Despite its growing legality in different states across the country, the federal government's prohibition on marijuana makes working in the budding industry a little more difficult, a panel of attorneys who work with marijuana companies said at the Association of Corporate Counsel's annual meeting in Austin, Texas.

The risk and difficulty of helping to grow and operate a legal marijuana business became more apparent recently when U.S. Attorney General Jeff Sessions rescinded the Obama-era “Cole Memo.”

James Cole, co-lead partner of white collar litigation and investigations at Sidley Austin in Washington, D.C., who was deputy attorney general during the Obama administration, said that when Washington and Colorado legalized the use of marijuana for adults, he wrote the memorandum bearing his name. In short, stated that the Justice Department would not enforce federal marijuana prohibitions as long as states had their own regulations and enforcement except where not doing so would interfere with other federal priorities such as gang interdiction.

Cole said that, when the memo was rescinded, he was not overly worried about a crackdown on legal marijuana businesses.

“What Sessions did with his memo is give discretion back to the U.S. attorneys,” he said.

Cole explained that many U.S. attorneys are political people who hope to run for office someday. He said he doubted those attorneys would prosecute crimes in the states they hoped to run for office in.

Despite the lack of enforcement from federal authorities, Zachary Kobrin, general counsel and chief compliance officer of Cansortium Holdings LLC/Knox Medical,  said operating as the top lawyer for a marijuana company is not easy.

“What I like to joke with other folks, especially lawyers, is that to me this is just another widget. It just happens to be the most highly regulated widget I've ever dealt with in my life,” Kobrin said.

He said attorneys need to do extra due diligence and add extra layers of disclosure about potential risks.

“One of the most obvious examples is traditional financing,” Kobrin said. “You're not going to J.P. Morgan to get a $20 million line [of credit] to expand operations in a state. The bulk of financing is done through private raises.”

As far as contracts go, Kobrin said, that to mitigate risks in a deal,  he includes a strong arbitration clause and a waiver of jury clause.

“The more recent opinion among the industry is to push for arbitration or some kind of ADR provision because, if a dispute arrives between an operator [a grower] and some vendor, it is a contract dispute,” Kobrin said. “So, if you've got a very well-defined arbitration clause within any of your agreements, you're walking in with an arbitrator who understands contract issues instead of taking a chance with a judge who may or may not be an activist judge or doesn't know enough about the industry.”

Advice for those thinking about getting into the marijuana industry? Know the risks. Cole said he gets calls every day from different kinds of businesses, and he tells them it is unlikely that the federal government would crack down on marijuana, but that could change the next day.

“You go into it based on the risk appetite. Many time, the higher the risk, the higher the reward as well. I can tell you whether it's legal or not but you're going to have to make the decision,” Cole said.