Few cannabis business attorneys have more experience in the industry than Craig Small, the vice chair of Clark Hill’s cannabis practice. From the very early days of regulated medical marijuana in Colorado to the booming global industry of today, Small has watched the business grow in size and complexity.
Small’s own career mirrors the evolution of cannabis, going from an internship in California to running his own private practice in Colorado to eventually joining Clark Hill, one of the 100 largest law firms in the United States and a clear indicator of just how far the industry has come.
Marijuana Venture spoke with Small about the ever-changing world of legal cannabis.
Marijuana Venture: Give us a quick introduction into who you are.
Craig Small: I started in 2008. When I was coming out of law school, I had done an internship with a criminal defense attorney in San Francisco, but they primarily dealt with low-level cannabis crimes.
And each case they got, they would try to transition that to why cannabis laws are unconstitutional. That’s where I first got interested in what cannabis law could be.
When I came out of law school, there was a recession and no one was hiring. I basically opened up the Law Office of Craig Small in Boulder, Colorado, figuring I’d take divorce cases and criminal cases, just to try to make some money.
I joined the NORML legal committee, so that that’s where I started getting a little bit more involved with the cannabis community. This was in 2009. After about a month or two, I just kept getting all these calls: “I want to start a Colorado marijuana business. What do I need to do?”
I turned a few of those away and figured, I’m just out of law school, I’m not ready to take that on. But when I started looking into it and asking around, I realized I was on the same playing field as everybody else.
So I took one client, and I said, “Look, I don’t know what I’m doing but for $50 an hour, which is a massive discount off my normal rate, I’m gonna learn how to do this, and I’m gonna learn with you.” His mother had passed away, and he had $100,000 from an inheritance that he invested in the marijuana industry, and we eventually sold that business for $1.7 million about three years later.
At the time, almost no one was doing cannabis business law. There were maybe 10 or a dozen attorneys in Colorado that would be willing to touch it, and there were questions about whether it was a violation of our oath of ethics as an attorney, whether it would jeopardize our license, whether we were co-conspirators.
But there were a few of us that said, “Hey, we’re gonna move forward. We’re gonna figure this out.”
And as time went by, it just became a larger and larger industry. I grew out of the Law Office of Craig Small and joined up with Bob Hoban and Hoban Law Group in 2017. And then in 2021, transitioned Hoban Law Group into the cannabis industry bureau for Clark Hill.
MV: As the industry evolves, do you find yourself being confined less to the Colorado borders and increasingly looking nationally or globally with what clients ultimately want to do with this business?
Small: Very much so. I started off in Boulder, Colorado, and eventually moved the practice down to Denver. We’re still hemmed in by the interstate commerce prohibition for marijuana, so we can create multi-state operators, but they have to be done in a very creative way. And that creative way is often not really what clients want to do.
Clients will talk a lot about wanting to get their product on all the shelves around the nation. And we say, “Great. Here’s the model to do it. It’s just going to cost you a ton of money.” And a lot of that is more based off of building brand recognition than the ability to go multi-state.
I tell clients to think more in terms of building your brand, building your trust. As people are traveling throughout the United States, ultimately, they’re going to be looking for the products that they trust.
Whether you like McDonald’s or not, a McDonald’s burger in Seattle is the same as the one in Denver. It tastes exactly the same. (I would say marijuana is healthier than McDonald’s burgers.)
When you’re trying to focus on where you want to build your business, I tell clients to focus more on brand trust, brand recognition and brand success within the state, and then focus on which other states or other regions you want to build into.
MV: Is there any specific advice you give clients as they’re moving forward in the cannabis industry?
Small: Certainly, one piece of advice I tell clients who are newly getting into the industry is that this is still a high-risk industry. It always needs to be present in our mind that it is illegal under federal law.
It may be legal under state law, but just because you are comfortable with buying and selling marijuana on the state level, you cannot ignore the federal illegality part of it — because that’s going to sneak in when you try to get a bank account or when you try to negotiate your leases.
The second thing is this is no longer the green rush, where you’ll make so much money that you can buy your way out of problems. Those days have been over for many, many years. Now, the level of sophistication of business owners is so high that they’re doing what capitalism is designed to do: create a higher quality product for a lower cost.
