Have you heard? Cannabis is federally illegal. And in places where state law disregards the feds, it’s highly regulated. That means if you’re in cannabis, you need a lawyer to help you sort things out.
Recently we asked Grown In readers what attorneys and law firms they turn to to make sure they aren’t getting too far over their skis. We got back a huge number of names. Here are some of the firms mentioned more often than others.
Matt Abel, Cannabis Counsel – website
Twenty-five years ago Matt Abel struck out on his own, eventually founding a firm, Cannabis Counsel in Detroit, which he had to legally rename to “The Rivertown Law Firm”, because banks wouldn’t let him hold an account under that name, for fear of crossing the law.
“In the early days it was all criminal defense, that was the only cannabis law available. So I was exclusively working in marjuana cases,” Abel said. “Slowly it began to evolve where people began thinking about creating a business in this area.”
After participating in state referendum efforts, and then leading Michigan NORML (last week he told Grown In he’s stepping down), Abel grew the firm to five attorneys focusing on Michigan cannabis law, license approval, zoning, and local municipality lobbying for license approval.
Watching hundreds of cannabis businesses start and grow, Abel warns his clients that the market is never stable.
“You have to realize when the time is right to either merge or sell your business,” he says. “That there may be a day when a business is worth $5 million and you’re riding high and you think this gravy train is going on forever. And then a year later they offer you half that because the market has saturated. We don’t know how quickly the market will saturate, but it will at some point.”
Dave DiGiacomo, Michael Best & Friedrich LLP – website
“Especially with cannabis law, I think at any stage within an emerging industry, you have folks that are maybe trying to navigate it on their own,” said attorney Dave DiGiacomo. “Doing things right the first time – an ounce of prevention will provide a pound of cure.”
DiGiacomo, who started working on cannabis in 2012 with Colorado’s legalization effort, came to Michael Best as part of a law firm merger, making his cannabis practice part of the Milwaukee-based firm.
“Michael Best is an established Midwest law firm with great roots ain Chicago, Milwaukee, and Madison,” he said. “We have a ton of clients in the industrial hemp space and we represent multi-state operators at lots of steps of the chain. We focus on growth businesses and larger scale businesses as well.”
Byrna Dahlin, Benesch – website
In 2015, after spending 15 successful years as a litigator, Byrna Dahlin made a big change to cannabis law.
“The opportunity was clear,” she said. “And more important for me, it was an area I really wanted to support because I thought legalization was the right thing to do. The harms from the war on drugs was terrible, and it was anything I could do to be a part of this industry.”
But, she says, if you’re interested in getting in cannabis, do it before it becomes too late.
“It’s getting harder for new entrants to gain a foothold and gain an impact,” she says. “I hope as the industry continues to grow, there is a way for smaller players to meaningfully participate in the industry.”
In that vein, Dahlin says existing cannabis businesses should start preparing for big regulatory changes at the federal level.
“We’re years off from legalization, but the SAFE Act could happen relatively soon (legalizing full banking services to cannabis), and that will change the industry. Companies will have to start orienting their thinking towards federal legalization and how that will impact their business.”
David Feldman, Hiller – website
Although he’s a securities lawyer – specializing in cannabis companies – David Feldman still marvels at what he does.
“Is anyone surprised that David Feldman is a cannabis lawyer, given how we spent our high school years?” he says his old friends kid him.
He earned his name pioneering reverse mergers, where private companies take over an already publicly traded company, to gain access to the markets. In fact, Feldman has written two books on the topic, an expertise that’s become increasingly useful when advising growing cannabis companies.
After helping to build a large cannabis practice at another firm, Feldman moved to Hiller to emphasize consulting.
“My focus has and remains to be on the finance side of the industry. Taking companies public, and even doing startup work. Our firm does a lot of regulatory work, getting people licensed, also litigation. We’re one of the top New York City zoning firms,” he said.
Feldman cautions his clients to have a deliberate speed with acquisitions.
“They’re not fixating enough on due diligence of transactions. We’re seeing a number of deals unravel because of embarrassing discoveries that should have been uncovered before the deals were made. [Leaders] are under tremendous pressure by their advisors to hurry up the process. They ignore and minimize the careful review of diligence.”
Feldman also thinks this is the year of branding in cannabis.
“More professionals are coming in, instead of just weed people talking about their strain on Instagram. Now we have marketing people. It’s the one thing you can do nationwide: Build a brand. Not just of marijuana products, but dispensary brands too,” he said. “It drives me nuts when people have dispensaries with different names. I ask them, ‘Why? Why do you do that?’”
Bill Bogot, Fox Rothschild – website
Bill Bogot started his career at the Illinois Gaming Board, ending up as the Acting General Counsel.
“It’s highly regulated, When people applied for a casino license in a state like Illinois, it was very similar to applying for a cannabis license,” he said.
When he started working on cannabis law in 2013, he had to pass on some clients, because at the time it was illegal for a member of the Illinois Bar to represent a business that was federally illegal. “We had to petition the state supreme court to allow us represent them,” he said.
“People need to be on top of compliance and voluntary disclosure of issues,” Bogot said. “We had a mantra at [my old firm]: Disclose, disclose, disclose. Regulators understand people make mistakes. Bring it to them, and you generally don’t get in serious trouble when you say we had these problems and are now trying to fix it. The problems come when you try to hide it.”
Bogot sees two driving concerns for smaller cannabis businesses in Illinois, versus concerns for larger ones.
“I do worry if federal law doesn’t change soon enough, a lot of the new entries have not taken in account [IRS Regulation] 280E and the deduction requirements, so their pro formas will be askew. That will be a wake up call,” said Bogot referring to the federal tax regulation that vastly limits deductible expenses for businesses selling FDA Schedule I drugs.
“For the large companies, one of the larger things coming in 2021, if federal law changes, will be not just 280E, but for some of the companies already trading on [the Canadian stock exchange], will be a jump to the U.S. Board, as the New York Stock Exchange navigates that with a large spike of large investors getting into cannabis,” he said. “Even though the stocks are doing great, think of the number of people that can’t buy it [right now]. It will be a good change. More access to capital. It will make the swings of the market less volatile.”