Each month, ToneDen Lunch and Learn brings cutting-edge, educational speakers to the office (along with delicious food). Designed to provoke conversation and company enrichment, this series is always open to new perspectives. Think you'd be a good fit for a future Lunch and Learn? Say hi at joanna@toneden.io.

Michelle Mabugat is an attorney at Manzuri Law, a boutique all-female firm in West Hollywood that represents some of California's largest cannabis businesses alongside the start-ups that fuel the soul of the industry. Known as a strategic out-of-box thinker, Michelle has handled a wide variety of cannabis-related matters, ranging from criminal defense at both the state and federal level, to closing large, complex and innovative corporate transactions. In 2017, Michelle co-authored “Legal Weed: A Comprehensive Guide to California Cannabis Law & Regulation,” one of the first authoritative publications on California’s regulatory landscape.

Photo by Jessica Chou

ToneDen: How did you get interested in law and specifically cannabis law?

Michelle Mabugat: Interest in law—nothing really romantic about it. I was premed in undergrad and decided I didn't like science and was really good at writing. Law school was a natural progression—I wasn't ready to be out in the world working yet. So here came law school. Luckily, I'm very good at law and it happened to be a very good decision for me. How I got into cannabis—that's a more convoluted answer. I started off interning for civil law firms, hated it, boring. I clerked for a Court of Appeal judge in the state of California and was exposed to criminal law when my judge asked me to draft a judicial opinion on a gay drive-by shooting. And working on that opinion gave me googly eyes. I realized I love criminal law.

I started working for criminal lawyers and one of them happened to be one of the first marijuana lawyers ever. So I got exposed to a lot of marijuana criminal cases, which was the only kind of cannabis case back in the day (like 2010). So after having experience in that, I started getting referred marijuana cases all the time. It kind of just snowballed. When Prop 64 happened, I realized I had inadvertently got myself into a niche and here I am today.

What kind of cases do you work with at Manzuri Law?

Back in the day in 2010, it was 100% criminal for obvious reasons. Now with legalization, my practice has evolved along with how my client's businesses have involved. Before they would ask me to advise them, you know, besides, you know, representing them in criminal court, you know, getting them off those charges. Slowly these clients started asking me before they even got raided, how can I run my business without landing in jail? And so then I became more of like a prophylactic: okay, we do this, this and this, you'll be clear of liability. And that has evolved so now that it's legal I advise them in more strategic capacity: stay out of federal jail, stay out of state jail, etc. Now my practice is probably 90% commercial transactions, licensing and compliance, mergers and acquisitions, and a dwindling 10% is related to criminal law.

 

Where do you see women making an impact in the cannabis industry?

Well, our firm is all women. We're actually probably one of the most prominent firms, definitely in Los Angeles. So we've made our own personal mark on the industry. In general, though, women are still largely underrepresented. I see women more focused in ancillary businesses as opposed to what I call plant-touching companies. Those are more professional services that cater to the cannabis industry. Women are still trying to break the ceiling in terms of having actual equity, ownership, sitting on boards, or being executives. We're still largely underrepresented in that regard.

Manzuri Law (From left to right: Meital Manzuri, Esq;Alexa Steinberg, Esq; and Michelle Mabugat, Esq.)
Women are still trying to break the ceiling in terms of having actual equity, ownership, sitting on boards, or being executives.

 What do you think contributes to that?

I see a lot of my female clients and it's not that many compared to my male clients. Across the board, everyone needs the same thing. They need money. You know, starting up in this new wild, wild west, you need a lot of capital and I'll see female clients pitching investors with arguably the same quality, if not better business plans than a male counterpart, but for whatever institutional reason, investors still trust giving a man money more than they do giving a woman money.

 

Wow. It's kind of, it's kind of crazy, isn't it?

Yeah, it is crazy. Statistically, just based on my own experience, women have a harder time raising money than men do.

 

What are some of the misconceptions people might have about the cannabis industry?

‍Right now, I think everyone thinks everyone's just rolling in cash. It's the biggest green rush. They think every dispensary owner is a millionaire and every cultivator is swimming in cash. To some degree they are, but a lot of that cash is going right back out to all the increased costs of compliance, taxes, all these things that they haven't been accustomed to paying before. Right now the industry is severely cash-strapped and most people are struggling to stay afloat—basically make it past the first hurdle. So I think that would be a big misconception: that it's easy and highly lucrative from the beginning.

 

Yeah, you used the phrase "wild west" earlier and there's that implication that the wild west is basically a paradise of money. 

Yeah, it's not—at least not right now. There's a learning curve, getting everyone to pay lawyers and compliance managers. You've paying much more in taxes than you did before. You've got to pay licensing fees, application fees. It's a lot more overhead than they're used to. So, they have to get through this hump before they can really start making money.

 

Where do you see yourself and the world of cannabis law in the next five years?

I'm going to be doing exactly what I'm doing now. I'm going to be a cannabis lawyer till I'm in 90 or something. You're going to have to pry my laptop from my cold, dead fingers.