South Dakota Bar Warns Lawyers that Counseling Marijuana Clients Might be Ethics Violation – Not First State to Say So

South Dakota Bar Warns Lawyers that Counseling Marijuana Clients Might be Ethics Violation – Not First State to Say So

A Note from the Executive Director: The INCBA Ethics Committee is currently in discussions on how to address this issue. If you would like to be involved with our Ethics Committee, or any of our other committees, please contact us at [email protected] This post was republished with permission from the author, and original appears on the Vanderbilt Law School Marijuana Law, Policy, and Authority blog.

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In fall 2020, South Dakota voters approved measures to legalize both medical and recreational marijuana. See Marijuana Reforms Win Big at the Polls. In January 2021, however, the South Dakota State Bar Association warned attorneys that providing legal services to marijuana businesses would violate the South Dakota Rules of Professional Conduct (i.e., the bar’s code of ethics). The short (1 page) ethics opinion can be found on page 32: South Dakota ethics opinion January 2021

The ethics opinion rests on Rule 1.2(d), which every state bar (as far as I am aware) has adopted (it’s part of the Model Rules of Professional Conduct). In full, Rule 1.2(d) stipulates that:

“A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a 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.”

The South Dakota bar reasons that because federal law continues to ban the production and distribution of marijuana, lawyers may not provide (most) legal services to marijuana clients. Here’s the key paragraph from the ethics opinion, which largely tracks the language of Rule 1.2(d):

“Rule 1.2(d) 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, Lawyer may not ethically provide legal services to assist a client in establishing, licensing, or otherwise operating a marijuana business. 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 book discusses Rule 1.2(d) and the special ethical and legal issues attorneys face when advising marijuana clients – indeed, one-half of Chapter 12 is devoted to those subjects (see pages 626-644). I’ve discussed some of these issues in previous posts as well:

Here, let me make three observations about the South Dakota opinion, which has (perhaps needlessly) caused quite a stir in the legal world.

1. Several other states – including Colorado and Ohio — have reached the same conclusion about Rule 1.2(d).

Many news reports make it seem as if South Dakota’s bar association had just done something crazy or at least novel. But it’s important to recognize that several other state bar associations / ethics committees have reached the same conclusion about Rule 1.2(d). As I discuss in the book, for example, Ohio’s Board of Professional Conduct similarly concluded that providing many types of legal services (e.g., helping a client with a license application) under the Buckeye State’s medical marijuana law would violate Rule 1.2(d) (see pages 627-29 for the Ohio opinion). I call this the “restrictive” interpretation of Rule 1.2(d).

To be sure, other states (like New York) have interpreted Rule 1.2(d) more flexibly to allow lawyers to provide the same services to marijuana clients that they might provide to, say, craft brewers or hair salons. (See book, pages 631-634.) These states have adopted what I call the “permissive” interpretation of Rule 1.2(d). But I think the plain text of Rule 1.2(d), and the fact that several states have reached the same conclusion as the South Dakota bar, suggests that South Dakota’s interpretation is not “frivolous”, “appalling”, “shocking,” etc., as I’ve heard some folks describe it.

2. . . . but every other state that’s adopted the “restrictive” interpretation has subsequently revised Rule 1.2(d) to permit lawyers to advise marijuana clients.

Obviously, those restrictive state ethics opinions have not stopped lawyers in Ohio, Colorado, etc. from providing a full range of legal services to marijuana clients. So what gives?

Importantly, every state that has interpreted Rule 1.2(d) to limit the services that lawyers may offer marijuana clients has subsequently amended their Rule 1.2(d) to expressly permit lawyers to provide those services. I discuss these amendments in the book on page 630 n.2. (Sometimes, rather than amend the text of the Rule, state bars just add a new comment to the Rule that accomplishes the same thing.)

So South Dakota would break with other states ONLY IF THE STATE DOES NOT AMEND RULE 1.2(d) TO ALLOW LAWYERS TO ADVISE MARIJUANA CLIENTS.

There are many reasons for the state to make such an amendment, i.e., to permit its lawyers to provide legal services to marijuana clients – e.g., lawyers can help ensure that marijuana businesses comply with state law. (That’s why many states have adopted the permissive interpretation of Rule 1.2(d) in the first instance.) The South Dakota ethics opinion doesn’t mention any amendment, but it’s possible the state will revise its Rule 1.2(d), thus mooting many of the concerns that have been raised by the bar’s restrictive interpretation of the Rule.

3. South Dakota’s brief opinion may have saved the state bar from making some embarrassing distinctions.

South Dakota’s ethics opinion is unusual in one respect – it’s very brief (1 page). Other states have issued much longer opinions (10 pages or more) discussing Rule 1.2(d), and those opinions make some indefensible distinctions about the typ
es of servi
ces lawyers may or may not provide their clients. I highlight these odd distinctions in Problems 12.11-12.13 of the book (pages 629-630 n.1). For example, while Ohio’s Board of Professional Conduct says that a lawyer may not help a client OBTAIN a marijuana license in the first instance (e.g., by filling out a license application), it also says that a lawyer may help the client KEEP that license (e.g., by representing the client in a licensing board hearing). I just can’t fathom this distinction, and I’ve yet to get a good response from state ethics boards (usually the response I get is of the “. . . but it goes to eleven” variety).

Rule 1.2(d) itself seems to allow lawyers to provide SOME services to marijuana clients – i.e., maybe the problem is with the drafting of the Rule, rather than the interpretations of it. And by parroting the Rule in its short opinion, the South Dakota bar seems to suggest there are some services a lawyer may provide marijuana clients in South Dakota, without violating the Rule. But hopefully the bar will moot the issue and save itself the nettlesome task of identifying what those permissible services are by revising Rule 1.2(d) to expressly allow lawyers to provide a full range of legal services to South Dakota’s new marijuana industry.