Marijuana legalization hasn’t blossomed in N.J., but cannabis remains fertile field for law firms

By Brett Johnson
New Jersey | Nov 13, 2019 at 4:20 am
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The expectations for explosive growth in the cannabis sector, a fuse lit by Gov. Phil Murphy’s campaign promise to legalize marijuana in the Garden State, haven’t completely died out.

But, as the future of pot in New Jersey has gotten hazy after a few faltering efforts by lawmakers, those eager to pour investments into real estate and other assets in preparation for the industry’s boom are experiencing some burnout.

There’s one place, however, you don’t find many regrets about early investments into the green gold rush … and that’s at law firms. 

For example, one of the earliest New Jersey law firms to plant resources in the cannabis sector was Sills Cummis & Gross. It was in early 2015 that the Newark firm announced it was launching a “Regulated Substances Practice” in preparation for more states introducing legalized medical and recreational cannabis, indicating as well that it expected New Jersey could do the same.

At the tail end of 2019, despite no recreational cannabis legalization in the Garden State, Max Crane, the firm’s managing partner, doesn’t think the firm started a minute too soon.

“We’ve been put on the map for the legal side of this sector by investing time and resources in it, and that’s invaluable,” he said. “Although the legislation in New Jersey hasn’t been passed yet, there’s still business happening. We’ve actually already seen a return on our investment.”

What Crane calls his “very bullish” attitude about this budding sector doesn’t depend entirely on New Jersey’s progress on its path toward legal recreational use of cannabis; he admits that’s been more difficult than most imagined, but he says it’s still an inevitable destination for the state. 

But even without it, he still has lawyers generating significant business dealing with cannabis-related client matters. 

“Two attorneys here — Victor Herlinsky, one of the top advisers to the Cory Booker presidential campaign, and Robert Schiappacasse — both came to me about three years ago now and said this was going to be the hottest thing in law,” he said. “The clients they’ve since been raising the visibility of in a positive way — they were never interested in scrambling to get that recognition last minute, once legislation is already passed.”

Unlike some investments — such as growing facilities, which largely can’t bear fruit until legalization gets a final sign-off — cannabis resources at law firms are already making money, even those focused mostly on just the Garden State.

Nik Komyati, chair of the Cannabis Practice Group at Bressler, Amery & Ross, said it’s all the businesses adjacent to this new sector that have been responsible for that.

Nik Komyati

“In New Jersey, there are tons of issues to deal with when it comes to people involved with CBD or hemp farming right now, on top of the companies that still want to get set up with licenses for medical marijuana in the state,” he said. 

If anything, the limbo New Jersey has remained in during the past year of industry pondering about when a law expanding the marijuana market might get passed has given law firms more time to help the sector’s stragglers catch up in terms of preparation for business opportunities.

“Still, just as many businesses are interested in getting into this sector and want to be advised on how to do so appropriately,” he said. “And we try to provide expertise not only for the company growing the plant, but also a company that might want to sell them fertilizer.”

At the same time, there has formed an increasingly crowded market for cannabis businesses in states where this industry has matured over several years, such as Colorado. Even if no one is completely sure when New Jersey’s own legislation might get passed, it remains a blank slate for those established companies to work on.

John Fanburg, managing member at Brach Eichler LLC and co-chair of its Cannabis Law Practice, said the state’s own legislation was expected by many to arrive last spring.

“Now, with the entire state Assembly being up for election in the November cycle, there has been some discussion of it coming up in the lame-duck session,” he added. “So far, we’re still waiting.”

When a law allowing regulated adult use of marijuana last failed to make its way to the governor’s desk, state Senate President Stephen Sweeney (D-West Deptford) said lawmakers will ask the state’s voters to decide on the matter through a ballot measure.

“In the meantime, different aspects of this industry are being taken more seriously by people on all sides of the issue, even if there’s a feeling that we have a long way to go to really managing it appropriately,” Fanburg said. 

One complication that has arisen is the recent health crisis brought on by cases of vaping products being associated with lung injuries. The Centers for Disease Control and Prevention reported Oct. 22 that 1,604 of these cases have been reported across the country so far and that there have been 34 confirmed deaths.

“In light of these deaths we’ve had, everyone, especially those in the industry, should be concerned,” Fanburg said. “We all want a safe industry.”

Brach Eichler LLC
John Fanburg, managing member at Brach Eichler LLC and co-chair of its Cannabis Law Practice.

THC, the main compound in marijuana, is present in most of the samples taken in these cases, but the exact cause of these injuries has not been determined. Regardless, the CDC issued a recommendation that no one use vaping products containing THC.

In New Jersey, a Murphy-commissioned task force recommended a ban on all flavored vaping products. Some states, including Rhode Island and Massachusetts, have introduced limits on the sale of those products.

In another example of how law firms are staying busy serving client interests adjacent to the cannabis sector, Komyati has been representing a business that manufacturers these devices. Although the business is involved in making the vaping hardware, not the cartridges, the company has been dealing with the fallout from the unregulated industry’s bad publicity.

His stance is that the recent issues have actually further highlighted the need to make these and other cannabis products legal and, importantly, regulated for adult use.

“Regulate, test and disclose — those are to me the three pillars for anything people are putting into their bodies,” Komyati said. “You want to regulate so manufacturers have a duty to disclose what people are getting, while also testing it to make sure what they’re saying is correct and that it’s safe.”

As everyone — including and especially those in the legal sector — waits to hear what the state’s lawmakers have planned for legal weed, they’ll also be waiting to hear what they might have planned for vaping products. 

Much like proponents have argued marijuana legalization keeps people safe, Komyati argues that bans are a faulty solution.

“It’s basically saying, ‘Bad actors, here you go — you can dominate this industry,’” he said. “That does nothing to benefit public health of safety. If we have no oversight, unfortunately, we’ll have more people hurt. Because, like it or not, it’s here to stay.”

Lateral latitude

The state’s top-ranked law firms today like to make themselves a comfortable place for laterals to land.

For one, lateral hiring, bringing on someone who didn’t build their career with the law firm, is a big deal at Sills Cummis & Gross. Among that firm’s many recent recognitions was having the most New Jersey attorneys listed in IFLR1000’s national financial and corporate law rankings.

“Since the founding of this firm, and I’d like to say I’ve looked at it the same way, we’ve always embraced laterals,” said Max Crane, the firm’s managing partner. “To us, they’re not just a way of bringing in new clients and opportunities, but also it’s a way of making us a better organization, as we incorporate pieces of everyone’s background.”

The firm’s secret to attracting talent and helping them succeed is not getting too tied up in rules, Crane added.

“One of our top priorities is allowing people to come here without encumbering them with a lot of rules and preconceived ways of doing things,” he explained. “We want people to be part of our culture, how we were founded and the direction we’re headed, but it would be the height of silliness to take someone who has been successful in their professional career to change how they practice, how you deal with clients and finances.”

At Brach Eichler, which also has brought on industry thought leaders with accolades from legal sector ranking companies, Managing Member John Fanburg said the approach also begins with identifying traits such as motivation and commitment.

“We don’t want to just look for whomever has the biggest book of business, even if that’s a factor,” he said. 

Conversation Starters

Reach Max Crane of Sills Cummis & Gross at: mcrane@sillscummis.com or 973-643-5055.

Reach John Fanburg of Brach Eichler at: jfanburg@bracheichler.com or 973-403-3107.