Up in Smoke or Down in Flames? A Florida Lawyer’s Legal and Ethical Risks in Advising a Marijuana Industry Client
With the passage in Florida and other states of laws permitting medical and recreational use of marijuana, lawyers are being asked to provide legal advice and legal services to the so-called “legal marijuana” industry. These lawyers should think carefully before dispensing advice. Despite what the states and advocates may say, legal marijuana does not exist. A marijuana business that fully complies with state law is still breaking federal law. Bluntly put, it is a criminal enterprise.
Lawyers who provide assistance to a marijuana business are putting themselves at risk for incarceration, loss of money, and disbarment. Unless Congress amends federal law, tremendous legal and ethical risks exist for any lawyer representing clients in this market. In this author’s view, state laws and bar opinions to the contrary offer hollow protection.
More than 20 states and the District of Columbia have adopted laws that legalize medical and/or recreational marijuana.1 Two years ago, the Florida Legislature enacted the Compassionate Medical Cannabis Act of 2014, F.S. §381.986. Once fully implemented, it will allow patients in Florida to obtain low-THC cannabis based on a doctor’s order.
This article explores the legal and ethical pitfalls lawyers face in providing services to marijuana industry clients. There are two categories of potential clients for Florida lawyers: 1) businesses that directly manufacture, distribute, or sell marijuana in compliance with state law (legal marijuana businesses); and 2) third parties who help these businesses operate or refer customers to them, including doctors, bankers, investors, lawyers, landlords, real estate brokers, and vendors (ancillary service providers). There are two general categories of legal services that can be offered to these clients: 1) advice about the legality of proposed future actions (counseling); and 2) transactional services to assist the operations of the legal marijuana business (assistance). There is little doubt that providing prospective legal counseling is legally and ethically permitted. Providing transactional services or other assistance, however, is fraught with personal and professional danger.
A lawyer cannot ethically assist a client in conduct that the lawyer knows or reasonably should know is criminal. Rule 4-1.2(d) of the Florida Rules of Professional Conduct states:
A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows or reasonably should know is criminal or fraudulent. However, a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning, or application of the law.2
Recognizing the tension between federal and state marijuana laws, in 2014, The Florida Bar Board of Governors issued policy guidance on whether lawyers advising legal marijuana businesses would be subject to discipline. The policy stated:
The Florida Bar will not prosecute a Florida Bar member solely for advising a client regarding the validity, scope, and meaning of Florida statutes regarding medical marijuana or for assisting a client in conduct the lawyer reasonably believes is permitted by Florida statutes, regulations, orders, and other state or local provisions implementing them, as long as the lawyer also advises the client regarding related federal law and policy.3
A number of other bar associations around the country have issued similar advisory opinions saying that a lawyer can provide legal counseling and legal assistance to marijuana industry clients without running afoul of their jurisdiction’s rules of professional conduct, so long as the lawyer also advises the client regarding federal law and policy.4 Neither The Florida Bar policy nor the other bar opinions delineate the scope of the advice the lawyer must give about federal law and policy.
Adequately advising the client regarding federal law and policy is not as simple as it might appear at first blush. Federal laws and policies are broad, detailed, and complex. Legal marijuana business operators can be prosecuted under several federal criminal statutes.5 Ancillary service providers can be prosecuted under these same statutes as co-conspirators6 or aiders and abettors.7 There are also tax and bankruptcy implications, as well as potential civil monetary penalties, asset forfeiture, and regulatory sanctions. The consequences of giving inadequate advice could be devastating for the lawyer as well as the client. The lawyer could be exposed to bar sanctions and malpractice liability, or worse. Lawyers, therefore, should not be comfortable that they are fully complying with their ethical obligations by summarily telling the client that the proposed conduct is prohibited by federal law.
What Should a Lawyer Tell the Client About Federal Marijuana Law and Policy?
