Jack Praetzellis writes:
California Governor Jerry Brown signed an amendment to California Evidence Code Section 956 ominously known as the “crime-fraud exception”. The newly-revised Code Section attempts to address the tension between state and federal law governing cannabis.
Under normal circumstances, California’s attorney-client privilege makes confidential communications among an attorney and a client exempt from disclosure. Essentially, neither a lawyer nor a client can be compelled to testify about the substance of their communications.
The crime-fraud exception punctures the attorney-client privilege. It provides that if a client used the services of a lawyer to commit a crime or a fraud, then the attorney-client privilege doesn’t apply. The conflict between state and federal laws governing cannabis raises the specter of whether or not legal advice about cannabis falls into the crime-fraud exception.
Under California’s newly enacted Evidence Code Section 956(b), so long as an attorney “advises the client on conflicts with respect to federal law,” the crime-fraud exception won’t impact the attorney-client privilege where the advice is “rendered in compliance on state and local laws on medical cannabis or adult-use cannabis.”
Before celebrating, however, be mindful of Federal Rule of Evidence 501. Where federal law governs a claim, federal courts do not apply state law privileges and therefore will not apply Evidence Code Section 956(b). And obviously no similar special exception has been written in to federal law.
What’s the takeaway? If you are providing or receiving advice about cannabis in California, be sure that some of the advice concerns conflicts with respect to federal law. While it’s not guaranteed to preserve the attorney-client privilege under all circumstances (see Federal Rule of Evidence 501), it’s undoubtedly better than nothing.
Jack Praetzellis is an associate in the Litigation Department, resident in the San Francisco office.