- Posted on: Dec 15 2021
By: Ben Barlow
Recently, a potential (and now current) cannabis business client came looking for advice on how to navigate the regulatory waters as he pivots his business from the non-cannabis market to the cannabis market. In our conversation, I updated him on Virginia cannabis legislation, provided what little is now known about licensing and timetables, and discussed how to best position his business for those next steps in the regulatory process. One question the client had was whether he needed an attorney to help him through the process and what type of attorney he should find. My colleagues and I offered a few ideas about things he should look for and look out for as he went about his search. As a third and final (or at least until there is concrete news to report) blog entry on the upcoming cannabis market in Virginia, here are some of those thoughts:
- Remember that you are interested in bringing cannabis to your legal business, not the other way around. Basically, clients need to remember that while the idea of legal cannabis is new in Virginia, business is not. Counsel with a solid business background and experience assisting ‘traditional’ business clients are must-haves in the new green economy. In addition to understanding any cannabis regulations developed, a client is going to need advice on how traditional business law – business formation, employment, tax, etc. – interacts with cannabis regulations.
- Consider counsel with particular regulatory and licensing expertise. While it is unclear exactly how the new cannabis regulatory scheme will work, it is common for state authorities, when developing regulations, to look to similar frameworks that are time-tested. In Virginia, one example from which the Governor’s Cannabis Control Authority (CCA) will likely borrow is the Virginia Alcohol Beverage Control (ABC) framework. Counsel who have particular expertise advising alcohol clients on licensing and regulation will likely be of immense value to cannabis clients.
- Consider areas of particular importance to cannabis clients. Some clients might have particular interest in branding – especially cultivators and retail establishments. Counsel well-versed in intellectual property law would be a tremendous asset – counsel well-versed in protecting intellectual property and dealing with disputes (litigation) would be a bonus. Clients might want to ask potential attorneys about their experience in representing ‘similar’ (using the term loosely) clients – such as experience with breweries and vineyards who have different product lines with specific branding.
- Think about potential problems from the outset. Cannabis legislation in Virginia, as of now, contains ‘social equity’ provisions aimed at addressing the fact the State, largely for monetary reasons, has legalized activity it prosecuted for generations. It is a given that families and communities in the Commonwealth have been devastated because of prosecutions. The aim of social equity provisions is to help ensure communities affected by the illegality of cannabis benefit from legalization and accompanying economic opportunity. Elements of current social equity provisions are preferential treatment of applicants with prior cannabis convictions and preferential treatment of applicants in communities disproportionately affected by cannabis prosecution. Both factors mean that many prospective clients might need counsel with particular expertise in presenting background information in a way that maximizes favorable outcomes. Better put, clients might need help explaining questionable past decisions. Attorneys with experience dealing with security clearance clients and would-be government contractors would be an asset for such clients.
- Consider the unknowns. Clients should be skeptical of anyone who pretends to know everything they need. Remember that Virginia is in the early stages of a process that will twist and turn and that you are best off with an attorney or other advisor who acknowledges from the outset that there is a lot they don’t know. What clients need is someone who acknowledges uncertainty but has the type of experience they need. What clients do not need is someone who says the right things in order to get a client but ends up having none of the experience needed in the future. When future problems arise, such clients will end up needing new or additional attorneys – a position no one wants to be in.
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