• Lawful Marijuana Does Not Exist — Marijuana is still illegal everywhere in the United States, even for medicinal purposes. Federal law carefully regulates controlled substances. It is punishable by up to life imprisonment to “knowingly or intentionally…manufacture, distribute, dispense, or possess with intent to distribute or dispense, a controlled substance.”8 T he only exception to this sweeping prohibition is that certain persons registered with the U.S. Drug Enforcement Administration (DEA) (primarily drug companies, doctors, and pharmacists) can manufacture, distribute, and dispense specified controlled substances.9 No such registration is available for wholesale or retail marijuana.
Under federal law, a physician cannot lawfully prescribe marijuana, nor can a pharmacist lawfully fill a prescription for marijuana. Federal law divides controlled substances into a series of drug schedules: Marijuana is designated a Schedule I controlled substance.10 Schedule I controlled substances have been determined to have “a high potential for abuse[,] no currently accepted medical use in treatment in the United States [and] a lack of accepted safety for use of the drug or other substance under medical supervision.”11 A prescription for a controlled substance is valid only if issued “for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.”12 Therefore, Schedule I controlled substances, like marijuana, cannot be prescribed because, by definition, they have no legitimate medical purpose.
Recognizing that marijuana cannot lawfully be prescribed, states have adopted other terms to describe the document a doctor issues to help the patient obtain marijuana. These terms include an “order” (Florida), a “recommendation” (California), and a “certification” (Arizona).13 Regardless of what the document is called, it is illegal; federal law prohibits a doctor from helping someone obtain medical marijuana.
A number of bills have been introduced in Congress to remove marijuana from Schedule I, which would allow doctors to prescribe it.14 Until that change occurs, it remains illegal for anyone to grow, prescribe, dispense, or distribute marijuana. Doctors or pharmacists helping a patient obtain marijuana risk losing their DEA registration,15 being excluded from the Medicare program,16 losing their assets, and going to prison.
• The Federal Government Has Not Immunized Marijuana Businesses that Comply with State Laws — Many people incorrectly believe that the U.S. Department of Justice has agreed not to prosecute marijuana businesses that comply with state laws. On August 29, 2013, the Department of Justice issued policy guidance on criminal enforcement of federal marijuana laws (Cole memorandum).17 The Cole memorandum directs federal prosecutors to generally refrain from prosecuting marijuana businesses that are complying with state law. The guidance does not say that these kinds of businesses are immune from federal prosecution, however. Rather, it states:
[P]rosecutors should continue to review marijuana cases on a case-by-case basis and weigh all available information and evidence, including, but not limited to, whether the operation is demonstrably in compliance with a strong and effective state regulatory system….The primary question in all cases — and in all jurisdictions — should be whether the conduct at issue implicates one or more of the [Department of Justice’s] enforcement priorities.18
While the Cole memorandum strongly suggests that federal prosecutors should not bring criminal cases against legal marijuana businesses, it does not create immunity. Moreover, the guidance could be rescinded at any time, particularly once a new administration takes office after the 2016 elections.
It is also important to note that the Cole memorandum only addresses criminal prosecutions. It does not speak to civil monetary penalties, civil forfeitures, or regulatory sanctions, all of which can occur without anyone being charged with a crime. For example, even without a criminal case being filed, a person who manages or controls a premises for growing, distributing, or selling marijuana can be fined up to $250,000 or twice the gross receipts of the business, whichever is greater.19
In addition to the Justice Department’s self-imposed policy in the Cole memorandum, Congress used the 2015 appropriations bill to further limit enforcement of federal marijuana laws in states that have legalized medical or recreational marijuana.20 Here, too, however, nonenforcement does not equate to immunity. A lawyer’s ethical duty under Rule 4-1.2(d) not to aid a client in committing a crime continues even if the federal marijuana laws are not currently being fully enforced.
