Navigating Washington state law can be difficult for retailers, producers, and processors doing business in the legalized cannabis industry. Add the fact that the federal government still views cannabis as illegal, and it makes sense that, at some point, a cannabis business owner is going to need legal advice.
Much like Washington state-chartered banks and credit unions, which have chosen to offer banking services to cannabis industry professionals, a handful of Puget Sound law firms have emerged to offer legal expertise. Seattle University School of Law offers programs on cannabis law and even a Cannabis Law Society to educate students on the issue.
Seattle-based Gleam Law, which works with clients on the Eastside and has offices in California, Oregon, and Washington, is a leading cannabis law firm. Attorney Neil Juneja offered insights into this new field of corporate law.
Q: Is cannabis law a fairly new legal field? Is it as old as the legalization of recreational marijuana in Washington state in 2012?
A: Prior to 2012, there was a medical (marijuana) market, so there was a little bit of law there, but not much. What cannabis law was prior to 2012 was criminal law — essentially, people illegally growing (cannabis) and getting arrested for it.
Q: Does Gleam Law solely focus on cannabis law?
A: Not solely, but it’s our major focus — 90 percent of the firm.
Q: When recreational cannabis was legalized in Washington state, did you notice a rise in the number of attorneys entering into this field of law?
A: Absolutely. Until it was legal, there weren’t really any attorneys doing this. There’s a small contingent in this state, about two dozen attorneys, who focus on this, and some bigger firms are starting to get into this. Cannabis law is a practice area — that’s what we call it — but you could actually just say it’s business law and probably administrative, and we’re just focused on the cannabis industry, as opposed to, say, the startup industry, the dot-com industry. It’s just another industry.
Q: When someone approaches you and Gleam Law for legal services, what is he looking for? What are some common issues you deal with?
A: One is licensing with the regulatory authority. Somebody calls me and wants to get into the cannabis industry. They have found a potential license or target company to acquire, and then they’ve got to go through the business transactional documents, the licensing process with the Washington State Liquor and Cannabis Board — that’s the majority of work that needs to be done, and it can take quite a while to complete.
When they’re in business, they’ll come to us for consults because we have a good grasp of the industry. We have MBAs at the firm, so we really like to make sure they’re successful and look at their business plans. We’ll look at their brands and their intellectual property to make sure their product is differentiated from everything else on the shelves.
Q: Are there business-related laws that exist today that you would like to see change in order to better serve the industry?
A: On the federal level, Section 280 of the tax code, which says you can’t deduct business expenses — the cost of legal fees, advertising fees, or anything that doesn’t go directly into the cost of goods sold —when dealing with a Schedule I or Schedule II drug. Those billboards you see, (business owners) are paying taxes on that as if it’s income. If it’s an $8,000-per-month billboard, they’re probably paying $11,000 because they can’t deduct it. They’re paying taxes on it. That’s the big one.
On the state level, we need more retail shops because that’s the bottleneck. We don’t have enough shops across the state, and we have such a limited number of licenses. I think we need to make it a truly open market and let anybody get a license, continuously, instead of making it a government-controlled market.
Q: Do cannabis attorneys run any risks with the federal law?
A: As long as it follows the state law, it is not considered unethical or a violation of our duties. One attorney in San Diego was arrested, but they dropped the charges. No attorney has been put on trial for this.
Q: Did you ever think that you would be an attorney who practices cannabis law? Are you surprised to be working in this field?
A: I’ve been an attorney 10 years, and it does surprise me. I never thought I would see legalization. I would have thought you were making things up if you would have told me I would be here. I love it. Every day is something new. You’re working with very excited people. You’re breaking new ground and changing the world.
Thumbnail image: Matthew Brodeur on Unsplash