Legal Marijuana: Budding Industry, Burning Questions

On any typical day, Khoja said, he’s advising clients on any number of substantive-law topics—finance and securities, business and trademark licensing and franchise law. He often reviews state legislation on behalf of clients, and he does pro bono work for Students for Sensible Drug Policy and other drug-policy reform groups.

“I may be overly busy at times (or all the time), but I’m never bored,” he said.

We recently asked Khoja about his work amid these ever-changing regulatory times. What follows are excerpts from our conversation, edited for length and clarity.

The Recorder: Can you tell me a bit about Greenbridge Corporate Counsel?

Khoja: Greenbridge is a minority-owned, women-managed boutique law firm specializing in cannabis business law. We’ve represented well over 150 legal cannabis industry businesses in California, Washington and Hawaii since our founding in 2012, including medical and adult-use marijuana, industrial hemp and non-“plant-touching” ancillary businesses.

How do you navigate your work in the midst of this conflict between the states and the federal government over legalized marijuana?

Every client relationship starts with an express written acknowledgement that, while their proposed businesses are lawful under state law, what the client wants to do is federally illegal. Even strict compliance with state law is, unfortunately, not a guarantee against federal prosecution, but it remains your best defense.

Until Congress removes cannabis from Schedule I of the federal Controlled Substances Act, the only meaningful protections my clients have from federal intervention are the existing medical cannabis rider to the current federal budget which prohibits spending federal funds to prosecute state-legal medical cannabis businesses (aka the “Rohrbacher-Farr Amendment”) and, in the Ninth Circuit, U.S. v. McIntosh, which forestalled federal law enforcement action against state medical cannabis businesses pursuant to the Rohrbacher-Farr Amendment.

But those protections need to be renewed in the next federal budget bill in order for the holding in McIntosh to be effective for another budget cycle.  

What’s the one work issue that keeps you up at night?

Naturally, I worry most about what my clients are worried about. The lack of banking access and tax equity are always a preoccupation, but right now many of my clients are especially concerned about the mixed signals we’re getting from the Trump administration regarding respect for state cannabis laws.

Some fear a renewed federal crackdown under a Sessions DOJ, and the possibility that Attorney General [Jeff] Sessions could substantially revise or even revoke existing DOJ guidance to local U.S. attorneys on deferring to state and local law enforcement in states with legal marijuana markets (aka the “Cole Memo”). It would be helpful if the Sessions DOJ would unambiguously announce its intention to abide by the Cole Memo, but I’m not holding my breath.

Whether that happens or not, it is absolutely vital that the next federal budget bill Congress passes in September include the Rohrbacher-Farr rider, and that it extend its protection to states with legal adult-use cannabis businesses too. If that happens, I’ll sleep much more soundly, even if we can’t address the industry’s continued challenges with federal tax and banking laws in the immediate short term.

What’s the greatest misconception about your work?

That our clients—especially the pioneering activists who established this movement and this industry—are Cheech and Chong-style caricatures, somehow not as intelligent, professional or business savvy as clients in the pharma, tech, finance, media and other industries. Of course, as talent flight from established industries infuses new blood into the cannabis industry, newcomers quickly learn that it’s very hard work to run a profitable and sustainable cannabis venture amidst so much legal risk and regulatory uncertainty.

Our clients in the industry are some of the most skilled businesspeople I’ve ever met, with a much higher than average (no pun intended) appetite for risk and capacity for responsible self-regulation.

There’s still a stigma, perhaps a lessening one, in some places about marijuana. Do you ever hesitate before telling someone about the line of work you’re in?