• Being the Owner, Operator, Financier, Banker, Landlord, or Vendor for a Marijuana Business Is Illegal — In addition to the potential life felony for dealing in marijuana, it is a separate federal crime, punishable by up to 20 years in prison, to manage or control any place, permanently or temporarily, for the purpose of manufacturing, distributing, storing, or using marijuana.21 This statute is commonly used to prosecute owners and operators of illegal marijuana grow houses, crack houses, and methamphetamine labs.22 Nevertheless, a landlord, lender, investor, or ancillary service provider to a legal marijuana business potentially could be prosecuted under this statute, either as a principal, a co-conspirator, or an aider and abettor.23
• Be Careful About Accepting or Paying Money — Most banks will not accept legal marijuana businesses as clients, so these businesses operate extensively in cash.24 Federal law requires banks, trades, and businesses (including lawyers) to report any cash transaction, or series of transactions, that exceed $10,000.25 Failing to file these reports could result in monetary fines or prosecution.26
Federal money laundering laws also apply to certain common financial transactions with legal marijuana businesses. For example, merely receiving a payment of more than $10,000 from a known marijuana business may be a federal crime punishable by up to 10 years in prison.27 Engaging in a financial transaction for the purpose of promoting or furthering a known marijuana business may be a federal crime punishable by up to 20 years in prison.28 Therefore, a vendor who supplies packaging material or agricultural equipment to a legal marijuana business, knowing that those goods will be used to help the business operate, may be committing a 20-year felony by accepting payment for those goods. Similarly, an accountant who receives payment for maintaining the financial records of a legal marijuana business could be violating the federal money laundering laws.
• Even Without a Prosecution, the Government Can Take Your Assets — Even if there is no prosecution, there is enormous risk that assets will be seized and forfeited. Civil forfeiture laws allow the government to take all of the assets involved in operating the marijuana business and any property traceable to proceeds of the business.29 Assets that could be forfeited include bank accounts, investor capitol, profits already paid back to investors, land used to grow marijuana, and the building where the business operates. It could also include clawing back payments to vendors for services rendered.
This risk is real. In a 2012 case, the Justice Department sought forfeiture of a commercial building near Los Angeles whose tenants included a marijuana business operating in compliance with state law.30 This matter was dismissed shortly after the Cole memorandum was issued.31 Nevertheless, even after the Cole memorandum, the Justice Department continues to pursue the forfeiture of real property housing several medical marijuana dispensaries in the San Francisco area.32
• You May Have No Liability Insurance Coverage — Ancillary service providers to legal marijuana businesses take on tremendous risk in addition to possible enforcement action by the federal government. Liability insurance policies normally contain exclusions for criminal acts. Therefore, an ancillary service provider may have no liability coverage should it be sued for conduct related to its interactions with the legal marijuana business. Lawyers, accountants, doctors, and other professionals could see their malpractice coverage disappear. Similarly, senior executives of private equity funds, hedge funds, and corporate entities affiliated with legal marijuana businesses may breach their governing documents or their fiduciary duties by engaging in illegal activity, without the protection of director and officer liability coverage.
• You Could Lose Your License — Ancillary service providers also risk losing their livelihood. Many states have agencies or licensure boards that regulate ancillary service providers, such as accountants, general contractors, architects, and real estate brokers.33 Some ancillary service providers also may have advanced professional certifications. Many of these regulators and certifying bodies have rules or codes of conduct that prohibit a regulated person or entity from knowingly engaging in illegal acts or assisting others in illegal conduct.34
• My Advice May Not Protect You and I May Be a Witness Against You — It can be a defense to state or federal criminal prosecution that a client relied upon the advice of counsel. This defense requires that, before taking action, the client fully disclose his or her plans to the lawyer and thereafter comply with the lawyer’s advice.35 This defense negates specific intent to commit a crime.36
Clients should understand that the advice-of-counsel defense will not apply to some of the federal drug statutes because those statutes do not require proof of specific criminal intent.37 Rather, a person can be guilty of some federal drug crimes so long as they knew they were interacting with a marijuana business. It is no defense that they believed what they were doing was legal based on advice of counsel.
Moreover, asserting an advice-of-counsel defense waives the attorney-client privilege.38 If the lawyer has complied with Rule 4-1.2(d), the lawyer will have told the client that the marijuana business is illegal under federal law. As such, the lawyer could be called as a damaging witness in a federal drug prosecution against the client.
