To recycle R12, it must be free of oil, moisture and Non Condensable Gas (NCG.) Most shops have a machine that will filter the oil and moisture, and they invert the container for 12 hours, or something like that, before checking for NCG.
There are also firms such as www.refrigerantsales.com that buy recovered R12, clean it, and resell it.
Some good points were made in this thread such as the shop recovering R12 when doing a conversion. There are also shady shops that basically withdraw the freon (steal it) then charge for either a conversion or a recharge (with at least some of the R12 they are selling you being what was yours to begin with.
To answer the original question, it is indeed legal and, if properly recycled, is quite alright.
Have a great day,