With the rapid spread of marijuana legalization in the US, lawyers are discovering that the tangled web of regulations guiding the rapidly growing industry is a boon for business.
After last year's midterm elections, some form of cannabis is now legal in 33 states, and many in the industry say it's only a matter of time before legalization sweeps the nation.
Big money — and big law — has followed. The opportunity could be huge: some Wall Street analysts say marijuana could become an $80 billion market in the US alone in the next decade, with the global market hitting close to $200 billion.
There are several key reasons lawyers are attracted to the marijuana industry. For one, as cannabis companies grow, merge, and start getting the attention of Fortune 500 corporations as acquisition targets, they need more sophisticated advice on financing, tax planning, corporate structure, and M&A.
Publicly traded cannabis companies were on a dealmaking tear in 2019, scooping up competitors and signing multibillion-dollar tie-ups with pharmaceutical, alcohol, and tobacco corporations. It's a trend heating up in 2019.
In addition, many marijuana companies still directly flout US federal law, despite being publicly traded and posting multibillion-dollar valuations.
That's an opportunity to a select group of lawyers who have cut a trailblazing path into the industry. Once reluctant, some of the biggest law firms, like Duane Morris, Baker Botts and Dentons, are building out specialized cannabis practice groups as the industry continues to grow in profitability and complexity.
And even some of the most world's most prestigious law firms, like Sullivan and Cromwell, have gotten in on the marijuana mergers-and-acquisitions action.
Business Insider has pulled together a list of the top lawyers who've worked on the largest deals in the past year in the growing marijuana industry.
Here's the list:
Patricia Olasker, Brian Kujavsky: Davies Ward Phillips and Vineberg
Firm: Davies Ward Phillips and Vineberg
Location: Toronto and Montreal
Davies, one of the largest Canadian law firms, first got involved in the cannabis industry at the request of an important client in October 2017.
That client was Bank of America, which had provided financing for the beer maker Constellation Brands' initial purchase of a stake in Canopy Growth, a publicly traded marijuana cultivator.
"We were really led by our clients into this space," said Patricia Olasker, a capital-markets partner in Davies' Toronto office. "We had to get smart about the opportunity very quickly."
Since that first deal, Davies has ramped up its M&A work in the sector, particularly after Canada legalized marijuana federally last year.
"There were a lot of internal discussions as to how comfortable we were advising companies in the space, and how to get comfortable," said Brian Kujavsky, a partner in Davies' Montreal office.
The firm then provided regulatory advice to Canopy on Constellation's subsequent $4 billion investment into the marijuana cultivator last summer.
Davies also represented investment bank Lazard's Canadian arm on the deal that saw Altria, the tobacco maker behind Marlboro, sink $1.8 billion into a 45% stake in marijuana cultivator Cronos Group in December.
The firm now advises marijuana cultivators, like Canopy and Cronos Group, at the "senior end" of the market, Olasker said.
"When a major client like Altria wants to enter the space, you're going to say, 'Yes, we're here to help you,'" Olasker said.
Looking forward, Olasker said consolidation will slow in the cannabis industry, but she expects to see a lot of deals on the radar. Expect to see tie-ups with consumer packaged goods, tobacco, and pharmaceutical companies either through joint ventures or strategic acquisitions, she said.
And since the passing of the Farm Bill, which legalized hemp in the US in December, Canadian marijuana companies are looking southward.
"The holy grail for Canadian [marijuana cultivators] is how to get exposure to the US market and not be offside stock-exchange requirements and anti-money-laundering regulations," Olasker said.
Jonathan S. Robbins: Akerman LLP
Firm: Akerman LLP
Location: Fort Lauderdale
Jonathan Robbins first got exposure to the cannabis industry in 2014 after a real-estate client called him up to ask questions about leasing space to a medical-marijuana company.
After that call Robbins saw the writing on the wall. "I approached the CEO of the firm the following day and told him we'll be kicking ourselves if we miss this opportunity," he said.
That was at the outset of Florida's medical-marijuana program, which has now blossomed into a big business, with many US marijuana retailers vying for a piece of the market.
