For nearly a decade now, Los Angeles-based Zuber Lawler has been one of the top cannabis law firms in the country, though that was not always the plan.
Originally, the firm was focused on “higher-stakes commercial practice,” according to managing partner Tom Zuber, and started to get referrals as the commercial cannabis industry began to develop. It didn’t take long before the firm decided to lean in and actively build its cannabis practice.
“The phone just kept ringing, so to speak,” Zuber says. “Now, yes, our goal is to be the best law firm in the United States for higher-stakes cannabis matters throughout the world — if we’re not that firm already.”
Today, the firm has offices in L.A., Silicon Valley, Chicago, Phoenix and New York and has hundreds of attorneys working worldwide under its Zuber Lawler Global banner.
“So you might describe Zuber Lawler as a U.S. firm with truly global reach,” Zuber says.
Zuber also sees the cannabis industry becoming truly global, with the prospect of Mexico legalizing recreational cannabis late this year or next year.
“The general theme here is that, over the coming years, cannabis as a commodity will flow from areas of cheaper production into larger markets in the U.S. and Europe, and brands and technology will flow from places like the U.S., Canada, Europe and Israel into other markets throughout the world,” he says.
Right now, Zuber says the firm’s primary focus is on helping companies identify, acquire and restructure distressed assets, but it also deals with mergers and acquisitions, financing questions, patent and trademark infringement, contract disputes and even product seized at the border. He says the combination of cannabis-specific knowledge and experience serving traditional companies gives the company a leg up on other law firms in the space.
“My colleagues are a bunch of hard-working, heavy-hitting, hyper-intelligent attorneys that have been serving Fortune 500 companies alongside cannabis companies longer than any other law firm in the country,” he says. “In that sense, we’re uniquely positioned to obtain great results on complex legal matters in the cannabis space.”
Marijuana Venture: What first got you interested in cannabis Law?
Tom Zuber: Way back in 2007, my friends in California who had started cannabis companies began texting me, asking if we could handle their more sophisticated legal matters. As far as I know, back then, there were no corporate law firms at all in the cannabis space. And so we became popular with pioneering cannabis companies as they grew into legal needs relating to finance, mergers and acquisitions, intellectual property and commercial disputes.
Fast forward a few years, and we had, under God, a long list of cannabis clients, and we realized that a legalized cannabis industry had the potential to someday be bigger than the pharmaceutical industry. At that point, as a firm, we decided we were all in.
MV: What makes you think that the cannabis industry has the potential to be bigger than the pharmaceutical industry?
Zuber: First of all, the cannabis industry will ultimately include many sub-industries. For example, one of these sub-industries will be a commodities industry focused on those that just want to relax after work or at a party with a joint or a hemp tincture or some other recreational ingestible. This commodities industry will comprise cannabis and hemp companies that offer quality product and the cheapest prices, as well as a few companies that manage to convince consumers to pay a premium as a function of great branding.
Another sub-industry will be an experiential industry composed of companies that nail the on-site product consumption experience in the context of on-site product sales, the way some coffee chains can charge $4 for a cup of coffee because they’ve nailed the experience.
Another will be an end-to-end user experience industry composed of companies with truly elite branding that control the supply chain from the moment the seed is put in the ground to the moment the user purchases the product in a retail shop, the way that Apple has done.
Yet another sub-industry will be a technology industry composed of drugs and drug replacements, meaning supplements approved by the Food and Drug Administration and foreign equivalents. The cannabis industry is a technology industry, just like the pharmaceutical industry is a technology industry, even though most of the cannabis industry hasn’t realized it yet.
Other sub-industries will focus on non-ingestible hemp products, like clothing, housing and bioplastics. Then, of course, some sub-industries can be further divided between adult use and medicinal use, and between psychoactive and non-psychoactive.
MV: What do you mean when you say the cannabis industry is a technology industry but most operators haven’t realized it yet?
Zuber: We’re currently seeing merely the tip of the tip of the iceberg, as far as cannabis is concerned. Most of the technology inside the cannabis plant is yet to be discovered. This technology lies not so much with any particular cannabinoid, but rather between the 100-plus cannabinoids within the cannabis plant, and between the plant and the human physiology. Like everything else, this plant is a gift from God and extracting any cannabinoid isolate from the plant leaves much of God’s work behind.
Furthermore, extracting the contents of the plant is one thing and facilitating uptake into cannabinoid receptors within the human body is another. The best minds are only just recently starting to focus on tapping this technology. There is still a long way to go. The best stuff is yet to come, and it’s very exciting.
MV: How is California’s system working and what challenges do you see as a law firm representing Cannabis clients in that state?
Zuber: California deserves a lot of credit for being a pioneer state, both on the medicinal level and on the recreational level. The rest of the country gets to learn from the successes and mistakes of California and other pioneering states. That said, I’m frustrated at the lack of enforcement against the illicit market, which currently makes up about 80% of the California market.
This is not unusual, and our clients in other states face competition from similarly daunting illicit markets. Unlicensed cannabis companies don’t comply with regulations and don’t pay taxes and often lie about the contents of their products. So, of course, they get to offer cheaper products and undercut the legal market.
It’s the responsibility of not just California, but all state and municipal governments, and ultimately the federal government, to enforce laws against illicit companies, not just the companies that are spending money and time and attention on doing their best to comply with state and municipal regulations. This is critical not only to the growth of the legal cannabis industry, but also to the health of cannabis consumers.
