Cannabis is Big Business for Michigan Law Firms

Lawyers revel in legal conundrums on both sides of break even.

This story was republished with permission from Crain’s Detroit and written by Dustin Walsh

Myles Baker is only six years out of law school. In a couple of months, it’s likely the associate attorney for Detroit firm Dickinson Wright PLLC will make partner — an often-elusive reward for a young lawyer. Baker is only 31 years old.

Attorney Myles Baker says regulated cannabis gave him a fast track to expertise.​ ​Credit: Freshwater Brand

He has marijuana to thank. Most associates aren’t even eligible for partnership, which means higher compensation and revenue sharing in law firms until they are eight to 10 years into their careers.

But the legalization of cannabis in Michigan created a boon for law firms across the state and has propelled lawyers, like Baker, ahead in their careers.

“Marijuana has given me a fast track to expertise in a short period of time; much quicker than my classmates in other specialties that are up against 100 years of case law,” Baker said. “There’s just not a lot of new industries in America, so I’ve been able to market myself in this practice and be in the same space with lawyers 20 years my senior.”

Since the start of legal marijuana sales in 2018, the lawyers have been absolutely critical in standing up for the newly-regulated industry. Operators require interpretation of the often-changing regulations, navigating the complex relations between state and federal laws, working within local municipality frameworks, and the overarching web of compliance. For lawyers, it’s all green.

“Our (cannabis) practice is a measurable percentage of our law firm revenue,” said Lance Boldrey, partner and industry group leader for the cannabis practice at Detroit’s Dykema Gossett LLP. “Every single practice area in our firm has had some involvement representing cannabis … it’s our fastest growing area of practice.”

Fielding the future

Marijuana in Michigan is big business.

Through September, operators in the state have sold nearly $2.3 billion worth of marijuana in 2023. Michigan is now the largest marijuana state based on per capita sales, overtaking Colorado and California.

It hasn’t been all good times for operators, who witnessed a marijuana price collapse since legal sales began in December 2019. Prices have fallen from $512.05 per ounce of marijuana flower in January 2020 to a low of $80.16 per ounce in January this year. Prices have since recovered to $100.14 per ounce of recreational marijuana in September.

But lawyers revel in legal conundrums on both sides of break even. The attorneys have been, and remain, paramount for securing licensing and setting up operations, but they are equally important to helping businesses navigate consolidation and tax law to reduce overheard.

Dimondale-based Skymint, for instance, succumbed to poor management and large loans in March, owing more than $127 million to one creditor alone. The ongoing receivership has likely been quite profitable for Detroit-based Honigman LLP, which represents the lender, and Grosse Pointe-based The Dragich Law Firm PLLC, which represents the receiver in the case.

Marshall-based Common Citizen, one of the largest operators in the state, has spent well over $1 million in legal expenses since opening in 2018, CEO Mike Elias told Crain’s. Elias notes the company has an in-house legal team that has saved the company from a larger bill.

But Boldrey said the law industry can’t always avoid the financial troubles of the cannabis industry.

“We’re not immune to the growing pains of the industry either,” Boldrey said. “We have seen delayed payments and other issues. It’s much like the Dot Com bust in some ways. There are a lot of startups and some of them are going to be very successful, but most of them are not and we have to account for that.”

Accounting for change

Boldrey said Dykema is very selective about its cannabis clientele, ensuring they can make payments.

“When we’re not sure on somebody, we insure against that with upfront retainers,” Boldrey said. “We do a lot of due diligence up front to judge the client’s suitability and reputation. We’re looking for clients that have some level of business expertise and aren’t coming in with a long criminal history.”

But the criminal side of law was a way in for many lawyers in the industry.

Matthew Abel, partner and founder of Cannabis Counsel Law Firm, spent much of his career defending clients against misdemeanor and felony marijuana charges before expanding into corporate law.

“I think it was God’s work,” Abel said. “Back then, I only took cannabis cases. It wasn’t lucrative, but I was able to make a living. I had to travel far and wide across the state. I felt the people I was representing were not criminals.”

But when caregiver rules for medical marijuana were published in 2008, Abel switched to assisting clients with establishing their business models and abiding by state regulations.

Abel said he was in the right place at the right time to get ahead of competitors.

“When I started, other criminal defense lawyers said I was crazy, and when the medical marijuana law passed those same attorneys said I was crazy,” Abel said. “But we got to enjoy the spoils of being early in. There are now over 1,000 members of the cannabis law section of the state bar. Now all those big law firms have cannabis practice groups.”

But Abel’s client base does differ, he said.

“Our market tends to be smaller operators, scrappy mom-and-pop operations,” Abel said. “Our offices smell like cannabis. We’re customers too. There are a lot of clients who are not going to hire a lawyer whose office smells like cannabis. They want a silk-stocking firm. But that’s OK. We’re comfortable where we are and there is still plenty of work to go around.”

In-house attorneys

For many lawyers, particularly associate attorneys, getting into cannabis law provided a launching pad to more power and more responsibility at in-house positions.

John Abbo, now general counsel for one of the state’s largest operators, Lume Cannabis Co., earned his law degree from the University of Detroit Mercy Law School in 2015 and immediately became an associate attorney at Dykema. Pretty quickly after the industry began to set up, partners began handing him regulatory and tax work.

“There was a huge influx of cannabis clients that came into Dykema, so they needed the help and just sort of threw the work at me,” Abbo said.

His work didn’t go unnoticed and Lume, which has an investment interest from Crain Communications CEO KC Crain, hired Abbo to lead its legal office in 2019.

“The guys here really empowered me to take ownership,” Abbo said. “They have given me full reign over legal and compliance matters. It’s a bigger responsibility than I’d have had at a firm. It’s been awesome.”

These young lawyers are staking their place in an industry that’s consistently in flux due to cannabis being illegal at the federal level and under constant regulatory changes — they are effectively building the plane as they are flying it.

Baker, who also co-owns a clothing brand with Detroit record producer Apollo Brown called Freshwater, views his place in the intersection of law and weed as an opportunity to define how the industry moves going forward and establishes case law.

“The biggest thing that goes unrecognized is there is almost no such thing as cannabis law,” Baker said. “It involves all aspects of what law firms do — employment contracts, real estate, licensing and all the other functions that are now being applied to cannabis. It’s amazing to become a well-rounded lawyer and apply this knowledge to the advancements that are just now determining the case law that will be studied for years to come.”

Dustin Walsh

Dustin Walsh is a senior reporter for Crain’s Detroit Business, covering health care with a focus on industry change and operations, as well as the state's emerging cannabis industry. He is also a regular columnist on all things health, labor, economics, and more.

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