• Our Conversations May Not Be Privileged — Generally, confidential communications between a client and lawyer are privileged. Nevertheless, the crime-fraud exception states that communications with a lawyer in furtherance of illegal activity are not privileged, even if the lawyer is not complicit in the crime.39 Therefore, an adverse party (either the government or a private litigant) could assert that all attorney-client communications about the operations and transactions of the legal marijuana business are not privileged and are, therefore, discoverable in litigation.
• You Cannot Deduct Your Business Expenses — Section 280E of the Internal Revenue Code says that “no deduction or credit shall be allowed” for expenses related to a trade or business that consists of trafficking in Schedule I or Schedule II controlled substances in violation of state or federal law.40 In a 2012 case, the U.S. Tax Court denied all business deductions to a California marijuana dispensary. In July 2015, this decision was affirmed by the U.S. Court of Appeals for the Ninth Circuit.41 Without being able to deduct these expenses, marijuana businesses can pay an effective tax rate in excess of 70 percent.42
• Bankruptcy Will Not Protect You if the Marijuana Business Fails — The 10th Circuit and several bankruptcy courts have ruled that a marijuana business cannot use bankruptcy for protection from creditors.43 These decisions turn on the fact that marijuana is illegal at the federal level. So, even if the federal government does not take all assets of the business in forfeiture or taxes, its creditors might.
What Should the Lawyer Be Saying to Himself or Herself?
• Am I Committing a Crime? — A lawyer is unlikely to create personal liability if the services rendered are limited to pure legal advice. A lawyer can safely fulfill the traditional counselor’s role of advising the client on the legal consequences of proposed action. The client, having received this advice, then chooses how to act. If, despite the lawyers’ advice, the client elects to contravene federal law, the lawyer should be protected from personal liability.
The lawyer sits in a different position once the legal services go beyond giving advice and begin assisting with transactions that help the business operate. At that point, the lawyer arguably becomes an aider and abettor of an illegal drug enterprise.44 As discussed above, neither bar guidance, including Florida’s, nor federal enforcement policies create a safe harbor against criminal prosecution.
• Can I Be Disciplined? — Noncompliance with Rule 4-1.2(d) remains an ethical violation, even though The Florida Bar Board of Governors has said that it will not impose discipline for providing advice and assistance to legal marijuana businesses. Many Florida lawyers are admitted to practice in other states or federal jurisdictions in which they could still be subject to discipline. For example, the rules of the 11th Circuit and each of the federal district courts for Florida discipline lawyers for violating the Florida Rules of Professional Conduct.45 None of these courts has adopted the Board of Governors’ policy relating to legal marijuana businesses. As such, a Florida lawyer can still be disciplined for representing legal marijuana businesses.
• Do I Still Have Insurance? — Most attorney malpractice policies have an exclusion for criminal acts. Under these exclusions, there is no coverage if the lawyer participates in a crime.46 Assume a lawyer fails to properly advise a legal marijuana business client about federal marijuana law and policy, and that client suffers damages. If the client then sues the lawyer for malpractice, the insurance carrier may attempt to deny coverage based on the criminal acts exclusion. If that occurs, the lawyer could be facing a legal malpractice action without any insurance coverage.
• Can I Keep My Fee? — As noted above, funds derived from a marijuana business are subject to forfeiture, so long as the recipient of the funds is aware that they come from an illegal source. The fact that the lawyer provided fair-value services in return for the money does not defeat the forfeiture. Moreover, by accepting a payment of more than $10,000 that the lawyer knows came from a legal marijuana business, the lawyer is committing a federal money laundering crime, which makes the funds separately subject to forfeiture.47
The Rules Regulating The Florida Bar require certain client funds to be held in a depository account, but there is no guarantee that any bank will allow a Florida firm to deposit marijuana-derived funds into an operating or trust account.48 The Federal Reserve recently refused to charter a credit union that intended to accept marijuana money, signaling that banks have significant regulatory risk if they accept marijuana money.49 Aside from the regulatory risk, the federal government has not given definitive protection to banks or other financial institutions that accept funds derived from legal marijuana businesses. On February 14, 2014, the Department of Justice and the Financial Crimes Enforcement Network (FinCEN) issued guidance to financial institutions about transactions with legal marijuana businesses.50 Here, again, the federal government indicated that it generally would exercise its discretion not to seek criminal penalties or Bank Secrecy Act monetary penalties against financial institutions that provided services to legal marijuana businesses, so long as the financial institutions had robust internal compliance programs.51 Like the Cole memorandum, however, the guidance does not rule out present or future federal prosecution for financial institutions that provide services to legal marijuana businesses.52 As a result, very few banks are willing to accept funds that derive from legal marijuana businesses. 53
Notwithstanding The Florida Bar’s policy statement, lawyers take on tremendous risk when representing legal marijuana businesses or ancillary service providers, particularly when that representation goes beyond mere legal advice. They expose themselves to malpractice claims, criminal prosecution, loss of fees and other assets, and bar sanctions. They assume this risk in an environment in which they have limited insurance protection. Until federal law is changed, representing clients in the legal marijuana market may not be worth the risk.
