational laws; in those laws, power is given to state agencies to oversee the licensing program, and this means that agencies have to rule make; Agencies begin to rule make and they take forever because they can (or because they’re being lobbied) because they never set deadlines for themselves if they can help it. I imagine the pushback is the political back and forth at the agency level at this point.

How soon do you think some more conservative/"red" states will eventually implement legalization of medical use and then the eventual recreational use?

Do you have any advice to those living there on what they can do to help expedite the process?

It’s probably going to be a while in those states unless the people rally and put a law together to affect change. All of that starts with educating neighbors and colleagues. Most successful campaigns have a good degree of education and outreach to support reform.

What kind of law did you specialize in law school?

I didn’t specialize or focus on any one thing. I did though take administrative law and that actually helped a lot in the long run. Constitutional law is a good area for this, too.

Do you have any interesting stories or an example of a company thats status was in question and you were able to help them get through the legal hoops necessary to operate?

One time, I had a city government jerking around a grower client of mine who had literally met every single requirement of the city before the city passed a moratorium/ban on what he wanted to do. It all came down to whether my client had filed a “complete” building permit application before the ban deadline.

Long story short, the city had gotten cold feet from certain citizens on allowing in anymore growers and my guy was one of the last to file. In the end, we were able to prove that the city accepted a series of documents from client that amounted to a complete building permit application and they let him in. His grandma financed the project and she was really happy about her grandson’s weed farm dreams coming true.

No real questions about cannabis or law or anything because I am from Australia and am massively uninformed but...

What's your favourite food?

Burrata! I check burratagram on IG everyday.

What do you think the legal buying age of cannabis should be?

21 and up, just like alcohol. If it’s truly medical though, as needed by treating doctor’s recommendation regardless of age.

Have you seen people become largely successful in the cannabis industry since it became legal? Is there really as much money to be made as everyone suggests?

I’m doing well for my practice age, and that is largely due to pot. I don’t think there’s a lawyer at my practice level that would have gotten half of the stuff I’ve gotten/had to do in this practice, and I’m better for it.

On the operator side, it’s pretty difficult to make a ton of money. Weed doesn’t sell itself anymore. People want consistency, brand identity, and good customer service. In addition, the taxes at the state and federal level can be killer. There are probably a good amount of operators out there doing well because they’re either have multiple storefronts in great locations or they’re doing the Wal-Mart weed model of mass production at little to no cost. To date, I’ve never seen a “craft cannabis” brand survive the cost caused by legalization, regulation, and taxation.

What kind of change in the law should vendors watch out for?

The locals. More than state governments, cities and counties are demanding more local control. Cities and counties are already vested with police powers and they like to use them when it comes to marijuana, and they do so very often.

For example, let’s say you’ve been cultivating in a city for a year when, all of a sudden, the condo home owners association a mile away from you claims that they can smell the odor of marijuana when you harvest. Before you know it, the city council could pass an ordinance rendering your grow a non-conforming use and you’ll be shut down at that location, without a legal leg to stand on, within however long the city says you can last.

So, be on the look-out for the locals when it comes to instant and tough changes in the law.

For state workers in States where pot has been legalized for recreational use, can they face legal repercussions if they partake outside of work? Like does drug tests still count against them?

Yes and yes. All of these states that have legalized specifically allow an employer to maintain a zero tolerance drug policy in the workplace. Even a weed company itself could drug test and then fire their employees for testing hot on marijuana if they wanted to. And in all of these states, even if you’re getting stoned on your own time and your work isn’t affected, it doesn’t matter. If you test positive and no accommodation has been made for cannabis use, you can still be fired.

What problems do you face on your job beside the obvious keeping up with all the rule changes and informing these changes as soon as possible?

Dealing with folks who really don’t want to comply with the rules and who think they’re going to get rich quick overnight as a result. The stakes are higher in marijuana if you screw up, mainly because of the federal government. And no one wants to be the lawyer going down with their client because they had a moment of weakness. In turn, my BS radar is on high all the time, which can be stressful because you have to approach everyone with a healthy degree of suspicion.

The other main issue I deal with a lot are people in the ancillary sector of marijuana (i.e., those selling goods and services to marijuana businesses) that are just there to scam people out of their money. It gets really bad in states that first legalize, but eventually those scammers get found out and go away.