At one point, marijuana was $2,500 to $3,500 a pound; now we’re seeing $500 to $800 a pound. And realistically, as time goes by, you might even see that go lower. Margins are getting smaller and smaller. The industry is getting harder and harder. And certainly, with hemp-derived cannabinoids eating into the marijuana market share, that becomes problematic.
You need to treat it more like a tomato and less like gold because that’s really where businesses succeed.
MV: Can you tell us any crazy stories or weird experiences you’ve had in your extensive history in this business?
Small: Most of the crazy stories are old and forgotten, so nothing comes to mind. But I will say I always run into crazy characters, people who have probably been buying and selling marijuana illegally their entire lives. There’s still a colorful, interesting, libertarian streak that runs through cannabis businesses.
And I think that goes on both sides, marijuana or hemp-derived cannabinoids. There’s a feeling of “us versus them” in pushing this Cannabis sativa L product.
MV: From an advocacy standpoint, what do you see as top priorities?
Small: Clearly, from a business side, its 280E. As soon as that is cracked, I think that’s when capital will flow into the industry, at least on the marijuana side.
It doesn’t impact the hemp-derived cannabinoid side, but I think when investors are looking at cannabis as an investment, they don’t really see too much of a difference between the two industries.
So, certainly, I would love to see 280E carve out exceptions for cannabis.
From a consumer advocacy side, it’s testing, 100%. Testing and disclosures on the labels.
I know the disclosures on labels can get a little crazy sometimes, but I come at it from the mindset of the consumer, where I want to know what’s in the package. And right now, as robust as a lot of these state testing programs are, they don’t really do the best job at providing consistency across the tests. So, it’s a huge problem in the industry, different testing facilities coming out with different testing results based off of the same product. I’m not a scientist, and I don’t know what the answer is, but I would love to see more regulations and escalation on how testing is done and what is reported on the packages.
That’s a strong educational component to winning the hearts and minds of the public that these products can be safely consumed.
Certainly, I would never say that marijuana is a benign drug — I don’t think it is — but we should treat it like we treat many of our other vices, and it’s certainly safer than many of the other vices we use.
MV: What about from a Colorado regulatory perspective? Is there anything that sticks out to you that if you could waive a magic pen, you could fix a rule or regulation?
Small: Colorado’s a unique beast because a lot of our law is in our constitution, so it can’t be changed, absent a constitutional amendment.
Colorado absolutely was a leader, along with Washington and Oregon and California, in helping this industry go from nothing to something. And back in 2010, when medical marijuana went on the books, and in 2013, when retail marijuana went on the books, no one knew what this industry could be. So when they started with the regulations, I think they overshot the mark. And we all even said that at the time. And where many of my colleagues were outraged at how the mark was overshot, I was saying, “I’m happy we even have this. Let’s operate within the parameters we’re given, demonstrate that this can be a successful and responsible industry, and then advocate for rolling back some of these regulations.”
Colorado was a leader. We were the frontrunners. But when 38 states have marijuana on the books now, we need to pay attention to how is Colorado competing against these other cannabis markets.
How easy is it to get a license? Are we saturated? Are we capped? What do our application and licensing fees look like?
Social equity is always something that’s very important, but I don’t know that anyone’s really implemented it well. And certainly it might be too late to implement it well. If you’re going to talk about saturated markets and license caps, I don’t know how you’re going to get more social equity applicants in there.
MV: Is there anything we didn’t touch on that you think is worth mentioning right now?
Small: The only thing I’d add is there’s obviously a lot going on in politics today. Some of it might be seen as doom and gloom, but the fact is adversity creates opportunity. Whether you like Trump or don’t like Trump, the fact is the chaos going on creates opportunity. Maybe it’s opportunity for financial investment, maybe it’s opportunity for networking and business relationships. It’s also an opportunity for social change.
So, as we come up to midterm elections and the next presidential election, will cannabis be an issue? I would say for the marijuana advocates out there, I think at the next elections, both parties are going to be starving for votes.
And if cannabis can come together as a lobbying force to be reckoned with, and if we can get some more candidates who are willing to put cannabis higher up on the priority list, they’ll get votes for it. There’s a political opportunity here for cannabis to push this agenda.
This interview has been edited for length and clarity.