1 See State Medical Marijuana Laws, National Conference of State Legislators (Nov. 9, 2015), available at http://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx.
2 Rule 4-1.2(d) is based on Rule 1.2 of the Model Rules of Professional Conduct, which states: “A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.”
3 Gary Blankenship, Board Adopts Medical Marijuana Advice Policy, Fla. Bar News, June 15, 2014, available at /DIVCOM/JN/jnnews01.nsf/cb53c80c8fabd49d85256b5900678f6c/575b2ba3c91f53dd85257cf200481980!OpenDocument.
4 See, e.g., Wash. St. Bar Ass’n, Advisory Op. 201501 (2015); Ill. St. Bar Ass’n, Advisory Op. 14-07 (2014); St. Bar of Ariz., Ethics Op. 11-01 (2011).
5 See, e.g., 21 U.S.C. §841 (prohibiting manufacturing, distributing, dispensing, or possessing with intent to distribute or dispense controlled substances); 21 U.S.C. §856 (prohibiting maintaining a premises for the purpose of manufacturing, distributing, storing, or using controlled substances); 18 U.S.C. §§1956-1957 (prohibiting certain financial transactions in furtherance of, or involving proceeds of, specified unlawful activities).
6 21 U.S.C. §846.
7 Id.; 18 U.S.C. §2.
8 21 U.S.C. §841(a)(1).
9 21 U.S.C. §823.
10 21 U.S.C. §812( c).
11 21 U.S.C. §812(b)(1).
12 21 C.F.R. §1306.04.
13 See Fla. Stat. §381.986(2) (2015); Cal. Health & Safety Code §11362.5 (2015); Ariz. Rev. Stat. §36-2804.02 (2015).
14 See, e.g., H.R. 499, 113th Cong. (2013).
15 21 U.S.C. §824(a).
16 42 U.S.C. §1320a-7 mandates a minimum five-year exclusion from the Medicare program for any individual or entity convicted of “a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”
17 James M. Cole, Office of the Deputy Attorney Gen., U.S. Dept. of Justice, Memorandum to U.S. Attorneys (Aug. 29, 2013), available at http://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf.
18 Id. at 3.
19 21 U.S.C. §856(d).
20 Consolidated and Further Continuing Appropriations Act of 2015 §538 ( “None of the funds made available in this Act to the Department of Justice may be used, with respect to the [states that have legalized medical or recreational marijuana] to prevent such [s]tates from implementing their own [s]tate laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”). Multiple bills have been introduced in Congress that would modify the federal prohibition on marijuana, but so far none has been enacted. See, e.g., Respect State Marijuana Laws Act of 2015, H.R. 1940, 114th Cong. (2015); Compassionate Access, Research Expansion, and Respect States Act of 2015, §683, 114th Cong. (2015).
21 18 U.S.C. §856.
22 See, e.g., United States v. Garcia, 405 F.3d 1260 (11th Cir. 2005) (marijuana grow house); United States v. Griffith, 397 Fed. Appx. 613 (11th Cir. 2010) (methamphetamine lab); United States v. Henry, 307 Fed. Appx. 331 (11th Cir. 2009) (crack house).