MV: How important is the emerging international cannabis business to your firm and do you have a strategy for business outside the United States?
Zuber: It’s very important. We’ve been anticipating an increasingly global conversation on cannabis for years. We are already very active on the cannabis front in Europe, the Middle East, Africa and Latin America. Furthermore, alongside its decade-old cannabis practice, Zuber Lawler also represents Fortune 500 pharmaceutical companies, energy companies, utility companies, technology companies and financial institutions. So, from our perspective, the firm is standing on the bridge between the financial world and the cannabis world. When prohibition ends in the U.S., it will affect the flow of money into cannabis companies throughout the world and the freer flow of cannabis products throughout the world. These non-cannabis companies will want to cross that bridge into the cannabis world. We’re working to position Zuber Lawler as the law firm for higher-stakes cannabis matters, not only from the perspective of cannabis companies, but also from the perspective of Fortune 500 companies and financial institutions that will dive into the space when U.S. prohibition ends.
So, overall, the emerging international cannabis industry is exceedingly important to Zuber Lawler, and we’re quite focused on being ready for the burst in international activity that will occur upon the end of U.S. prohibition.
MV: If you were to guess, how long do you think it will be before cannabis is federally legal in the United States? And what about internationally?
Zuber: I think that President Trump might announce a rescheduling or even a descheduling of cannabis prior to the November election in order to boost his prospects for re-election. He knows that decriminalizing cannabis won’t affect support from his base, but it would certainly win him new voters.
Even if Trump doesn’t do it, regardless of what Joe Biden has said to date, I think that a rescheduling or a descheduling will occur during the next presidential term.
On the international front, things will continue to open up at a somewhat persistent pace in Europe like it has in the U.S. — meaning a haphazard, piecemeal fashion. And that’s fine. Ditto for Latin America and Africa. Much of Asia and the Arab world are more of a mystery. There are cultural barriers there that are particularly obstructive to the process. We do a lot of non-cannabis work in these regions, but I don’t know that anybody has any real visibility as to cannabis legalization in there.
MV: How does hemp and all the various products that can be made from hemp figure in international trade?
Zuber: This really is an amazing plant, in that so many different products can be derived from it, from supplements to relieve pain to meatless burgers to ice cream to textiles and so much more. To oversimplify things a bit, hemp and all the products derived from hemp will likely figure into international trade in two ways: First, hemp as a commodity and products made from hemp will flow from places of cheaper production, like Mexico, Colombia and Thailand, into wealthier markets, like the U.S., Europe and Asia; second, hemp is potentially an equalizer of sorts in terms of moving wealth and increased standards of living into developing countries by making them less dependent on wealthier countries for things like drugs, to the extent that hemp-derived products can replace drugs, and energy, to the extent that hemp-derived biofuel can replace oil and gas.
MV: What surprises you most about the cannabis industry?
Zuber: The lack of sufficient focus on protecting brands at the federal level, developing and enforcing patent portfolios and FDA compliance.
As to trademarks and patents, just like dominant companies in most other industries, the bulk of the value of the dominant cannabis companies post-U.S. prohibition will reside in their intellectual property portfolios. By contrast, cannabis licenses are, almost by definition, depreciating assets in that as the number of licenses goes up, other things being equal, the prices of licenses must come down.
As to FDA compliance, on July 1, 2018, about 90% of cannabis products were pulled off the shelves of licensed dispensaries here in California. A similar reckoning is coming to the cannabis industry nationwide as the FDA continues to assert its authority on the subject matter. Just as the companies owning that 10% of cannabis product in July 2018 grew their market share as a function of their prescient compliance with regulations that had not yet gone into effect, cannabis companies that begin complying today with the FDA regulations of tomorrow will also grow their market share relative to the companies that ignore the inevitable future.
A few companies are focusing on these things, and they tend to be our clients, but I’m pretty baffled by the lack of sufficient focus of the industry at large on the IP portfolios and FDA compliance that will separate the dominant companies from the also-rans post-U.S. prohibition.
MV: Aside from prohibition in the United States, what is the biggest challenge facing the cannabis industry today?
Zuber: The illicit cannabis market, and counterfeit and other illegal cannabis products. The next milestone for the cannabis industry is to build a conversation of trust between cannabis producers and cannabis users that have not yet tried cannabis. This conversation of trust is undermined every time the news reports a death from an illicit cannabis vape pen, or someone gets sick from illicit product infested with pesticides of other impurities. Future cannabis consumers, like my mom in Blandon, Pennsylvania, doesn’t read a headline like “Illicit Cannabis Vape Pens Kill 3,” but rather simply, “Cannabis Vape Pen Kill 3.” The media tends to report the sensational, and the latter headline is more sensational.
On the one hand, legalized cannabis has the potential to dramatically improve the lives of people around the world, as perhaps no other single plant in history, aside from maybe wheat or rice. On the other hand, illicit cannabis kills people. Let’s get rid of the illicit cannabis, and in the process literally save lives, and also enable that conversation of trust to finally begin in earnest.
This interview has been edited for length and clarity.
Tom Zuber is the managing partner of Zuber Lawler, which handles corporate, finance, M&A, IPO, intellectual property, FDA and litigation matters from offices in California, Illinois and New York. He holds a law degree from Columbia Law School, a master’s degree in public policy from Harvard University and a biomedical engineering degree from Rutgers University, where he graduated with highest honors. He can be reached at firstname.lastname@example.org.