Rimon Law executive Q&A: Justin Keller and Jason Klein

This post is a Q&A with Justin Keller and Jason Klein, both partners in Rimon Law’s cannabis practice. Keller is based in Los Angeles. Klein works out of Washington D.C.

What brought each of you to Rimon Law?

Justin Keller: I started my career in transactional and regulatory cannabis law in 2015 – I was previously working at a boutique cannabis-only firm called Frontera Law Group, which I helped found, then staying on until 2019. 

At that point, we were going through the growing pains of California’s legalization of Cannabis. It started as an affirmative defense to prosecution and then moved to a collective and cooperative model. Finally, we witnessed it transition to a license model.

With all of these changes, my clients were looking for more support from their in-house legal team than my cannabis firm could offer. From my perspective in California, cannabis law has a lot more nuances because of its federal illegality, and different local and state laws. At the end of the day, Cannabis is a kind of startup law in and of itself.

A client faces all the regulatory challenges, the supply chain issues and the contracts, but they’re also a startup that’s raising money and has a myriad of other issues such as employment and intellectual property. 

I became interested in working with a firm that could be a solution for all of these matters, as at the time, cannabis for the legal sector was and remains a pretty hot emerging market.

We were recruited by lots and lots of firms, yet I thought that the leadership at Rimon Law particularly, and their willingness to be on the cutting edge was attractive. They allowed me to run my practice the way that I had, and they were able to say, “We understand that cannabis is a new industry. You can keep your prices the same; we’re not going to to raise them to an unsustainable rate for our clients.”

Rimon Law is willing and able to foster support and collaboration from attorneys from the top law schools and top firms in the world that have all joined here. It was a great fit, and in 2019 we made the jump. We haven’t looked back and are extremely happy.

What brought you to Rimon Law, Jason?

Jason Klein: I joined in October of 2020, and my practice hasn’t changed a lot since then. By joining Rimon Law, I was able to maintain consistency in my practice while expanding. What Rimon offers, is a broad platform of great attorneys – A really deep bench. When you’re in cannabis, you need other attorneys to support your work.

Cannabis is one of those industries that requires a wide range of legal expertise. There is no one type of cannabis attorney. Rimon’s deep bench helps me support my clients. 

Cannabis clients are growing, consolidating, finding new markets, encountering new issues, and running into new problems. You’re always asked to do something else, something new, maybe something you haven’t seen before. From a legal perspective, it’s comforting to be able to assure those clients that you’ll be able to continue to support their work, doing so with colleagues who you know are competent and capable. You can offer competitive rates and continue to manage and develop relationships with your clients. 

It really was about the other lawyers here at Rimon that drew me in; the markets that they’re in, and their depth of experience.

WEED WEEK: In terms of deregulation nationwide, seemingly it’s looming. What are both of your thoughts? How difficult is it to start a business in a newly deregulated state for your clients…?

Jason: I’d say that it’s easier than it ever was before for cannabis. It’s easier to start a business in a new state in 2022, or a recreational business in a state that was previously medical-only in 2022. It’s certainly not extremely difficult, like it was six, eight, or 10 years ago.

It’s getting a little bit easier, because regulations are slowly standardizing across the board. You don’t have as many places or as many states who are trying entirely new things or going at it on their own. You are seeing lessons that different jurisdictions have learned from others. 

There are still many longstanding challenges, and there are new challenges, but it’s not completely unchartered territory, like it may have been in the past. With that said, however, Cannabis is among the most regulated industries, and is one of the most difficult to start a business.  It’s not for the faint of heart.  

Changes on the federal level are slow. They are few and far between and can never be counted on. It’s down to the states, and each state has its own unique challenges.

Justin: I would agree that it’s been slow and there are many challenges. The SAFE Act seems like it will never go through, and banking remains difficult. There’s a cannabis surcharge to everything, which creates a very difficult road for many. 

Established brands are expanding to multi-state operations (MSOs). By having different intrastate operations in lots of states, brands are making it harder for startups to find their place, because they’re competing with more capitalized companies. 

A few days ago, Congress proposed the CLIMB Act, which sounds very ‘pie in the sky’, if you ask me. They’re talking about allowing cannabis companies to garner greater access to capital, and list on public markets – This sounds way too good to be true. I don’t think it is going to pass, considering SAFE and legalization has stalled out so many times. I’m not counting on federal doing anything.

I agree that the challenges are difficult, but as there develops a playbook, at least businesses can look at how other entrepreneurs and companies were able to find success.

How does the cannabis legal climate differ from where each of you are currently based?

