Marijuana Law at an Inflection Point

The National Picture

Twenty-six states and the District of Columbia now have laws legalizing marijuana sales and use in some form. Three other states—Arkansas, Florida and North Dakota—will soon join this list after 2016 ballot measures permitting use of medical marijuana.

Seven states—Colorado, Washington, Oregon, California, Massachusetts, Maine and Nevada–and the District of Columbia have laws legalizing marijuana for recreational use. California’s measure allows adults 21 and older to possess up to one ounce of marijuana and grow up to six plants in their homes. Other tax and licensing provisions of the law will not take effect until January 2018.

Legislatures in states that recently passed legalization measures are currently debating and devising regulatory schemes governing the use and sale of marijuana. Several other states have also decriminalized the possession of small amounts of marijuana.

Medical marijuana laws are all over the map when it comes to the types of medical conditions that allow for treatment. Several states allow residents to possess marijuana only if they suffer from certain rare medical illnesses.

The biggest potential threat to this rapidly expanding industry is the U.S. government. Selling marijuana is still illegal under federal law. The Obama Justice Department refrained for the most part from enforcing the law in legalizing states. The jury is still out with respect to what the Trump Justice Department will do.

The U.S. Supreme Court last year, by a 6-2 vote, rejected a challenge to Colorado’s marijuana legalization law that permits adults to buy, sell or use an ounce of the drug. The justices turned away a lawsuit brought by Nebraska and Oklahoma, whose state attorneys general argued that illegal marijuana was pouring into their states from Colorado. They argued that Colorado’s law violates the federal Controlled Substances Act (21 U.S.C. §§ 801 et seq.), which treats marijuana as a dangerous drug and forbids its sale or use. They urged the Supreme Court to declare that Colorado’s law was preempted by the federal drug laws.

Consequences

The legalization of marijuana has led to a huge growth in the production and distribution of legal cannabis and an explosion of new businesses—growers, distributors, retailers—and related service providers, including marketers, paraphernalia sellers, bankers, and lawyers (sole practitioners, law firms of all sizes, attorneys who work for consulting firms, and government regulators encompassing both attorney and JD Advantage positions).

Colorado, which voted to legalize recreational marijuana in 2012 is now home to a more-than-$1 billion a year industry, according to tax data. Sales are increasing at an annual rate of more than 20 percent.

Marijuana law is likely to be a growth industry for years to come, regardless of the federal enforcement role.

Key Issues

The major issues around the new cannabis regimes encompass many practice areas, including:

  • Transactions
  • Investment
  • Litigation
  • Criminal matters
  • Banking and finance
  • Money laundering
  • Asset protection
  • Landlord-tenant
  • Intellectual property
  • Ethical considerations

The law with respect to all of these is changing rapidly. New regulations are cascading all over the country. That makes marijuana law potentially one of the 21st century’s most robust practice areas.