Week in Review: Arizona tells lawyers no, MD grapples with diversity, Oregon faces possible stumbling block

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By Omar Sacirbey and John Schroyer

Arizona’s Supreme Court says no to lawyers, Maryland’s cannabis regulators wrestle with racial diversity, and Oregon’s recreational marijuana market faces a potential hurdle.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Arizona’s high court says no

Arizona is digging in its heels over whether local attorneys can help marijuana entrepreneurs, a decision likely to complicate the lives of local MJ entrepreneurs – especially if the state’s voters approve adult-use cannabis this fall.

The Arizona Supreme Court refused this week to repeal rules threatening lawyers with disbarment if they help marijuana businesses and other clients buy, sell, or use marijuana under a 2010 voter-approved medical marijuana law. The ruling flies in the face of numerous other states which have given attorneys the green light.

The high court’s ruling could make it harder for marijuana businesses to find legal representation, said Steve White, an attorney and the CEO of Harvest Inc., a multistate MMJ business headquartered in Tempe.

“There are a lot of law firms that represent medical marijuana businesses and are very nervous about it,” said White. “Something like this could push them back out” of the cannabis industry.

That could be a double whammy for cannabis entrepreneurs if Arizonans legalize recreational marijuana in November. A new poll shows that roughly half of Arizona voters are likely to support the adult-use initiative.

While some lawyers will exit the cannabis space after the Arizona Supreme Court’s ruling, some are expected to stay. But their numbers will likely shrink, and it will require more effort to locate them.

“You’ll have to find out who is willing to do this kind of thing,” White said.

The Arizona Supreme Court’s decision comes soon after Ohio’s high court proposed rewriting its rules to give lawyers the go-ahead to work with entrepreneurs under the state’s new MMJ program. In May, a Maine Supreme Court ethics panel undid an earlier prohibition against lawyers advising cannabis clients.

Other states ranging from Colorado to Illinois have said lawyers can provide legal assistance to a cannabis business, while others including Nevada and Minnesota have passed statutes or enacted policies that protect lawyers.

Maryland’s diversity dilemma

Add Maryland to the roster of states grappling with how to make their cannabis industries more racially diverse.

Maryland’s Medical Cannabis Commission signaled this week it will increase the diversity of its pool of medical marijuana license winners – even if it means delaying the launch of a program already lagging months behind schedule.

The commission awarded 15 growing licenses and 15 processor licenses last month, but only a handful of minority-led teams were among the winners. This in a state where roughly a third of the population is African-American.

Commissioners have promised to partner with state lawyers to find solutions that legally increase the number of African-American and other minority MMJ license winners.

Darrell Carrington, the executive director of the Maryland Cannabis Industry Association, argued some steps could be taken immediately.

Carrington, an African-American, wants the commission to make public the scores used to rank all the applicants. The public knows who the 30 grower and processor license winners are and how they were ranked. But the public doesn’t know: how they scored; what areas they scored well or poorly in; or the number of qualified applicants who earned a strong score but came up short.

“The Commission should publish the scores because people need to be able to compare apples to apples,” Carrington said. “Without the transparency, we can’t make informed decisions about what went wrong and what went right (in terms of diversity).”

Carrington also wants the state to revise or eliminate its cap of 15 processor licenses. If the commission expanded the number of processors, Carrington suggested, that would create new opportunities for American-American cannabis entrepreneurs.

Legislatures in California, Massachusetts, Pennsylvania, Ohio, and Florida have wrestled with the diversity issue, or are in the process of doing so. But Carrington said Maryland could look to its gaming industry for a model. It requires that a minimum percentage of equity in gaming businesses belong to minority owners.

Carrington cautioned the gaming plan hasn’t been executed well in Maryland. But he bets it could work for cannabis.

Oregon testing conundrum? Not really

A potential stumbling block to the full rollout of Oregon’s recreational cannabis industry really isn’t a big deal – so says an executive at one of the state’s only accredited labs.

Here’s the issue: Oregon has so far accredited just four cannabis testing labs. Another 37 are waiting to be fully legal and able to provide the mandated testing services the law requires for for rec retailers.

The Oregon Health Authority told the Register-Guard another dozen labs will be reviewed before the full launch of the rec industry on Oct. 1. The newspaper noted the Oregon Environmental Laboratory Accreditation Program is overworked and understaffed – raising the possibility that not enough labs will be available for the industry to begin full adult-use sales.

Not so, reckons Eric Wendt, chief science officer at Portland’s Green Leaf Lab.

“There’s not a lot changing in terms of what will be available after Oct. 1,” he said. “I don’t know that there’s going to be any shortage of product, or that the demand for rec product is going to go through the roof. I just haven’t seen things trending in that direction.”

Even with a handful of labs ready to test cannabis, Wendt said many Oregon dispensaries – the majority of which will likely enter the rec market – already have enough product to meet whatever demand materializes next month.

“Anything that the dispensaries take in before Oct. 1 can continue to be sold afterwards, as long as it’s properly labeled to say that it’s not tested to the new requirements,” Wendt said. “So I don’t see there being a big shortage of product on the market.”

Omar Sacirbey can be reached at omars@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com