LIFE HEALTH-MEDICAL-MARIJUANA 2 PH

In this 2014 file photo, marijuana plants grow in the flowering room at Compassionate Care Foundation the only medical marijuana dispensary in Egg Harbor Twp. (David M. Warren/Philadelphia Inquirer/MCT)

TRENTON — The co-founder of the medical marijuana dispensary in Egg Harbor Township will appear in court Wednesday to dispute claims he blocked his employees' attempts to join a union in a case that is being watched across the nation.

And this isn't even David Knowlton's biggest problem.

Knowlton, board chairman of the nonprofit Compassionate Care Foundation dispensary, is not a lawyer, and he can't find one to represent him before the National Labor Relations Board. State law created a medicinal marijuana program, but to the federal government, growing and possessing marijuana remain illegal activities. Rules of professional conduct say attorneys cannot advise or assist their clients engage in "conduct a lawyer knows is criminal or fraudulent."

The law firm of Ballard Spahr of Philadelphia offered to represent the financially struggling dispensary for free but later withdrew the offer out of concern its attorneys could face ethics charges and put their licenses at risk, Knowlton said.

"It's a difficult position to be in," said Knowlton, who is also CEO for a health policy think tank, the Health Care Quality Institute of New Jersey. "I am used to being in a world where everyone knows what the rules are — you have a right to counsel, a hearing and due process — and it is being cast aside because the state and the feds can't agree."

The quandary is just the latest legal landmine people in the medicinal marijuana industry face in the netherworld between state and federal law, where it's nearly impossible to obtain a simple bank loan.

The case pitting the United Food and Commercial Workers Union and the dispensary promises to test the murky limits of both state and federal laws in ways that would set a precedent, according to legal experts.

THE UNION ISSUE

United Food and Commercial Workers has organized cannabis industry workers in California, Colorado, the District of Columbia, Massachusetts, Michigan, and Oregon.

The union has created a campaign called Cannabis Workers Rising "to bring more professionalism and stability to this emerging sector of the healthcare industry," according to the campaign's website.

But the National Labor Relations Board, an independent agency responsible for protecting employees' rights investigating unfair labor practices, has never intervened in a case involving the legal marijuana industry's right to organize, said Mark E. Belland, attorney for the union local 152. This case would be the first, he said.

Medical marijuana laws have passed in 23 states and Washington D.C.

"Our main mission is to assist the employees who want to be represented. If through that process a legal precedent is set and helps others who work in New Jersey and other locations, that's good," Belland said. "It's a significant case and it will be a significant decision."

Last fall, the dozen dispensary employees in Egg Harbor decided they wanted to vote to determine whether they should join the UFCW Local 152 in Mays Landing, Belland said. They had accepted a "temporary" 60-day pay cut in July "due to alleged financial difficulties" and never received the back pay they were promised, according to the Dec. 4 complaint. The owners, angry over their organizing efforts, retaliated by changing some employees' schedules and refusing to recognize the full-time status of some employees, the complaint said.

"None of that is accurate," Knowlton said.

While he would not get into specifics of his defense, Knowlton did say he will question whether the labor board has standing in this case because most of his employees work in the greenhouse portion of the company. Agricultural employees are not covered by labor relations board.

Belland said these are not farm workers. "This is a highly specialized process that converts marijuana plants to a retail consumable product. It's similar to tobacco" with an employee base that "has not been deemed agricultural," he said.

Knowlton contends he is not opposed to the union coming in - just not right now. With expensive overhead costs and a less-than-ample patient base in a program that has gotten off to a slow start, Knowlton and other board members are seeking new investors.

"I've talked to our lenders and they don't think (unionizing) is a bad thing," he said. "We may have additional lenders come to the table and they may not want a union. I have a fiduciary obligation to make the foundation viable. I asked for four months to get it worked out, but they (the union) said no."

Most frustrating to Knowlton is that he must make his case himself.

When Knowlton appeared at an earlier hearing representing himself, a labor board official strongly urged him to hire an attorney, and recommended several firms that were willing to work pro bono, including Ballard Spahr, he said.

"They were eager to take the case," but without guidance from the Pennsylvania Bar Association, the attorneys informed him they were "disappointed they can't go forward," he said.

"If you make the argument we can't be represented by counsel and we are committing a felony, how can the (National Labor Relations Board) use its weight as a federal agency to force us to unionize our workers to commit a federal felony?" Knowlton said.

Attorney Meredith Swartz, who initially consulted on the case, wrote in an email to NJ Advance Media, "We are not able to comment on this matter."

A Pennsylvania bar spokeswoman said a committee is studying the issue and did not know when it would be finished.

RIGHT TO AN ATTORNEY UNCLEAR

Knowlton said after Ballard Spahr turned him down, he didn't look any further for lawyers, fearing others would be in the same legal bind.

Only a handful of state bar associations have tackled the ethical implications for lawyers representing the legal cannabis market — and New Jersey is only beginning that process.

Attorney James J. Ferrelli of Cherry Hill, a former longtime bar trustee, assembled a panel of colleagues in the past month to study the issue. The goal is for the Bar to submit a proposal to the state Supreme Court in the next few months and amend the rules of professional conduct for New Jersey's lawyers before the end of the year.



"I am sure there is a lot of people who would benefit greatly from this, and there are going to be clients who will need our help and guidance," Ferrelli said. "But under the letter of the rules of professional conduct, a lawyer should not counsel anyone engaged in conduct they known as illegal and fraudulent."

"A lawyer is handcuffed under New Jersey law and in many other states," he added. "It's a very real issue."

Florida Attorney Yale Galanter, a medical marijuana expert who represents Garden State Dispensary in Woodbridge as well as dispensaries in Colorado, doesn't agree.

The Colorado and Nevada bar associations' rules have been rewritten to permit attorneys to counsel people involved with medical and recreational cannabis "as long as they are advising their clients on what I would call 'strict compliance with state law,' " he said.

"It would really be tough for a state bar association to sanction a lawyer for interpreting state law," Galanter said. "Lawyers are licensed by a particular state; there is no federal license to practice law."

A report by the American Bar Association, "Lawyers & Marijuana: If It's Legal, Can it be Ethical?" said Arizona, Connecticut, Colorado, Washington bar associations amended their ethics rules to permit lawyers to assist their clients on matters relating to their legalized marijuana programs. Only Maine, the first state to confront the matter, hedged a bit. "An attorney needs to perform the analysis required by the rule (of professional conduct) and determine whether the particular service being requested rises to the level of assistance in violating federal law," according to the report.

The report does not cite any instances of attorneys facing disciplinary action for representing a client involved in legal cannabis. Galanter and Ferrelli were not aware of any ethics cases filed against an attorney.

Knowlton said he is willing to go it alone in the case for the sake of protecting the dispensary that has helped relieve the suffering of hundreds of people. A 76-year-old man with pancreatic cancer comes to mind, he said, whose body before cannabis was twisted in pain, and can now hold his grandchild.

'I think this is one of the most exciting things I have done, and I am even more convinced than I ever was it is the right thing to do," Knowlton said of his ownership of the dispensary. "I've never done anything more challenging — and more unnecessarily challenging. If this is program to help people in need, then make it easier to do that," Knowlton said.

Until marijuana is no longer considered a "schedule one drug," regarded as having no medical value and as dangerous as LSD, nothing will change, he said. "The feds have got to get their act together and help us deal with this."

State's 2nd Medical Marijuana despensary opens in Egg Harbor - 10-28-13 20 Gallery: State's 2nd Medical Marijuana despensary opens in Egg Harbor - 10-28-13

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.