Pharmaceutical firm leads financial push to defeat legalization of marijuana

J.P. Holyoak who chairs the campaign to legalize marijuana discusses the donations both to the campaign against Proposition 205 as well as those in favor.  (Capitol Media Services photo by Howard Fischer)

J.P. Holyoak who chairs the campaign to legalize marijuana discusses the donations both to the campaign against Proposition 205 as well as those in favor. (Capitol Media Services photo by Howard Fischer)

PHOENIX -- A Chandler firm that could lose business from legalized marijuana is now the largest contributor to a campaign to stop that from happening here.

Reports filed with the secretary of state's office show Insys Therapeutics, whose sole product is an opiate spray to treat pain for cancer patients, gave $500,000 to Arizonans for Responsible Drug Policy. That is nearly four times more than the second largest donation of $110,000 from the Arizona Chamber of Commerce and Industry to try to defeat Proposition 205.

J.P. Holyoak who chairs the committee pushing the initiative, said the interest of pharmaceutical companies in keeping marijuana illegal comes down to protection of profits. He said firms don't want the competition.

"They want to be able to push their far more addictive, far more harmful and far more dangerous opioid drugs,' Holyoak said. He said that is particularly true of a company like Insys whose business relies solely on a single product that has received federal approval: Subsys, a sublingual fentanyl spray.

Adam Deguire, campaign manager for the anti-205 effort, did not address the financial interest of firms like Insys in keeping marijuana illegal, referring that question to the company.

In its own prepared statement, Insys said it opposes the initiative "because it fails to protect the safety of Arizona's citizens, and particularly its children.' And the company noted that the U.S. Food and Drug Administration has not approved marijuana for any medical use.

"We believe that all available medicines should meet the clinical standards set by the FDA,' the statement says.

The statement says Insys has nothing against the cannabinoids, the ingredients in marijuana, assuming they are properly used. In fact, the company's web site says it has seven such products in various stages of development.

Deguire, for his part, said there's also reason to look at who is supporting Proposition 205.

Most of the cash has come from the Marijuana Policy Project, an out-of-state interest. And he noted a series of five-figure checks from donors who that "stand to make millions if Prop 205 passes, with no regards to its negative effects.'

That list includes companies that currently operate medical marijuana dispensaries. As crafted, the initiative gives them first crack at getting one of the limited number of licenses that will be available through 2020 to sell marijuana.

Holyoak did not dispute that fact.

"Proposition 205 may potentially benefit some of the existing dispensary owners,' he conceded. "This is still an economy and they're going to be winners and losers.'

But Holyoak defended the limit of 147 marijuana shops statewide the initiative would allow.

If approved in November, the measure would allow any adult to use marijuana for any reason, including recreational, as well as grow their own plants. It also would provide certain protections to marijuana users against losing their jobs or child visitation rights solely because of the legal use of the drug.

That is a big change from the existing 2010 voter-approved medical marijuana law which allows doctors to recommend the drug to patients with cancer as well as to treat pain. About 100,000 Arizonans already have state-issued ID cards allowing them to legally purchase up to 2 1/2 ounces of the drug every two weeks.

But Holyoak argued the availability of medical marijuana does not undermine his contention that pharmaceutical companies fear the expansion because it will make the drug much more accessible, mpt for recreational use but also for those who have medical needs but do not have the approximately $300 it takes to get a doctor's recommendation and an annual medical marijuana card from the state.

"There are great barriers to people having access to cannabis as pain treatment through the medical program,' Holyoak said. "Instead what we are proposing is allowing any adult to walk into a store ... and purchase an alternative to those harmful opiods that Insys is pushing.'

While Holyoak argues that legal marijuana would financially harm Insys, there's another side to thar argument.

In an article earlier this year in Forbes, Todd Hagopian who manages a fund of pharmaceutical companies said he actually sees a benefit to wider legal use of marijuana for firms like Insys. That has to do with the company's cannabis drugs under development.

"I anticipate a huge swing toward accessibility, and acceptability, with cannabis-based drugs,' he said.

"The biotech industry might be the one who is actually best-positioned to cash in on the wide acceptance of medical marijuana going forward,' Hagopian said. "As the medical marijuana trend becomes the norm, rather than exception, stocks like Insys will be major beneficiaries.'

Hagopian said he foresees larger pharmaceutical companies swallowing up firms that have developed cannabis-linked drugs.

On Twitter: @azcapmedia

PHOENIX -- The Arizona Supreme Court won't repeal rules that threaten lawyers with disbarment if they help clients get, sell or use marijuana legally under a 2010 voter-approved law.

