Why Fox Rothschild Is Still Banking on its Cannabis Practice

April 19, 2017, 5:56 PM

Shortly before the results from the November presidential election arrived, the management at Fox Rothschild decided it was time to double down and officially launch a Cannabis Law practice group with recognition on the web site, a blog and all the standard marketing.

And then, against many pollsters’ predictions, Donald Trump was elected, and soon thereafter picked Sen. Jeff Session, R-Alabama, as his attorney general — a man who last April remarked that “ good people don’t smoke marijuana ,” during a tirade against the legalization that’s been occurring in states throughout the country.

With Sessions now at the helm of the U.S. Department of Justice, where does that leave law firms like Fox Rothschild that doubled down on cannabis law?

“I think people are still pretty optimistic,” said Joshua Horn, co-head of Fox Rothschild’s Cannabis Law group, and a contributor to the firm’s ‘ In the Weeds ' blog.

[caption id="attachment_48130" align="alignleft” width="200"][Image “Josh Horn (Courtesy)” (src=https://bol.bna.com/wp-content/uploads/2017/04/Horn_Josh_LinkedIn.jpg)]Josh Horn (Courtesy)[/caption]

Horn said he stumbled into the weed game: In the summer of 2015, while hiking in the flat irons in Colorado, where recreational marijuana is legal and the industry is booming, his wife suggested he think about developing a specialty practice since he had already helped one marijuana-focused company in Maryland with a securities offering, which is his other practice. Not that Horn is a chronic weed smoker himself — he wouldn’t reveal anything about that topic.

“Look, I’ve been a trial lawyer for 20-something years,” he said. “There’s a certain grind — I had just finished a trial and you have to listen to what your wife, or partner, suggests.”

[Below, Fox Rothschild’s managing partner Mark Silow speaks to the challenges of a Big Law marijuana practice in a 2015 interview with Big Law Business.]


So he started reading books, including “Weed the People,” an analysis of the cultural trends inciting legalization written by former Guggenheim Fellow in nonfiction Bruce Barcott, and another book whose name he couldn’t recall. After Pennsylvania legalized medical marijuana in 2016, Horn said he was “all in.”

Horn and his partner William Bogot wound up writing an e-book of sorts earlier this year that provides a summary and overview of the law regarding marijuana in every state.

Despite the recent shift in tone at the DOJ with Sessions’ ascendance, Horn said he’s glad his firm is in the weed game: Their clientele of growers, dispensaries and processors — meaning people who convert the plant into oils, creams, edibles, etc. is going to need more legal advice than ever if federal enforcement policies become vague or ambiguous.

“There’s a partner of mine, and 50 percent of her practice is just dealing with IRS Audits” for marijuana dispensaries, said Horn. “Because it’s a cash business, they get audited all the time.”

Only a few other firms , including Davis Wright Tremaine, Anderson Kill and Stoel Riveshave waded into the marijuana space. But Horn noted that by 2026, the investment bank Cowan & Co. has predicted the legal marijuana business will grow to a $50 billion annual industry, although it made that prediction last September, before Sessions became attorney general.

Horn said that many marijuana businesses are a huge cash boon for the federal government because they can’t deduct normal business expenses due to the illegal nature of their business under federal law, and therefore pay a relatively high amount of taxes.

Thus, he said reports about the decline of the weed business have been greatly exaggerated. Brushing aside news that 16 people in Colorado were indicted in March for what the Denver Post described as a “ massive home-grown marijuana operation ,” Horn said all signs suggest the investigation was actually launched under the Obama Administration and targeted an operation that the feds believe violated state laws.

The real question on Horn and others mind is what happens to the Cole Memorandum, a 2013 memo written by then deputy attorney general James Cole, which states that businesses licensed to sell marijuana need not worry about federal prosecution if in compliance with state laws.

“This is one of those things that a lawyer who works in this space has to keep abreast upon,” said Horn.

Write to Big Law Business with news tips, comments or inquiries at biglawbusiness@bna.com .

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