South Dakota State Bar Advises Lawyers Not To Represent Legal Pot Firms

A committee that advises members of the State Bar of South Dakota has issued an opinion that advises attorneys not to represent clients who plan to produce or sell cannabis in the state. The opinion, which was published in the January 2021 edition of the group’s newsletter, follows the approval of two state marijuana legalization measures in the November general election.

Voters overwhelmingly approved South Dakota Measure 26, a ballot initiative to legalize the medicinal use of marijuana, with nearly 70% of votes cast. Another measure to legalize cannabis for use by adults, South Dakota Amendment A, also prevailed at the ballot box with more than 54% of the vote. Under Amendment A, adults 21 and older are permitted to possess and distribute up to one ounce of marijuana.

According to the State Bar newsletter, the passage of the ballot measure has prompted inquiries into the ethical considerations of representing clients “about licensing and other legal issues related to establishing, licensing, or otherwise operating a business to distribute or dispense marijuana.”

To answer the question, the committee cited the South Dakota Rules of Professional Conduct, noting that Rule 1.2(d) states that a “lawyer shall not counsel a client to engage, or assist a client, in conduct the lawyer knows is criminal or fraudulent, but lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.”

Cannabis Still Illegal Under Federal Law

The committee noted that while the two ballot measures passed by voters legalize marijuana under South Dakota state law, “manufacturing, distributing, or dispensing marijuana, or possessing marijuana intending to do any of the foregoing, remain illegal under federal law.”

The opinion found that the rule “does not distinguish between client conduct that is illegal under South Dakota law and client conduct that is illegal only under federal law. It applies to any illegal client conduct.” 

Consequently, attorneys “may not ethically provide legal services to assist a client in establishing, licensing, or otherwise operating a marijuana business,” the opinion continues. 

Although the opinion advises attorneys not to represent cannabis businesses, it does note that lawyers may advise a client who is considering taking such a course of action and the legal ramifications of doing so.

“Lawyer may only advise a client considering this course of action about the potential legal consequences of doing so, under either state or federal law, or assist the client in making a good faith effort to determine the validity, scope, meaning, or application of the relevant state and federal law,” the committee’s opinion states.

In 2017, the American Bar Association published a memo advising attorneys that representing marijuana businesses “presents a problem for lawyers as they advise their clients in the sale and use of marijuana.” The memo also noted that as of the time of its publication, the lawyer disciplinary offices in 16 states that have legalized cannabis had revised the rules for representing cannabis-related clients.