Without comment, the high court has rejected a petition which would legally allow lawyers to help clients deal with the Arizona law that allows certain individuals to possess and certain businesses to sell and grow marijuana. The justices gave no reason for their decision.

In doing so, the court is affirming existing rules which forbid attorneys from assisting clients "in conduct that the lawyer knows is criminal.'

That is significant: While the Arizona Medical Marijuana Act makes marijuana legal for some, the sale, possession and use of the drug remain a felony for all under federal law.

More to the point, attorney Patricia Sallen, who urged the high court to alter the rules, said it leaves attorneys at risk over what they can -- and cannot -- tell clients who want to get into the marijuana business. That is important because an attorney can be reprimanded, suspended or even disbarred for violating the rules.

The court's refusal has potentially deeper implications.

It comes as voters are deciding whether to expand the state law to allow any adult to possess and use the drug. And if that is approved, it means a whole new set of Arizona laws on marijuana that attorneys may be ethically unable to help their clients navigate.

Whether that will pass remains an open question. Two new polls suggest a close race, with one putting approval at 40 percent and one at 50 percent.

The problem the rule creates for attorneys does not bother Maricopa County Attorney Bill Montgomery who actively opposed what Sallen was trying to do.

He said no matter what Arizona voters have already decide or may decide in November, attorneys have taken an oath to defend both state and federal laws. And that, said Montgomery, means they cannot counsel anyone on activities that remain federal crimes.

Nor was Montgomery concerned that the ethical rules could result in some individuals and businesses being without legal help as they try to navigate state laws legalizing marijuana.

"You're not entitled to (legal) help to break federal law,' he said.

"That's called a conspiracy,' Montgomery continued. "And that makes the attorney an accomplice.'

The fact the Supreme Court was even looking at the issue came as a surprise to Ryan Hurley who has been active in representing dispensary owners and others since the 2010 law was approved. But Hurley said he is hoping the justices' refusal to provide some cover for attorneys like him is not an indication that he could end up in trouble with the court.

Hurley said, if nothing else, there is a 2011 opinion by the State Bar of Arizona.

That opinion says lawyers may advise clients about complying with the Arizona Medical Marijuana Act. That includes helping them establish business entities and representing them before government agencies.

That opinion does require attorneys to advise clients about the "potential federal law implications and consequences.'

But in her petition to the high court, Sallen told the justices that opinion is just that, an opinion, and something that may not be enough to assure attorneys they can help their clients on issues related to medical marijuana. Specifically, Sallen said the opinion does not trump the actual written rule -- the one the court refused to alter -- and does not necessarily protect a lawyer from being disciplined.

"Strictly applied, this means that by advising and helping clients conduct business under Arizona's medical marijuana law, lawyers would be engaging in criminal conduct under federal law,' Sallen wrote to the court, violating the written rules by which attorneys must act.

So she proposed amending the rules to say that attorneys can assist a client "regarding conduct expressly permitted by Arizona law' as long as the lawyer tells the client about the legal consequences under federal law.

Montgomery said that amending the rules is not an answer.

"It is inconsistent with an attorney's job to follow the law,' he said, And Montgomery called it "disingenuous' for attorneys to acknowledge the violation of federal law and then advise clients how to break it.

"It speaks to a disregard for the law that does more to harm lawyers as a profession than just about anything else,' Montgomery said of the desire to change the rules on attorney discipline. "It makes us all just a bunch of hypocrites (to say) 'Follow the law unless I tell you you can't.' '

But what Sallen asked the high court to do has precedent.

In Colorado where both medical and recreational marijuana is legal, there was an annotation to that state's Rules of Professional Conduct to say that lawyer may counsel a client not only about what the law legalizing pot says but may "assist a client in conduct that the lawyer reasonably believes is permitted by these constitutional provisions and the statutes.'

She cited similar provisions enacted in Washington, Oregon and Alaska.

The polls show some level of interest in expanding the existing medical marijuana law to allow all adults to purchase and use the drug.

One conducted by the Morrison Institute with live phone calls to about 800 registered voters found 50 percent support for Proposition 205, with about 40 percent against and the balance saying they were not sure. The margin of error is 3.3 percent.

A separate survey of 728 likely voters by OH Predictive Insights using both live callers and automated responses found a mirror image, with 40 percent saying they support the measure and 51 percent opposed. It has a margin of error of 3.6 percent.

-- Howard Fischer, Capitol Media Services

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