Justin Tepe, Founder and Managing Attorney at Tepe Law, LLC – Interview Series

Even though it’s one of the more recent states to legalize cannabis and a smaller state when compared to its neighbors, Maryland has still reached over $1 billion in total retail cannabis sales after their first year of recreational sales.  Given the rapid growth of the Maryland cannabis industry and resulting financial figures, the services of a dedicated attorney who’s familiar with ever-changing laws and regulations become ever more necessary. One such attorney with an extensive background representing clients in the various aspects of business law who’s now assisting cannabis businesses in this young industry is Justin Tepe, Founder and Managing Attorney for Tepe Law, LLC.

What subjects did you study during your undergraduate studies, and what initially interested you in attending law school?

I was a political science major in college, but I always planned to go to law school. I like fitting logical pieces together and understanding how to succeed within the rules. That’s really what most of being a cannabis lawyer is, so it turned out to be a good fit.

What made you decide to attend the University of Baltimore School of Law, and what legal fields did you initially study and/or plan on working in?

I knew I wanted to stay in Maryland and there are only two law schools in Maryland. UB is known for having great experiential learning programs and a vast alumni network in Maryland so that seemed like the place to go. I really tried to focus on business law classes. Although I liked litigation, I was already working in a defense litigation law firm before and during law school, so I wanted to get a more rounded experience.

Prior to working in cannabis law, what law firms did you work for, and what were their legal specialties?

Before entering the cannabis field, I was in insurance defense. I tried a lot of cases and gained a lot of hands-on experience in court.

Where did you serve as a Law Clerk, and how did those roles properly prepare you for a legal career? It looks like you’ve served as a law clerk at pretty notable places.

I was a law clerk for Judge Shannon Avery in the Baltimore City Circuit Court. Clerking for a trial judge was the most rewarding (and frankly fun!) legal job I’ve had. Getting to see attorneys in action every day, and seeing how trials played out, was invaluable experience for being a trial lawyer.

How would you describe the experience of being a lobbyist in Maryland, and what industries did you lobby on behalf of?

I’ve always been fascinated with the legislative process. Working for a lobbying firm let me focus on the nitty gritty of how laws are proposed, how they go through the legislative process, and how to advocate for legislative changes. We represented all different types of industries, but that was where I got my start in cannabis law.

What caught your professional interest in working in cannabis law, and did you have any initial concerns about working in this young and not nearly as litigated field of law?

When I was working for cannabis companies in a lobbying firm, the Maryland industry was still brand new. For such a highly-regulated industry with extremely high stakes, there weren’t many lawyers focusing on that practice area. Despite there being very little settled precedent, that’s actually what I really enjoy. There aren’t many practice areas where the law is brand new and constantly evolving. There are new questions all the time and it’s extremely satisfying to help clients navigate those changes in the law and run a successful business.

Because you’ve been a cannabis attorney in Maryland since before Question 4 passed, how did your duties as a lawyer and the firm you worked at change once the bill was signed into law?

From a day-to-day perspective, there was a lot of up-front legwork to get everyone ready and compliant for now conducting adult-use sales. Medical cannabis is still a thriving industry and most of the day-to-day obligations for cannabis operators aren’t significantly different between medical and adult-use sales. There are some nuances at every level of the supply chain, but the real biggest change was doubling the size of the industry and having to keep up with demand.

What is the current legal state of cannabis in the District of Columbia? Are there dispensaries, and are they properly licensed? It seems to exist in a strange legal grey area.

D.C. is an interesting jurisdiction for cannabis. It’s medical only. But because Congress has oversight over D.C.’s local laws and spending, attempts to approve adult use have all been blocked. D.C. operated under I-71, or “gifting” shops for such a long time that it’s been difficult to stop the gifting shops and move everyone over to the licensed medical industry. That’s what D.C. is currently working on, but it’s not an easy solution. There are dispensaries that are fully licensed and much more coming online soon. D.C. has a plan to move everything to the licensed market, it just seems to be harder and taking longer than everyone would like.

What inspired you to start your law firm, and what are the regular legal issues that your clients in the Maryland industry seek legal counsel over?

I realized that focusing on cannabis law is not always conducive to larger firm structures. I generally am on an island by myself for most of my practice and then bring in other subject matter experts on specific projects as necessary. I also liked the idea of having full autonomy over my practice and being able to offer clients cost-effective services by having my own firm. Having my own firm also fits well with my role with clients. A lot use me as general outside counsel where I handle regulatory issues, contracts, corporate matters, employment issues, and litigation all in a one-stop-shop.

Since it’s been a little over a year and a half since Question 4 became law, how would you describe the current state of the Maryland cannabis industry? Is the industry doing better than its neighboring states, and if so, why?

Maryland is doing well from a revenue and compliance standpoint. Most of the existing industry is well-versed in how to operate a compliant cannabis operation and the operators from before adult-use passed have been at it for 7-8 years now. What Maryland is struggling with is the new round of licensed businesses that are supposed to come online. It’s a social equity only round, and Maryland put extreme restrictions on those licenses. I support the goal of having a more expansive social equity round than what Maryland did in 2019, but with how restricted these licenses are, my clients are really struggling to raise capital and get operational.

And it’s risking some peoples’ livelihoods. People are signing leases where they’re personally liable, they’re pouring their hard-earned personal capital into these businesses, and it’s a real struggle to get the doors open. To some extent, that’s the status quo of starting a cannabis business, but the difference with this lottery round is that the social equity restrictions make it even harder than it used to be. It should be getting progressively easier to start a cannabis business, not harder.

How do you envision a federal rescheduling form from Schedule I to Schedule III changing both your role as a cannabis attorney and the greater Maryland industry as a whole?

Schedule III won’t be the immediate landscape shift for my practice or the industry as a whole. Most of what my clients do will still be illegal at the federal level. Schedule III is still a controlled substance that requires FDA approvals and involvement. Until that happens, all my clients will still be mostly conducting federally illegal businesses. What would really change though is the federal government’s view of my clients. The oppressive tax schedule, which prohibits my clients from deducting a lot of their normal business expenses, would go away. Schedule III also provides an opportunity to open up more traditional banking services.

The real monumental shift would be if the federal government starts approving cannabis drugs, licensing state-legal businesses, and opening up interstate commerce. That’s when you’ll see a major shift in the industry as a whole and every cannabis business is going to have to adapt to those major changes.

Thank you for joining us, Justin! For more information on Tepe Law and its services, click here.