Medical Cannabis Is the Next Boom, but When Will It Bust?

With Pennsylvania well on its way toward implementing a medical marijuana program, dozens of lawyers in the state are preparing for an explosion of legal work related to cannabis.

The blossoming industry is reminiscent of the surge in legal work that grew out of the Marcellus Shale play, which sparked up engagements for all kinds of firms almost a decade ago.

“Everyone wanted to be in it, there were people who carved out individual expertise … but the special area is here to stay,” said Steve Franko, a solo practitioner from Northeast Pennsylvania and member of the Pennsylvania Bar Association’s medical marijuana and hemp law committee. “It’s going to be, just like the [natural] gas was, a combination of people who have skills that maybe cross upon multiple areas.”

Drilling and shale continue to create legal work in Pennsylvania, but not at the same level they did at the start of the boom. When fuel prices dropped, so did the amount of local legal work available, something that has particularly affected general practitioners without a deep background in energy law who had jumped on the bandwagon.

Lawyers now getting into the medical marijuana space acknowledge that there may come a time when federal authorities decriminalize marijuana, decreasing the number of legal questions and the demand for cannabis-related legal consultations. But that’s a long way off, they said, as Pennsylvania is just starting to address the complicated effects of medical marijuana on numerous areas of law.

Andrew Sacks, head of both the Pennsylvania and Philadelphia bar association’s medical marijuana and hemp committees, said he has also heard lawyers compare medical cannabis to Pennsylvania’s gambling expansion, which created a rush of legal work several years ago, then saw a decline in work when casinos got their licenses.

But licensing is just the surface of medical marijuana law, said Sacks, a name partner at Philadelphia’s Sacks Weston Diamond. Lawyers in many other practices areas have an opportunity to get in on the action.

“Everybody is searching the world, searching the country and cities to see what people have done in their specific area so they can become specific experts,” Sacks said. “People are gearing up to become the names in the category.”

PHASE TWO

Pennsylvania passed its medical marijuana law in April 2016, and started the implementation process almost immediately. The Pennsylvania Department of Health is expected to grant licenses to a limited number of growers, processors and dispensaries this summer, after receiving hundreds of applications earlier this year.

As the applications poured in, lawyers created bar association committees to strategize, and the Pennsylvania Supreme Court updated its ethics rules, so lawyers can counsel clients on medical marijuana-related issues.

That was phase one, Sacks said, and the second phase is happening now.

“You’ve got the ancillaries coming in. You’ve got the testing facility people from out of state coming in,” he said. “You’ve got new lawyers that are doing transaction work and other work and not sitting there waiting for the Department of Health.”

For instance, last month the Department of Health contracted with Denver-based MJ Freeway to create a web platform for the state government to interact with and monitor licensed cannabis businesses. Those businesses have not even received their licenses yet, but MJ Freeway has hired Sacks as its local counsel in preparation.

Joshua Horn, co-chair of Fox Rothschild’s cannabis practice, said he has already begun counseling clients about the clinical licensing process, which is yet to come.

Things will really explode in the legal world “the second the first drip of medical marijuana gets sold,” Sacks said. When that happens, it won’t just create heath care and business issues, he said, but questions in a multitude of legal practices.

Kathryn Palladino, a criminal lawyer and subcommittee chair on the Philadelphia Bar’s medical marijuana committee, said she expects medical marijuana to become part of her day-to-day work, and it’s not just about clients breaking federal law to use it. DUI cases will raise questions about whether patients can drive after using marijuana, she said, and patients who are incarcerated may seek access to cannabis in prison. Patients on probation or parole who seek access to medical marijuana may risk violating parole.

“It will only grow as the patients have access to the marijuana and we see some issues come up that the legislature hadn’t planned for,” Palladino said.

And that’s just criminal law.

The new field of medical marijuana law will also touch on employment law, family law, education, intellectual property, licensing, life sciences, real estate, tax, workers’ compensation and zoning law, lawyers said.

That’s one way that medical marijuana is different from the Marcellus Shale boom, Sacks said. Drilling and natural gas led to legal questions in five or so other areas of law, he said, but for legal cannabis, the collateral issues are more numerous.

AN UNCERTAIN TIMELINE

It’s difficult to predict if and when the federal government will legalize medical marijuana, lawyers said, especially under the current presidential administration.

“Until the [federal] law changes you’re always going to have a dichotomy between federal law and state law,” said Fox Rothschild’s Horn.

If the federal government legalizes marijuana for recreational and medical use, the pharmaceutical industry will likely take over and the insurance sector will become involved, Sacks said.

“Some of [the legal work] will go away, but you’re not going to get this de-scheduled anytime soon,” he said.

Even then, family law and criminal law will likely continue to face complex medical cannabis questions, Sacks added.

“Things will run more smoothly, but I don’t see this area of law dying out in the future,” Palladino said. “We are only seeing just the tip of the iceberg of what medical marijuana and hemp are capable of doing.”

Federal legalization could have additional effects in Pennsylvania, where the medical marijuana program includes eight special permits and funding for clinical research on the substance’s medical effectiveness. With the removal of federal restrictions, Pennsylvania’s research programs could become a national resource.

While Colorado and California have more established legal cannabis industries, Pennsylvania’s clinical research program would be unique, Horn said.

“I give our legislature a lot of credit,” he added. “They’re trying to establish the commonwealth as a research triangle in this space.”