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May 10, 2021

Cannabis Counseling: Recreational marijuana could mean bigger business for law firms

YEHYUN KIM :: CTMIRROR.ORG Staff members at cannabis grower CTPharma’s Rocky Hill facility trim dried marijuana flowers.

A multitude of businesses cropped up following the legalization of medical marijuana in Connecticut, a pattern likely to repeat if the state follows the same path with recreational pot.

The trend has been fertile soil for the legal industry, with some law firms forming practice groups dedicated to cannabis law.

Gov. Ned Lamont proposed legislation aimed at legalizing recreational marijuana early this year. As of late April, the Judiciary Committee had approved it, and lawmakers are slated to continue debating it in the coming weeks.

Supporters are optimistic it will get the necessary votes to pass. Recreational marijuana is expected to bring in up to $952 million in new state tax revenues over a five-year period, with the potential for 17,462 new jobs in that timeframe, according to a report from UConn’s Connecticut Center for Economic Analysis.

Law firms have been watching the proposal’s progression closely. If passed, it would mean not only business opportunities for entrepreneurs, but more rules for employers. Both add up to more legal work for attorneys focused on cannabis law.

Attorney Aleece Burgio serves as cannabis team leader for Barclay Damon, a large Northeast firm with an office in New Haven. The firm started the practice group in 2018.

Burgio is its sole attorney dedicated exclusively to cannabis-related law, but she oversees 14 partners who work in corporate, litigation, employment and regulatory law and help clients on cannabis-related issues. They represent medical marijuana dispensaries, agricultural hemp producers, and adult-use cannabis businesses, including multistate operators.

According to Burgio, the cannabis industry has been one of growth for the firm.

“It has been successful,” Burgio said. “I think that almost every [law] firm in the near future is going to need to have some sort of cannabis expertise to it, especially given the market now.”

In demand

In March, New York legalized recreational marijuana, and Burgio, who works out of the firm’s Buffalo office, said she got more than 100 calls in a three-week period from people interested in entering the cannabis space there. She noted how several states, Massachusetts and New Jersey among them, allow recreational marijuana, and she anticipates that many more states will follow.

“Lawyers need to have an understanding of how this works,” Burgio said. “It is federally illegal. Each state has different rules and regulations. It makes sense, especially when you are a big law firm, to have a group of attorneys who are very up to date on the regulations.”

Burgio says there is “enough business to go around” for any law firms that want to be involved in assisting the cannabis industry. Demand and interest have been so high that Barclay Damon can’t represent everyone who has sought counsel.

“We are turning clients away,” Burgio said.

Barclay Damon on March 1 launched a weekly podcast, “Barclay Damon Live: The Cannabis Counselor, Featuring Aleece Burgio.”

Burgio hosts 10 to 20 minute segments with interviews and weekly updates on cannabis-related topics, such as federal and state legislation, taxation, banking, labor and employment, and how to enter the industry. The podcast also covers state-specific news. Its target audience includes people looking to enter the cannabis industry, existing multistate operators, or anyone interested.

If recreational pot is legalized in Connecticut, attorneys foresee an influx of marijuana-related businesses opening in the state. That would mean more business for real estate and land use attorneys, as municipalities grapple with zoning issues related to stores selling marijuana products. Law firms will want to help existing out-of-state clients expand into Connecticut. Entrepreneurs applying for Connecticut licenses, either for growing or selling marijuana, would likely need legal assistance too, Burgio said.

Other players

Barclay Damon isn’t alone in getting into the cannabis space.

Law firm Carmody Torrance Sandak & Hennessey, which has a New Haven office, established a cannabis practice group in 2014. Its lawyers started advising medical marijuana dispensaries. Today its attorneys provide a range of services to the industry, from licensing and land use to zoning, employment and intellectual property. While about a dozen attorneys are attached to the group, it pulls in assistance when needed from the entire firm.

Benjamin Pomerantz, managing member of Carmody’s cannabis practice group, said they are already getting pre-emptive calls from people who want to get into the industry in advance of Connecticut passing a recreational marijuana law.

They anticipate business from growers, distributors, retail, delivery companies and potential hookah bar-style lounges. Accountants, security personnel and even lab testing will be needed to support the industry, and will likely need legal advice, Pomerantz said.

Large multistate operators in the cannabis industry typically have in-house legal departments, but still hire Connecticut-based firms for local matters or as local in-state counsel, he added.

He also anticipates many individuals with prior marijuana-related convictions will seek to have their records expunged.

“We want to help the community, and this [expungement] may be an area for pro bono work,” Pomerantz said.

Patrick Hanna, a real estate and business services attorney who is part of Carmody’s cannabis group, said if demand gets high enough, it could mean firms hire additional attorneys and support staff.

Andrew C. Glassman, an attorney with Pullman & Comley based in its Hartford office, serves on that firm’s cannabis industry team. The firm created it when the state allowed medical marijuana back in 2012.

Six attorneys at the firm are involved in the team. Four consult with companies on medical marijuana, cannabidiol and hemp, including setting up companies, and sales, acquisitions and mergers. Two members provide clients with advice on employment issues related to medical cannabis in the workplace.

According to Glassman, many law firms don’t have a cannabis practice, which he attributed to hesitancy due to the conflict with federal law prohibitions.

“We have had clients come to us because they have had trouble finding representation,” Glassman said.

Glassman said he hopes it will mean more business for his firm if recreational marijuana is legalized in Connecticut.

“It would mean more businesses selling, and whenever you have more activity, you have a need for more lawyers,” Glassman said. “People will be needing to get up to speed on the regulations and the law.”

His firm is taking a “wait-and-see” approach in terms of expansion. If demand increases, and cannabis turns into a consistently growing industry, he said they would likely add to their team.

Advising employers

Companies will have to modify their policies around marijuana use if recreational pot is legalized in Connecticut.

Pre-employment drug testing policies are an example. Employers wouldn’t be able to cite the presence of tetrahydrocannabinol, or THC, the compound in marijuana responsible for its mood-altering effects, as a reason not to hire a candidate, according to Burgio.

What an employee does “off the clock” in terms of marijuana usage would be OK, as long as they aren’t under the influence while working, she added.

“Employers are very curious about how they would move forward, especially if they have had a drug-free workplace or if they tested for marijuana previously,” Burgio said.

In addition to its podcast, Barclay Damon is planning webinars and workshops to help provide guidance to employers.

According to Pomerantz, workers will likely be protected for off-premises, off-duty marijuana use much as they are now for alcohol or tobacco.

Vincent Farisello, a labor and employment lawyer with Carmody, said he is monitoring the proposed legislation on behalf of clients.

He noted that when medical marijuana legislation passed, it required training and policy updates.

“I’m sure that if this passes, it will also require reviewing and revising drug and alcohol policies, and training for human resources and frontline supervisors as well,” Farisello said.

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