There’s also the ridiculous amount of industry hearsay. One day it’ll be that the Feds are coming to get everyone (I even once heard a rumor about myself that folks were saying I was a narc for the DOJ) to rumors that Costco and CVS are getting into the business and everyone better run for the hills.

In an earlier comment you mentioned "barriers to entry." In what exact context you are saying these are a positive thing. Could you please explain?

To keep the federal government off of their backs, states have to make sure that active criminal interests are not getting through their licensing gates. So, certain barriers to entry must be created, like background checks and source of funds vetting. All of the other barriers to entry, like “you must have a chemist on staff” or having to have certain amounts of funds in the bank, are mostly created by stakeholders influencing regulators on who should be able to have a license. Can’t say that all of those latter barriers to entry are positive ones.

What are the short and long-term issues/solutions surrounding the cannabis industry being effectively locked out of banking markets?

How large of an effort will be required to open those markets up?

Short term issue is federal law. The Bank Secrecy Act prohibits money laundering, and weed money is federally illegal money. If the banks take it, they launder. There’s also secondary criminal liability for the banks—aiding, abetting, and conspiring to violate the CSA. The foregoing keeps them out.

The 2014 FinCEN guidelines are a bright spot, but Department of Treasury (DOT) can pull those whenever. Unless and until cannabis is federally legalized, it is HIGHLY unlikely that we’ll see banking reform that caters to cannabis specifically. We’re more likely to see more of these memos issue from DOT instead that enable bolder, more enterprising banks to participate.

How much of your time is focused on preemptive contingency plans for your clients? Specifically for Federal level actions.

Probably only 50% of the time now. Even though Jeff Sessions HATES marijuana (and he’s made that very public), the DOJ under him hasn’t done anything to take out or even chill state-legal cannabis.

I’d say the majority of U.S. prosecutors are still relying on “Cole Memo” enforcement priorities because they just don’t have the time or money to go after state-law abiding operators. In turn, so long as clients comply with state and local laws and they always include any federal enforcement actions or forfeiture proceeding contingencies, I’m relatively happy. I’m more concerned now about things like the IRS and intelligent business contracts and decisions than I am about the DOJ making dramatic moves.

Just curious- how much money does the average dispensary owner make annually in profits?

One of the largest medical cannabis dispensaries in the U.S. (based in California) was at one point making $25-$27 million per year. I would not say that’s average though. In the first year, it may be difficult to turn any profit because of the volatility of licensing--if the state is slow or delayed, stored often have to open for a couple of hours and then shut down because there’s no product. Once they get going though and the rules are more stable, the average dispensary owner is probably making a couple to a few million a year (in a state with recreational cannabis).

As a cultivator navigating the legal market here in California, the (unfortunate) trend I have seen is that the bigger the carbon footprint of the packaging the better. On a label that is 6.25” x 1.25” nearly 2/3 of the label is dedicated to state mandated text. Many products (i.e. Pre-rolls) can’t fit enough of the required information on the item themselves and require an exterior box or package to fit everything mandated. With child resistant packaging no longer required after next month (WTF CA?) do you see this trend reversing? Having just spent over a month getting my jars and labels compliant and having many friends and colleagues dealing with what we consider onerous regulations we have come to the conclusion that the more packaging the better. Is this a trend you are also seeing? As we are a high end “boutique” craft-cannabis purveyor, we are extremely conscious of how our product looks to the consumer. However we strive to be as eco-conscious as possible (we cultivate organically and run 100% of our operation on renewable resources). Striking a balance between safeguarding our product from the elements, having a visual appeal beyond our label and still not destroying the environment is a difficult proposal. I am of the opinion that no non-homogenized agricultural product should come in opaque packaging (who would buy apples or lettuce or avocados etc. in a bag you couldn’t see through?) How are others overcoming this, are there any suggestions you could offer in balancing these often contradictory needs?

This is just the beginning. The rules on packaging and labeling will continue to shift as industry issues arise and that will all affect your bottom line since you have to comply or face the consequences. California is especially rough because they’re so consumer protection oriented. In my experience, it will get worse before it gets better relative to disclaimers and labeling content (and don’t forget Prop 65!).

Do you do any IP in the marijuana space? I'm curious about the value of "brands" for both retailers and mj strains.

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If you had to guess, how soon will it be legal nationally?