23 See generally Richard Belfiore, Annotation, Validity, Construction, and Application of Federal “Crack-House Statute” Criminalizing Maintaining Place for Purpose of Making, Distributing, or Using Controlled Drugs (21 U.S.C.A. §856), 116 A.L.R. Fed. 345 (1993).
24 According to testimony from FinCEN’s director in August 2014, only 105 banks nationwide were accepting deposits from marijuana businesses. Jennifer Shasky Calvery, Director, Fin. Crimes Enforcement Network, Remarks at the 2014 Mid-Atlantic AML Conference (Aug. 12, 2014), available at http://www.fincen.gov/news_room/speech/html/20140812.html.
25 31 U.S.C. §5313 (requiring financial institutions to file cash transaction reports); 26 U.S.C. §6050I (requiring trades and businesses to file form 8300 cash transaction reports).
26 See, e.g., 31 U.S.C. §5321 (civil penalties for willful failure to file CTR); 31 U.S.C. §3522 (criminal penalties for willful failure to file CTR).
27 18 U.S.C. §1957 (illegal to “engage or attempt to engage in a monetary transaction in criminally derived property of a value greater than $10,000”).
28 18 U.S.C. §1956(a)(1) (illegal to conduct a financial transaction with the intent to promote the carrying on of specified unlawful activity).
29 18 U.S.C. §§981, 983.
30 United States v. 2601 West Ball Road, No. 12-CV-01345 AG-MLG (C.D. Cal. Filed Aug. 21, 2012); see Scott Bullock & Larry Salzman, Bullock and Salzman: Landlord Fights Building Seizure, The Orange County Register, May 1, 2013, available at http://www.ocregister.com/articles/federal-506499-jalali-property.html.
31 Stipulation of Dismissal, Docket Entry 45, United States v. 2601 West Ball Road, No. 12-CV-01345 AG-MLG (C.D. Cal. Filed Aug. 21, 2012).
32 City of Oakland v. Lynch, 798 F.3d 1159 (9th Cir. 2015); United States v. Real Property & Improvements Located at 1840 Embarcadero, Oakland, Cal., Case No. C 12–03566 MEJ (N.D. Cal. 2012); United States v. Real Property & Improvements Located at 2106 Ringwood Avenue, San Jose, California, Case No. C 12–03567 MEJ (N.D. Cal. 2012).
33 See, e.g., What Services Require a DBPR License?, Fla. Dept. of Business & Professional Regulation, http://www.myfloridalicense.com/dbpr/services.html (listing businesses and professions that require licensure).
34 See, e.g., American Institute of Architects Code of Ethics & Professional Conduct, Rule 2.101 (2012) (members shall not, in the conduct of their professional practice, knowingly violate the law).
35 See, e.g., 11th Cir. Pattern Jury Instructions (Criminal Cases), Special Instruction No. 18; Glass v. Parrish, 51 So. 2d 717, 721 (Fla. 1951).
36 See Aversano v. State, 966 So. 2d 493, 495 (Fla. 4th DCA 2007), citing State v. Franchi, 746 So. 2d 1127 (Fla. 4th DCA 1999) (citation omitted) (advice-of-counsel defense applies only to a specific intent crime); 11th Cir. Pattern Jury Instructions (Criminal Cases), Special Instruction No. 18, Annotations and Comments (“This instruction should be used, where appropriate, only in cases where ‘intent’ is an element. It is not to be used where it is required only that the defendant acted ‘knowingly.’”).
37 See, e.g., United States v. Tobin, 676 F.3d 1264 (11th Cir. 2012) (18 U.S.C. §841 is a general intent crime that does not require proof of willfulness; 18 U.S.C. §
846 requires proof of specific intent to conspire).
38 See, e.g., Inmuno Vital, Inc. v. Telemundo Grp., 203 F.R.D. 561, 564 (S.D. Fla. 2001) (“It is well-established that when a party asserts a defense, such as the advice of counsel defense, that makes an attorney’s advice an issue in the litigation, that party waives the attorney client privilege.”).
