Buzz Kill for Cannabis Lawyers at ABA Forum on Franchising
Franchising cannabis is “like franchising a bank robbery franchise,” said attorney Mike Drumm at the American Bar Association Forum on Franchising today. Nonetheless, he and other panelists shared best practices on serving such clients and called the prospect full of opportunity.
A buzz kill was in store today as attorneys packed into a panel about cannabis and franchising and mostly heard about dire warnings and ever-changing regulations, at the American Bar Association Forum on Franchising in Denver.
One of the three panelists, Mike Drumm of Drumm Law, however, provided a lighter touch. He was wearing a groovy tie-dyed t-shirt under his brown sport coat and introduced the panel’s subject this way: “We’re talking about some wacky tabaccy, some blade, some Mary Jane,” plus a half-dozen more nicknames.
He added advice about edibles. “Edibles are like shots, so you’ve got to be careful because if you take too many you’re not going to know until it’s too late,” he said. He wrapped up his talk with a classic video from two of America’s most famous stoners, Willie Nelson and Snoop Dogg performing on Letterman.
Everything else was rules, prison time and denial of malpractice coverage.
Caroline Bundy Fichter of Bundy Law Firm said “there’s a lot of opportunity” in growing a cannabis business using a franchise model. “Unfortunately there are some substantial risks.” Chief among them: Attorneys with cannabis clients “are technically working with a client committing things that are illegal under federal law,” she said.
CBD businesses, which sell products very low in the “high”-inducing chemical THC, on the other hand, face the opposite problem. “It was legalized in the 2018 Farm Bill because it comes from hemp. But it is not universally legal at the state level,” she said.
“This came as unpleasant news for a truck driver” stopped on the Idaho border with a load of hemp plants he was bringing in from another state. “That gentleman is facing 15 years as a guest of the state of Idaho in a state prison,” she said. “ You will face the same sourcing and transportation problems” for hemp as for cannabis.
Nonetheless, CBD is booming. “CBD is the new avocado toast. It’s expected to have a 107 percent annual sales increase from now until 2027,” she said. “You can walk out this door to the Target, and the Target will have many products” with CBD.
Drumm put the dilemma for attorneys representing cannabis clients this way: “As a lawyer you are a weed lawyer, and you being a weed lawyer may not work in a church group, Boy Scouts, who knows. That’s one of the big challenges.
“And the other big challenge is, it is illegal federally, and federal law preempts state law. It’s like franchising a bank robbery franchise. You’re colluding to, ‘Here’s how you do it, here’s the mask you should wear.’”
Ashley Kilroy heads the department of excises and licenses for the city of Denver. Colorado legalized medical marijuana in 2000 and started selling recreational marijuana on January 1, 2014. Denver, she said, has 1,116 licenses operating out of 476 locations. “We have more marijuana locations than Starbucks or whatever else you think of as ubiquitous,” she said.
Her department has been chasing the growers and sellers of recreational weed vigorously, making new rules as problems crop up, including the creation of anti-odor rules three years ago that sets Denver surprisingly apart from the strong weed smell in downtowns from Las Vegas to Phoenix and beyond.
Policy “is going to be changing rapidly,” and business owners “will be incurring costs as they adapt” to those changes, she said.
The 42nd annual Forum on Franchising continues through October 18.