I don’t do any IP (a colleague of mine in the firm does). There’s a lot of value in the brands, from product identity to lifestyle stuff to particular strains. There are entire companies that traffic in nothing but they make money off of the brands that they license to various operators.

How close do you think we are to having the federal government decriminalize and allow recreational use of marijuana? What's your favorite meal?

We’re far away from any kind of federal anything. My favorite meal is a breakfast sandwich.

From a marketing and business perspective perhaps you might be able to clarify couple things primarily being is there anything being done with legislation that you were aware of or laws that would allow the company perhaps in California to be able and sell their products In a state such as New York that would not result in federal penalties of transporting narcotics across state lines? I just find it very unique that there are so many companies that specialize in cartridges, Vape, And edible products that are limited with in the confines of their state when I slowly but surely a national market is expanding? As something of a caveat to that, to your knowledge is there any penalty for perhaps a company in California or Oregon to ship the product up the Pacific coast line through Oregon Washington and now into Canada where it is legal? This is more generally asked simply because some of the states mentioned have a surplus of extra marijuana and are selling at very low prices but could still maintain a profit if they were to sell it in Canada.

Thank you for taking the time and can anyone contact you by email or at your law office?

Unless and until we have federal reform, if you produce cannabis in one state and ship it or take it into another, even if that state has legalized marijuana, it’s going to be interstate drug trafficking and a huge no-no under the federal Controlled Substances Act. And definitely don’t plan on bringing or shipping any weed to Canada as customs will likely seize it and there are going to be criminal consequences under U.S. and Canadian laws.

Do you have a personal stance on the legalization of marijuana? or is this just simply a job you're doing?

It should be legal, but I’m not a zealous, passionate plant advocate or anything like that. Some days, it’s all widgets to me.

What do you think of Canada's approach to legalization? Do you feel Canadians and the government are sufficiently prepared or, come October, we'll have a mess on our hands?

Personally, I would have preferred decriminalization first with a timeframe to better study cannabis, figure out reasonable ways to road test and measure intoxication levels, and implement better harm reduction strategies, before legalization came into effect.

Canada is nailing it. They’re going to have their regulatory problems, and no I don’t think they’re ready, but in my personal experience no state here has been ready for any form of legalization because there are so many contingencies and different municipal cultures that demand different things. However, Canada is nailing because their federal government is on board. And, like it or not, most retail there is going to be government owned which allegedly helps with public health policy issues (we’ll see). Either way, the entire country has the appetite for the experiment, which provide stability and a path to a lasting industry that we just don’t have here yet.

It's my understanding that the industry is predominantly white in terms of ownership. With so many non-white people incarcerated due to often minor cannabis-related "crimes", are there any specific laws that prevent or deter other groups from becoming leaders in the cannabis industry?

Shockingly, not many. Cities are starting to step up and engage in “social equity” programs that are meant to bolster and bring into licenses those most affected by past cannabis criminality. Only a couple of states though to the best of my knowledge (MA and CA) are trying to implement a full-fledged state program that supports that.

Is it true that Chinese corporations own the patents or rights on many strains?

I don’t know if they do because I don’t do any patent law, but if they did I’d be pretty surprised since their government very much frowns on commercial cannabis activity.

do you smoke?

I don't.

How much weed do you get for free doing this?

Nada.

How expensive is it to get a license to sell weed?

It’s a range depending on state, and there’s a difference between just licensing fees and the actual start-up costs for what you have to do in order to actually receive a license.

First, just licensing fees; some states have hugely high financial barriers to entry. Nevada is a good example where, for the original medical marijuana licensing, you had to show that you had $250K liquid in the bank in order to even apply. The licensing fees there were several thousand dollars when you combined state and local licensing fees. Contrast that with states like Washington and Oregon where it’s only $250/license at the state level.

In California, the licensing fees are based on the value of the amount of product you have on hand for the previous year, so it’s a sliding scale.

Now, start-up costs; when you add all of the start-up costs to the business though (including what you have to have up and running to receive licensing approval--like security systems, track and trace software, inventory, lease, local permitting and licensing, development of SOPs, employee training, etc.), in any place in the U.S., you’re probably looking at six figures for start-up costs, at minimum.

Do you ever get high on your own supply ???

Nope. The last time I ate an edible, I ended up in the fetal position after eating all the food in my kitchen. That did it for me.