An article in The Philadelphia Inquirer reported about the reluctance of major banks to participate in the marijuana industries in those states that have legalized marijuana for recreational and/or medicinal purposes because marijuana is still a Schedule 1 controlled substance under the federal Controlled Substance Act. I have previously written that lawyers in those states share similar concerns because the rules of ethics prohibit lawyers from assisting clients in illegal activities.
The conflict between state legalization and federal criminalization of marijuana thus appears to be depriving the businesses and individuals, such as investors, growers, manufacturers, dispensaries, physicians, patients, and consumers, currently or potentially participating in the emerging marijuana industry from the two resources – lawyers and bankers – that are arguably the most important to the establishment and sustained growth of an emerging, regulated industry. This is especially concerning given the importance to all citizens of the careful implementation of marijuana legislation.
Most state marijuana laws propose the establishment of a highly regulated marijuana industry through voluminous and complex laws and regulations that govern everything from agricultural issues, to zoning for distribution, and penalties for violation. In the case of medical marijuana, the laws proposing legalization often limit use to the most serious medical conditions, and define who can grow, dispense, and use medical marijuana.
Similarly, the state marijuana laws that have been enacted or that are currently proposed generally provide for some form of taxation on the distribution of legal marijuana, as well as various, and often significant, fees for growing and dispensing legal marijuana. In states considering legalizing medical marijuana, sufficient funding for laboratory testing is an additional critical need.
Like other highly regulated industries, it is lawyers who should be advising industry participants on how to follow the laws and regulations so that the marijuana industry (medical or recreational) is properly established in a given state. Likewise, bankers managing the taxation, fee and capital needs of marijuana industry participants is necessary for businesses and individuals to enter and flourish in a state's medical or recreational marijuana industry.
Until the conflict between state legalization and federal criminalization is reconciled, the careful implementation of a state's marijuana legislation and the establishment and growth of the marijuana industry in that state could be hamstrung by an absence of involved lawyers and bankers.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
