In this episode, Matt Kelly and I take a deep dive, literally into the weeds of the convergence of the compliance profession and the nascent cannabis industry. While several states have made pot for medical use legal and one state, Colorado has made it legal for personal consumption, it is still illegal under federal law. We consider such questions as:
- Lawyers and accountants are required to report large cash transactions to the federal government—but large cash transactions are common in the cannabis industry, since commercial operators don’t have easy access to the banking system. So if you report one of these transactions, are you turning over evidence of illegal activities of your client to authorities? Or do you not report, and risk sanctions against yourself?
- If the Justice Department does act against a commercial weed business, will prosecutors really seek to impanel a federal grand jury, with jurors drawn from a state where they voted to legalize? Could prosecutors ask a candidate juror whether he or she smokes weed? Could that juror invoke the Fifth Amendment?
- Should lawyers be allowed to own equity in a legally operating marijuana business? What about judges? Do the two groups need different standards?
- Professional conduct rules for lawyers require competency in rendering legal advice. What does competency even look like in this branch of business conduct, when the laws are so new and in conflict with federal law?
- Will the nascence of the cannabis industry allow for innovations such as incorporation of blockchain to create fully auditable trails for all aspects of the business?
- Will any state which taxes cannabis sales be required to remit this money under a theory of profit disgorgement from funds generated by illegal activity.
For more from Matt Kelly:
See his blog post Compliance, Careers and Cannabis Industry;
Hear Matt Kelly’s interview with Amy McDougal (yes Matt has his own podcast as well-the Radical Compliance podcast) by clicking here.