Justin: I do the majority of my work in California, where I’m located. We’re seeing a lot of issues here at the moment. I believe that the Governor seeks to eliminate cultivation tax. However, it remains to be seen whether that will meaningfully combat the black market and other issues that California is facing in terms of overregulation, skyrocketing costs, and the impact it’s had on industry participants.

Jason: I am based in D.C. which is a unique little island compared to the rest of the Mid-Atlantic and the East Coast. I don’t want to say oasis, because it’s not all peachy-keen here in D.C., but it is not indicative of what the rest of the east coast is like.

The ‘limited license’ states that tend to exist over here on the east coast, like in Maryland, Pennsylvania, New Jersey, and New York, are very different from California. They obviously have fewer operators, and each individual operator gets a lot more attention. Historically, there are a lot more compliance requirements on these businesses than there are in California, although California seems to be catching up quickly. 

The climate is certainly one of optimism in most of these markets; optimism in terms of further expansion, continuing to grow the patient count, and in incorporating new products. For example, edibles weren’t even permitted in Maryland until the middle of last year.

Recreational programs are still very new, they’re on the horizon. There are still states like Virginia, which is very much at the beginning of its cannabis life cycle and, and North Carolina, which has hardly begun its process. There’s still a lot more growth to be had. 

The industry is generally optimistic about what to expect in these marketplaces, but they tend to be dominated by large operators such as MSOs and well-financed operations. It’s more difficult for smaller and independent operators to get started or to compete in this market.

How has the technology driven remote model of Rimon benefited your respective practices?

Jason: It’s essential. The fact of the matter is that, despite some turning into big businesses, many cannabis enterprises appreciate the reduced fees and the streamlining of legal services and delivery that Rimon Law can offer. Many big law firms have lots of extra costs involved in Class A real estate, and heavy professional services burdens. Those operating Cannabis businesses tend to be younger. They tend to be faster and want legal services that are agile like them. 

Rimon Law can and has evolved to grow and match their models.

Justin: Clients in disruptive industries appreciate innovation. As boring as law firms are, Rimon Law’s model and its use of technology is innovative and disruptive. I know my clients appreciate that.

Where do you see the state of the cannabis legal industry in the future, and where do you see Rimon in the next five years?

Justin: As to the cannabis industry, despite it becoming increasingly difficult to succeed, at least in California, we’ve seen it grow and grow, both within the state and nationally. The last I read, the cannabis industry globally is the size of Starbucks, which is impressive. It will continue to grow, particularly in other states, and throughout the world.

I anticipate that it will no longer be thought of as a ‘vice’ industry. While it is, however, it’s going to be as large as alcohol and tobacco. 

So how does that impact the legal industry? It remains to be seen. Until it’s no longer treated as a hyper regulated plant, there will be cannabis focused attorneys, and other attorneys that are not really going to be able to work in the cannabis industry, because there’s a lot of necessary knowledge required to be able to effectively navigate your clients towards their goals. 

As the industry grows, of course, the legal services industry surrounding it will also grow.

Right now, it’s still a niche industry, and a small one among material players. That’s going to continue for the foreseeable future.

Rimon Law exploded since COVID, and it’s going to continue to grow, as attorneys see that you can be happy, manage your work-life balance, make a good living, and have a healthy relationship with your coworkers and clients. Rimon’s cannabis practice will continue to grow as well.

Ultimately the future is bright for both the cannabis industry, for Rimon Law and its model.

Jason: Tobacco and alcohol certainly are sort of comps for cannabis. They can be viewed as targets to see where the industry may be going over the next few years. 

In 10 years, cannabis will be much more akin to one of those industries. If you look at how those industries are comprised right now, it’s a relatively small number of operators that have a great deal of market share – Sort of the 80/20 idea. 

We’re headed in that direction. Over the last couple of years, I’ve seen a lot of consolidation. I believe that we’re going to continue to see consolidation. This consolidation will permeate throughout the industry’s legal services, because as the consolidators choose to consolidate their legal services, you’ll end up seeing a handful of firms that have 80% of the work, and a bunch of other smaller players that are fighting over the remaining 20%.

That’s not necessarily a bad thing. As an industry that’s hyper regulated, it’s difficult for people who aren’t focused on it all the time to provide competent advice; you end up with a small handful of lawyers or firms who are heavily focused on cannabis regulation and have built practices around it.

Rimon Law is going to be right there in the mix. 

Certainly, the track record that Rimon’s been able to show over the last couple of years with its growth and maintaining some great relationships within the cannabis industry, this has been exciting to witness and I’m enjoying playing my part. 

Rimon Law will continue to build a strong presence and will grow right alongside the cannabis industry over the next couple of years.