Robbins is now the chair of Akerman's Cannabis Practice Group, which he says is one of the first cannabis practices at a national US law firm.
Many of the firm's clients, either private-equity funds, family offices, or high-net-worth individuals, provide a lot of the financing for the cannabis industry as traditional financial institutions like big banks remain wary of working with marijuana businesses, Robbins said.
In the past year, Robbins has helped Green Growth Brands, an Ohio marijuana retailer, acquire valuable grow facilities in Nevada and has represented the Wrigley family office in connection with Surterra Wellness's strategic acquisitions in Florida. Surterra Wellness is a marijuana company backed by the Wrigley Family, with operations in Texas and Florida.
"Just as you're starting to see more sophisticated law firms dip their toes in the water, we're seeing the same thing with more established, sophisticated businesspeople," Robbins added.
He said that the size and complexity of the deals he's worked on have dramatically increased as well.
"We're routinely working on $100 million deals, $200 million deals, public offerings, and complex cross-border transactions," he said.
Christopher Barry, Mike Weiner, Kenneth Sam: Dorsey and Whitney
Firm: Dorsey and Whitney
Location: Seattle, Toronto, and Denver
Dorsey and Whitney's first involvement in the cannabis industry came through a serendipitous phone call to partner Christopher Barry.
On the other end of the line was a representative from a multibillion-dollar Asian investment fund looking for advice on investing in marijuana after the fund's regular counsel turned it down.
Since then Barry has found his expertise in cross-border transactions — he's the head of Dorsey's Canada Practice Group — has dovetailed perfectly with the cannabis industry.
The firm has helped US marijuana retailers, like MedMen and Green Thumb Industries, go public in Canada via a reverse merger on the Canadian Securities Index. The firm also helped Canopy Growth, a publicly traded marijuana cultivator, cross-list on the NYSE in May.
For Barry, who was instrumental in building out Dorsey's cannabis practice alongside co-head Mike Weiner, being at the forefront of the new industry is what keeps him going.
"This is more fun than a barrel of monkeys," Barry said. "Look, I'm 71 years old. I've been practicing for over 40 years. If I weren't having so much fun with this I'd be retired."
Seth Goldberg, David Feldman, Jen Fisher, Neeraj Kumar: Duane Morris
Firm: Duane Morris
Location: Philadelphia, New York, and San Francisco
Duane Morris has staked out big territory: It's one of the few AmLaw 100 firms marketing its cannabis practice group, said Neeraj Kumar, an associate at the firm who works on cannabis issues.
"This is a very good opportunity for our firm," said Seth Goldberg, the chair of the firm's practice in Philadelphia. Cannabis is one of the "few emerging markets that has multibillion-dollar potential."
Goldberg, a seasoned trial lawyer with decades of experience, said he spearheaded the firm's involvement in the industry in 2014 after Colorado became the first state to allow recreational pot shops.
And for Kumar, the opportunity to become an expert in a field where there's "a new development every week" was something he couldn't turn down.
Duane Morris represented iAnthus, a US cannabis company, in its $640 million merger with MPX Bioceutical, also the first public-to-public transaction in the US cannabis industry. Further, the firm has advised investors on real-estate acquisitions.
Hilary Bricken: Harris Bricken
Firm: Harris Bricken
Location: Los Angeles
Hilary Bricken has been around the cannabis industry for a long time. As a lawyer at Harris Bricken and one of the chief writers of the popular Canna Law Blog, Bricken is regarded as one of the foremost experts in cannabis law.
As a regulatory expert, she's been hard at work in 2018. She helped Essence WeHo LLC win three valuable dispensary licenses in California and estimates she's closed $100 million worth of deals in the past year.
"It's something I take pride in because these are really difficult deals in a very volatile marketplace," she said.
Since she's worked in the industry, Bricken said 2018 marked a turning point: "We're seeing more and better diversity in the field."
A few years ago, marijuana was the purview of criminal lawyers. Now some of the world's biggest corporate law firms with deep M&A backgrounds are advising on deals.
"It's ironic because competition is competition," Bricken added. "But it just ups the level of everything. The clients get better, the deals get better, the businesses sustain longer, so their entry is really welcome."
Desmond Balakrishnan: McMillan LLP
Firm: McMillan LLP
Location: Vancouver
As a partner in McMillan's capital-markets practice, Desmond Balakrishnan developed expertise working in highly regulated industries such as gaming and liquor.
When British Columbia started issuing medical-marijuana licenses in late 2013, Balakrishnan jumped on the new line of business, seeing a clear crossover with his practice area.
"We were a first mover five years ago," Balakrishnan said. He now focuses on advising the biggest IPOs and M&A transactions in cannabis.
He led a team that represented Aurora Cannabis in its $1 billion takeover of CanniMed Therapeutics — a deal that started out hostile but turned friendly, Balakrishnan said — as well as Aurora's $3.5 billion merger with MedReleaf, one of the biggest marijuana M&A transactions to date.
Aurora, for its part, spent 2018 on an acquisition spree, deals that benefited Balakrishnan's longstanding relationship with the company.
Balakrishnan also led on the Green Organic Dutchman's $175 million public offering on the Toronto Stock Exchange, the largest marijuana IPO in Canada so far. He's worked with US clients, including iAnthus Capital on its cross-border listings to the Canadian Securities Exchange.
"We look at everything from a law-firm perspective," Balakrishnan added. "Five years ago, lots of firms didn't want to embrace this industry. But it became so big and so lucrative, with acquisitions and M&A and big equity offerings, that every law firm from the most buttoned-down blue-chip firms have embraced it."
Rachel Gillette: Greenspoon Marder
Firm: Greenspoon Marder
Location: Denver
Rachel Gillette has been working on issues surrounding marijuana legalization for a long time, much to the initial chagrin of her former constitutional-law professor.
In 2010, right when Colorado started regulating medical marijuana, she quit her job as a tax lawyer to start her own practice representing marijuana businesses.
When she emailed her favorite law professor to tell her about opening her own practice, the professor responded bluntly. "She was, like, 'You're going to be disbarred,'" Gillette said.
Gillette is now a partner at Greenspoon Marder, in Denver, and that same professor recently reached out to invite Gillette to teach a class on cannabis law.
"A few years ago, you couldn't find a large law firm to touch the area with a 10-foot pole," Gillette said. "But now I'm cool."
In the past year, Gillette was part of a team on a landmark case against the cofounders of the Colorado-dispensary Sweet Leaf, winning $8.8 million for her clients.
She also continues her advocacy work around section 280E of the federal tax code, which, Gillette says, forces law-abiding marijuana businesses to pay prohibitively high tax rates.
Samuel Dibble: Baker Botts
Firm: Baker Botts
Location: San Francisco
As a partner in Baker Botts' San Francisco office, Samuel Dibble has been at the forefront of the burgeoning cannabis industry since its inception.
The firm has made a push to grow its presence in California, and cannabis deals have consumed lots of oxygen in the state in the past year, Dibble said. Its cannabis practice is divided into litigation, headed up by Jonathan Shapiro, and corporate headed up by Dibble.
"We have a lot of lawyers who have experience in heavily regulated industries like alcohol," Dibble added. "It's a regulatory regime that's heavily applicable to cannabis companies."
Baker Botts has represented Grupo Flor, a Monterrey, California, cannabis company on several financing transactions as well as litigation in connection with a lawsuit.
The firm advised Headwaters, a Santa Barbara company on corporate structure, employee incentives, and real-estate deals, along with advice on trademark and intellectual property.
"As cannabis businesses grow and scale and become much more like agribusiness, which is the path we're on, they'll need more complex advice on financings, employment incentives, intercompany agreements, tax planning, structuring, and M&A assistance," Dibble said.
Joshua Horn: Fox Rothschild LLP
Firm: Fox Rothschild
Location: Philadelphia
When Joshua Horn and his wife traveled to Colorado five years ago, they thought they'd check out one of the state's new marijuana dispensaries for fun.
After Horn returned home to Philadelphia, the same movement that had legalized marijuana in Colorado had spilled over to Pennsylvania. After his wife suggested he learn about the new industry, Horn began a long process of self-education and become a subject-matter expert.
Five years on, Horn is the cochair of Fox Rothschild LLP's global cannabis practice. Horn helps cannabis-industry clients with nuts-and-bolts issues like licensing, taxes, and employee benefits, and as well as venture-capital-fund formation and shareholder agreements.
He also advises Philadelphia's city council on marijuana legalization.
Horn expects the M&A space heat up for cannabis lawyers as the industry continues to consolidate and large corporations hunt for acquisition targets.
Along with Chicago's Fox Rothschild partner, Bill Bogot, Horn worked on MedMen's $682 million stock acquisition of PharmaCann, the largest US cannabis acquisition to date.
"'I've been a commercial business trial lawyer for 25 years now, and it's very rare that you have the opportunity to be on the ground floor or something," Horn said. "And apart from being interesting from an intellectual standpoint, it's been really profitable from a business standpoint."
George Sampas, Matthew Goodman: Sullivan & Cromwell
Firm: Sullivan and Cromwell
Location: New York
Sullivan and Cromwell's involvement in Altria's $1.8 billion investment in Cronos Group, an NYSE-listed marijuana cultivator, represented a watershed moment for the fledgling cannabis industry.
Sullivan's involvement on the deal came about through a unique relationship that Cronos' CEO, Michael Gorenstein, had with the company. He'd spent three years working at the law firm before moving to Toronto to start Cronos in 2016.
Matthew Goodman, an associate at Sullivan who worked on the deal, said he and Gorenstein were in the same first-year class at the firm and spent time working on the M&A floor together. Sullivan got involved in cannabis M&A before the Cronos deal, said George Sampas, a partner at Sullivan who led the firm's involvement.
The firm advised Goldman Sachs, which served as Constellation Brands' financial adviser when the beer maker acquired a $4 billion stake in Canadian marijuana producer Canopy Growth.
Following that deal, a growing number of top-tier investment banks and law firms began to get more comfortable working with cannabis companies, albeit ones that don't operate in the US.
The firm isn't ready to build out a specific cannabis practice yet. Because marijuana is federally illegal in the US, Sullivan won't advise companies that sell or distribute marijuana in the country.
"That's a bright red line," added Sampas. "We won't cross that."
Eric P. Berlin: Dentons
Firm: Dentons
Location: Chicago
Eric Berlin first started taking a serious look at marijuana after he read research that showed how patients suffering from myriad digestive issues — as well as multiple sclerosis — had used the drug for palliative relief.
As the president of the University of Chicago's GI Research Foundation, Berlin started to take on pro bono work to help craft Illinois' medical marijuana law roughly a decade ago.
"As the industry expanded, I found there was a huge demand for my services," Berlin said. "And I was deeply intrigued by the area."
He started working with cannabis clients formally through his former firm, Jones Day, around 2014 after Colorado legalized marijuana for adult use.
As of January, Berlin took a new role at Dentons, one of the world's largest law firms, to build out a cannabis practice along with Kathryn Ashton, a partner at the firm's Chicago office.
Last year, Berlin worked on the four-way, cross-border merger between Briteside Holdings, Sea Hunter Therapeutics, Santé Veritas Holdings, and Baker Technologies, which became TILT, a publicly traded company, among other M&A transactions,
He's also helped counsel clients both within and impacted by, the marijuana industry, including the California-based vape company Hmbldt "work through the maze of federal uncertainty."
In his new role, Berlin hopes to use his longstanding expertise in the cannabis industry to build the world's leading practice.
"This is going to be wonderful for clients who need this broad base of legal expertise and boots on the ground in various jurisdictions across the United States and across the world because we really do see this as a global emerging industry," Berlin said.
He's also planning on hiring marijuana experts from outside the firm.
"Right now there are very few firms that provide the really high-level counseling and transactional work cannabis companies need," Berlin said. "That's complicated, layered M&A, reverse takeovers into Canada, going public, and all the banking that has to do with that. We want to be able to provide all of that for our clients."
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