39 See, e.g., United States v. Zolin, 491 U.S. 554 (1989); Am. Tobacco Co. v. State, 697 So. 2d 1249, 1256 (Fla. 4th DCA 1997).
40 26 U.S.C. §280E (2015).
41 Olive v. Comm’r, 139 T.C. 19 (2012), aff’d, 792 F.3d 1146 (9th Cir. 2015).
42 National Cannabis Industry Association, Internal Revenue Code Section 280E: Creating an Impossible Situation for Legitimate Businesses, available at https://thecannabisindustry.org/uploads/2015-280E-White-Paper.pdf.
43 See, e.g., In Re Arenas, 514 B.R. 887 (Bankr. D. Colo. 2014) (dismissing bankruptcy petition filed by marijuana business), aff’d 535 B.R. 845 (10th Cir. BAP 2015) (debtor in the marijuana business in Colorado could not obtain bankruptcy relief); In Re McGinnis, 453 B.R. 770 (Bankr. D. Or. 2011) (declining to confirm Ch. 13 plan that was to be funded with income generated from debtor’s medical marijuana business).
44 A person aids and abets if he “intentionally joins with [another] person to commit a crime” or “willfully directs or authorizes” the criminal acts of another. Eleventh Circuit Pattern Jury Instructions (Criminal Cases), Special Instruction No. 7.
45 S.D. Fla. Rules Governing Attorney Discipline R. 1(a); N.D. Fla. Local R. 11.1(E)(1); M.D. Fla. Local R. 2.04(d); Rules Governing Attorney Discipline in the U.S. Court of Appeals for the 11th Cir. R. 1(A).
46 See, e.g., Florida Lawyers Mutual Insurance Company, Lawyers Professional Liability Agreement §V(A)(1), available at https://flmic.com/files/8314/2186/9796/2011_FLPL_101_no_signatures_p_4.pdf (“The policy does not afford any coverage or benefits with respect to: [a]ny [c]laim arising out of a criminal, dishonest, intentional, malicious or fraudulent act, error or omission, committed by an [i]nsured.”).
47 1 8 U.S.C. §§1957, 981(a)(1)(A). Note that §1957 contains a safe harbor for “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.” 18 U.S.C. §1957( f)(1). This safe harbor only applies to attorneys’ fees in criminal cases.
48 Rul. Reg. Fla. Bar 5-1.1(a).
49 Nathaniel Popper, Banking for Pot Industry Hits a Roadblock, N.Y. Times, July 30, 2015, available at http://www.nytimes.com/2015/07/31/business/dealbook/federal-reserve-denies-credit-union-for-cannabis.html?_r=0.
50 James M. Cole, Office of the Deputy Attorney Gen., U.S. Dept. of Justice, Memorandum to U.S. Attorneys, Guidance Regarding Marijuana Related Financial Crimes (Feb. 14, 2014), available at http://www.justice.gov/usao/waw/press/newsblog%20pdfs/DAG%20Memo%20-%20Guidance%20Regarding%20Marijuana%20Related%20Financial%20Crimes%202%2014%2014%20(2).pdf. Department of the Treasury, Financial Crimes Enforcement Network, BSA Expectations Regarding Marijuana-Related Businesses (Feb. 14, 2014), available at http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2014-G001.pdf.
52 Legislation has been introduced, but not passed, to allow financial institutions to accept deposits of money from legal marijuana businesses. See, e.g.,
Marijuana Businesses Access to Banking Act of 2015, H.R. 2076, §1726, 114th Cong. (2015); Marijuana Businesses Access to Banking Act of 2013, H.R. 2652, 113th Cong. (2013).
53 See note 24.
Bruce E. Reinhart is the co-chair of the Government Compliance, Investigations and White Collar Defense Practice Group at McDonald Hopkins, LLC. He practices from the firm’s West Palm Beach office. Reinhart is a former federal prosecutor, a former Palm Beach County ethics commissioner, and a member of The Florida Bar’s Professional Ethics Committee. He represents clients in ethics, compliance, forfeiture, and government enforcement matters.