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Hawaii lawyers can’t help clients apply for high-stakes medical marijuana dispensary licenses authorized under a new state law, according to a formal opinion of the Hawaii Supreme Court Disciplinary Board.
Attorneys can provide legal advice regarding the state’s newly enacted medical marijuana dispensary law, but shouldn’t provide legal services to help establish or operate businesses because that would assist in committing a federal crime, the board said.
Hawaii legalized medical marijuana 15 years ago, but patients have had to grow their own or rely on the black market for access to their medicine. A new law approved this year allows eight companies to receive licenses to grow and sell marijuana at up to 16 dispensaries as early as next summer. Several entrepreneurs have already hired attorneys to help them prepare applications to enter what’s expected to be a multi-million-dollar industry.
But the decision by the Disciplinary Board, an 18-member appointed group made up of volunteers who conduct investigations and prosecutions of attorneys suspected of unethical actions, is bad news for lawyers hoping to get involved in the industry and those who are relying on them. Attorneys who violate ethics rules risk losing their ability to practice law in Hawaii.
“Without a lawyer involved, we’re treading water by ourselves.” — Scott Williams, medical marijuana consultant
The Aug. 27 decision has already caused trouble for Scott Williams, a medical cannabis consultant for two groups applying for licenses to grow and sell the product on Oahu and the Big Island.
Williams said the formal opinion caused the firm that was representing his Oahu group to end their partnership last week, and he’s worried that the attorneys helping his Big Island application will also be deterred.
“It’s super frustrating,” Williams said. “We just got dropped right in the middle of our paperwork being processed… They said, ‘Sorry, here’s your deposit back, have a nice day, good luck.’”
He said having an attorney is “imperative” because his team is in the midst of nailing down its corporate structure, applying for trademarks, determining what percentage of the company each person will own and negotiating multiple contracts.
“Without a lawyer involved, we’re treading water by ourselves,” Williams said. “We could be signing contracts that might not be accurate… We’re literally having to talk to lawyers in Maryland so we can maintain this process.”
His team doesn’t have a lot of time to figure out what to do. State law requires applicants to have at least $1.2 million in the bank 90 days prior to submitting applications in January. Williams says his group has been racing to get its corporate structure and finances in place by Oct. 1.
The situation could change if the state Supreme Court amends the Hawaii Rules of Professional Conduct or adds an “appropriate comment,” according to the formal opinion. Judiciary spokeswoman Tammy Mori said that to her knowledge, no one has yet requested a rule amendment.
“If and when a request for a rule amendment comes in … the court will determine the appropriate action to take,” she wrote in an email.
Carl Bergquist, executive director of the Drug Policy Forum of Hawaii, a leading advocate for establishing medical marijuana dispensaries, is optimistic that the Supreme Court will resolve the issue.
“People are a little bit helter-skelter but we’re not overly concerned at this stage,” Bergquist said. “This (law) is the will of the people and we’re hopeful that the Supreme Court will see that and change the rule.”
Bergquist noted that many other states have had to deal with similar issues. Several states have legalized marijuana for medicinal purposes and four states have legalized recreational use, but cannabis is still officially a Schedule I drug at the federal level.
According to the Disciplinary Board’s written opinion, the Minnesota Supreme Court exempted attorneys from disciplinary action regarding medical marijuana, while Connecticut amended its rules to allow lawyers to assist with conduct that’s permitted by state law.
The state supreme courts of Colorado, Nevada and Arizona all added comments to their rules that allow attorneys to provide advice and services to medical marijuana dispensaries, and in New York and Arizona, the state bar associations weighed in similarly.
Della Au Belatti, a Hawaii state representative who helped write the medical marijuana dispensary law, said she was aware that this could be an issue but that the Legislature doesn’t have the authority to change the Judiciary’s rules because that would violate the separation of powers.
She said she supports efforts to clarify the rules quickly, and thinks it’s appropriate for the Supreme Court to add a comment to that effect.
“I think that’s an expeditious way to deal with an issue that’s causing a lot of confusion right now,” she said.
Bergquist said he’s hopeful that the Hawaii Supreme Court will act fast.
“Timing is of the essence here,” he said.
Read the Disciplinary Board’s formal opinion below: