News Ticker

WIRE: Jeff Sessions moves to rescind cole memo, prosecute legal cannabis

Washington, D.C. – Today, U.S. Attorney General Jeff Sessions announced that the Department of Justice has rescinded the “Cole Memo” and two additional memos related to marijuana enforcement policy. These memos, issued in 2013 and 2014, have helped to clarify the Department’s response to state-legal cannabis activity.

In response to these developments, National Cannabis Industry Association Executive Director, Aaron Smith has issued the following statement:

This news from the Department of Justice is disturbing, especially in light of the fact that 73% of voters oppose federal interference with state cannabis laws. But, the rescinding of this memo does not necessarily mean that any major change in enforcement policy is on the horizon. This has been, and still will be, a matter of prosecutorial discretion. We therefore hope that Department of Justice officials, including U.S. Attorneys, will continue to uphold President Trump’s campaign promise to not interfere with state cannabis programs, which have been overwhelmingly successful in undercutting the criminal market.

In addition to safely regulating the production and sale of cannabis, state-based cannabis programs have created tens of thousands of jobs and generated more than a billion dollars in state and local tax revenue to date. Any significant change in federal enforcement policy will result in higher unemployment and will take funds away from education and other beneficial programs. Those revenues will instead go back to drug cartels and other criminal actors.

# # #

SPECIAL REPORT From Aaron Herzberg, The Puzzle Group PC:

Jeff Session’s decision to rescind the Cole Memoranda puts the marijuana industry and marijuana legalization efforts in a precarious position.  What’s key to what will happen from this point on is dependent on a federal law known as the Rohrabacher-Blumenauer Amendment – which prohibits the DOJ from using federal funds to interfere with state MMJ programs which is set to expire on January 19 unless re-authorized. If Rohrabacher-Blumenauer is re-authorized, which is likely but not certain, then Session’s pronouncement today will be more bark than bite—regardless of the change in Policy the Federal government won’t permitted to pursue medical marijuana prosecutions unless there are gross violations by a marijuana operator, such as diversion of cannabis across state lines.  If Rohrabacher-Blumenauer is not reauthorized then in theory the Department of justice could institute a complete crackdown on marijuana.  As this amendment has been extended by Congress 7 times I am cautiously optimistic that it will be re-authorized and things will be business as usual.

On the other hand, this multi-billion dollar industry is now too big to be shut down by the federal government– the legalization train has left the station.  With 29 states having passed some form of medical marijuana legalization and several recent polls showing over 60 percent of Americans now supporting the full legalization of marijuana for adults, the momentum behind marijuana law reform will not only continue but increase as we head into 2018.  Sessions actions today are not only at complete odds with the views of a majority of the general public but also add odd’s with Session’s own comments at his confirmation hearing when he promised to establish a rational policy in this area, but also at odd’s with Trump’s promise that medical marijuana is a state’s rights issue.

Regardless of what happens, if there is going to be any prosecution of any state-licensed marijuana businesses it’s likely that the Feds would choose to go after someone who flagrantly violates the law, for example by shipping marijuana across state lines.  Such a prosecution would have been allowed under the Cole Memorandum in any event.

# # #

FROM NORML:

Update: The Department of Justice has now released their language rescinding the Cole Memo and have chosen to not replace this newly created void with any other guidance to federal law enforcement officers.

“The rollback of this policy towards state legalized marijuana will only create chaos and confusion for an industry that is currently responsible for creating over 150,000 American jobs and generating countless millions in state tax revenue. This instability will only push consumer dollars away from these state sanctioned businesses and back into the hands of criminal elements. With nearly 2/3rds of Americans, including an outright majority of Republicans, Democrats, and Independents supporting marijuana legalization, this is not just bad policy, but awful politics and the Trump Administration should brace itself for the public backlash it will no doubt generate,” said Erik Altieri, NORML Executive Director.

“This change will allow any US Attorney who is looking to make a name for themselves to take unilateral action, thus depriving any semblance of certainty for state-lawful consumers or businesses moving forward. Essentially, Attorney General Jeff Sessions is declaring a free-for-all when it comes to the administration of federal marijuana prohibition,” said Justin Strekal, NORML Political Director.

You can read the new memo HERE and see NORML’s initial release below.

For Immediate Release 
Contact: Justin Strekal, NORML Political Director
202-483-5500
justin@norml.org

Attorney General Jeff Sessions To Crackdown On State-Legal Marijuana

Washington, DC: Attorney General Jeff Sessions is set to rescind the Department of Justice’s policy towards state-legal marijuana.

“By rescinding the Cole Memo, Jeff Sessions is acting on his warped desire to return America to the failed beliefs of the ‘Just Say No’ and Reefer Madness eras. This action flies in the face of sensible public policy and broad public opinion. The American people overwhelmingly support the legalization of marijuana and oppose federal intervention in state marijuana laws by an even wider margin. This move by the Attorney General will prove not just to be a disaster from a policy perspective, but from a political one. The American people will not just sit idly by while he upends all the progress that has been made in dialing back the mass incarceration fueled by marijuana arrests and destabilizes an industry that is now responsible for over 150,000 jobs. Ending our disgraceful war on marijuana is the will of the people and the Trump Administration can expect severe backlash for opposing it,” said Erik Altieri, NORML Executive Director.

The Cole Memo, a Justice Department memorandum, authored by former US Deputy Attorney General James Cole in 2013 to US attorneys in all 50 states, directs prosecutors not to interfere with state legalization efforts and those licensed to engage in the plant’s production and sale, provided that such persons do not engage in marijuana sales to minors or divert the product to states that have not legalized its use, among other guidelines.

During a Q and A with reporters in Richmond, VA in March of 2017, Jeff Sessions said, “The Cole Memorandum set up some policies under President Obama’s Department of Justice about how cases should be selected in those states and what would be appropriate for federal prosecution, much of which I think is valid,”

Additionally in 2017, Washington Gov. Jay Inslee (D), Colorado Gov. John Hickenlooper (D), Oregon Gov. Kate Brown (D) and Alaska Gov. Bill Walker (I) issued a letter to the new U.S. Attorney General and to Secretary of Treasury Mnuchin calling on them to uphold the largely ‘hands off’ policies toward marijuana legalization, as outlined in the Cole Memo. “Overhauling the Cole Memo is sure to produce unintended and harmful consequences,” the governors wrote. “Changes that hurt the regulated market would divert existing marijuana product into the black market and increase dangerous activity in both our states and our neighboring states.”

Currently, medical marijuana protections are still in effect, known as the Rohrabacher-Blumenauer amendment. Since 2014, members of Congress have passed annual spending bills that have included a provision protecting those who engage in the state-sanctioned use and dispensing of medical cannabis from undue prosecution by the Department of Justice. The amendment, known as the Rohrabacher-Blumenauer Amendment, maintains that federal funds cannot be used to prevent states from “implementing their own state laws that authorize the use, distribution, possession or cultivation of medical marijuana.”

“At a time when the majority of states now are regulating marijuana use in some form, and when nearly two-thirds of voters endorse legalizing the plant’s use by adults, it makes no sense from a political, fiscal, or moral perspective for Attorney General Sessions to take this step” said NORML Political Director Justin Strekal. “It is time that members of Congress take action to comport federal law with majority public opinion and to end the needless criminalization of marijuana — a policy failure that encroaches upon civil liberties, engenders disrespect for the law, and disproportionately impacts communities of color.”

“If the Trump administration goes through with a crackdown on states that have legalized marijuana, they will be taking billions of dollars away from regulated, state-sanctioned businesses and putting that money back into the hands of drug cartels,” Strekal concluded.

# # #

FROM New Frontier Data:

 

Sessions’ Rescinding of the Cole Memo to
Have Chilling Effect on Cannabis Industry

Washington – Attorney General Jeff Sessions announced that he will rescind “the Cole Memo,” a policy put in place during the Obama Administration which gave guidance to federal prosecutors operating in states where cannabis had been legalized for medical or adult use. New Frontier Data, the authority in business intelligence for the cannabis industry, forecasts this decision will have a chilling effect on the industry.

“The immediate impact of Attorney General Session’s decision to rescind the Cole Memo will be felt most acutely in the public markets, where some companies have already lost 30% or more of their stock value since the announcement was made this morning. Overall, publicly traded cannabis companies are down about 15% since this news broke.

This is a similar though more acute reaction to what we saw after former Press Secretary Sean Spicer made comments one year ago suggesting that the administration was going to enforce medical and recreational cannabis differently.

However, looking more broadly, this announcement is unlikely to be massively disruptive to cannabis business that are already in operation. Consumers are not going to stop buying cannabis in legal states, and businesses are not going to start laying off people or closing their doors just because of this announcement. In the long run, the key question is how, specifically, the DOJ intends to enforce federal law in legal states, and that is still too early to tell,” said New Frontier Data CEO Giadha Aguirre De Carcer.

Industry reactions: 

FINCANN

The Cole Memo is a ‘feel-good’ US Dept of Justice guidance that does not actually restrain local US AGs from enforcement but sets Dept priorities with regard to marijuana, e.g., sales to minors or diversion of product out of state. The Rohrbacher-Blumenauer budget amendment (which prohibits use of federal funds for DOJ enforcement of federal marijuana laws against state-sanctioned medical marijuana licensees) is still likely to be renewed at the end of January.

This development will undoubtedly have an at least temporary chilling effect, particularly on new investment and banking. However, it is also likely to drive marijuana-related businesses to higher levels of accountability and compliance, making their businesses less susceptible to targeted enforcement and overall more sustainable in the long run and this would be a positive outcome.”

– Nathaniel Gurien, CEO, FINCANN

420 Blockchain

“As much as the public has made it clear what their feelings on cannabis are, AG Sessions and this administration have stayed stern on their position on the cannabis industry and are finally showing signs of an aggressive movement towards dismantling it. If the cannabis industry wants to stay legitimate in the eyes of the state governments standing up for them, it’s imperative that we combat this stigmatized federal prohibition with strong data, secure networks, and the confidence that our businesses are run with the due diligence we claim. Obviously, in the position I’m in, I look at a secure industry with the utmost importance, however if this administration can be potentially liable for collusion, hacking, and a litany of other problems, what makes our community think they wouldn’t take a similar approach to acquiring data on the innermost parts of the cannabis economy? In times like this, with uncertain terrain ahead, my biggest concern for our industry is keeping the companies within it, that make it thrive so well, secure compliant and transparent so they can never have the rug swept out from beneath them.”

Mike Kramer, CEO, 420Blockchain

Ardent

“We will not be deterred by the actions of well-connected, misinformed politicians. The majority of Americans on both sides of the aisle support legalization, and more research continues to show the effectiveness of cannabis as a viable medicine. Rescinding a memo doesn’t wipe out public opinion, nor does it reverse scientific advancements.” – Shanel Lindsay, CEO of Ardent and MA Cannabis Advisory board member

BloomBoss

“Reasonable minds can disagree on the wisdom of recreational marijuana laws, but it’s inarguable that the timing of this announcement is outrageous, waiting for legitimate businesspeople to make significant investments in what they thought was lawful commerce, and then dropping the curtain once all the money is spent and before any of the revenues come in.

It’s clear that, for all it’s talk about bringing business back, this administration is determined to extinguish the multi-billion dollar cannabis industry, and the influx of tax revenues it brings, as well as the “pursuit of happiness” consumers may enjoy.”

-Chuck Siegel, CEO of BloomBoss

Green Lion Partners

“Jeff Sessions continues to astound the cannabis industry and the country with his ignorance to scientific fact. It’s a shame that this decision will likely lead to increased suffering of medical cannabis patients that could lose access to their medicine and significant wastes of federal funds. I expect any actions he and the Justice Department take against the industry will be met with significant pushback from states that are benefiting greatly from an economic and quality of life standpoint. The cannabis industry will continue on regardless of this decision, and in the long run, this should only be a road block.”

-Jeffrey Zucker, President of Green Lion Partners

Electrum Partners

“This is another expected bump in the road. It is almost as if the rally in publicly traded stocks in the legal cannabis sector was too much for the AG to bear. When we look back on this day in years to come, one of the big factors will be separating the dedicated from the dilettantes of who is building this industry. This is an opportunity. Additionally, we expect the Attorney General to announce new guidance to replace the Cole memo in the near future.”

-Leslie Bocskor, President of Electrum Partners

Altitude Products

“Jeff Sessions continues to act contrary to the desires of the American people. The actions to rescind the Cole Memo are just further evidence of an administration that is not of the people. It is my belief that state leaders on both sides of the aisle will work aggressively to protect state’s rights, and that America’s fastest growing industry ( Cannabis) will continue to thrive in spite of this nonsensical action.”

-Krista Whitley, CEO of Altitude Products

SinglePoint

“More than half of the US has legalized the use of cannabis, either medically or recreationally, and will most likely not go the other way. We’ve made a concerted effort to provide solutions that do not touch the cannabis plant and will continue to provide our payment solutions to both the legal cannabis industry and others.”

-Wil Ralston, President of SinglePoint

CanCore Concepts

“Today’s reported decision by the Justice Department to reverse Obama era guidelines set in place by Deputy Attorney General James Cole in 2013  could potentially lead to increased violent crime in States that have legalized the plant for medicinal and adult use. Banking has been a major issue within the industry. This reversal will throw further doubt into the financial sector, potentially leading to an increase in violent crime as cash transactions will once again be the norm. Although the decision is not surprising, it should be viewed as a strong indicator of how this administration may deal with States Rights on a number of issues. That said, the Attorney General has previously stated that he believes Congress needs to address the scheduling of Cannabis in relation to the Controlled Substances Act. Hopefully, this decision will act as a wakeup call to our Congressional leaders, as national polling continues to show strong bi-partisan support for legalization.”

Erik Knutson, CEO of CanCore Concepts

Burn TV

“This Jeff Sessions nonsense is out of control and the kind of thing that should get him removed from office.  Not only is it one more thing this Administration lied about after campaigning on letting the states decide for themselves, but its also economically stupid given all the money that has been going into the states from taxes through legalization.  Not exactly shocking considering we are talking about the same Federal government who stupidly thought the best way to attack cannabis was to make banking illegal.  Would love to have been in that meeting…”Hey guys, I know how we can get those pot people…lets make them only use cash so we can’t trace, track, or tax any of it and they get to keep it all and make more money…that’ll show em!”  The lack of intelligent thought in our government around this industry is astounding even though its substantially safer than other legal things like alcohol, tobacco, and prescription narcotics.”

Jason Santos, CEO of Burn TV

Feuerstein Kulick LLP

“Our initial take on the news that AG Sessions is rescinding the Cole Memo is that such rescission will in a vacuum allow local US Attorney’s to decide to prosecute people and business violating the Controlled Substance Act, whether or not they are acting in accordance with a robust regulatory State regime. However, any such federal enforcement/interference action, will, for the time being, be limited to actors in recreational states because the Rohrabacher-Farr amendment to the spending bill for the U.S Justice Department (which is currently still in force under Continuing Resolution __) prohibits the DOJ from using any of its budget/resources to interfere with or prosecute State legal MEDICAL marijuana businesses.

Since his confirmation hearings, AG Sessions has indicated that Marijuana is illegal at a federal level and if Congress wants to change that it has the power to do so.  We think that today’s action by AG Sessions may finally prompt Congressional action. This does not mean that Congress is going to de-schedule Marijuana as a controlled substance.  There are a number of interim steps that Congress can take including, but not limited to, voting in favor of some amendments already before it that would (i) extend Rohrabacher-Farr for another year, (ii) extend the Rohrabacher-Farr protections to adult use markets (the Polis-McClintock amendment), (iii) provide for a reliable safe harbor for banks servicing state legal marijuana businesses, and/or (iv) reform Section 280e of the Tax Code that is being applied to the legalized marijuana industry in a penal way and in a manner that was not contemplated by its drafters.

A very complex and complicated area of the law just got more complicated.  Numerous states depend on (and in some cases have already spent) the tax revenue projected to be generated by their State’s legalized program.  Without Congressional action to protect this vibrant, compliant, and tax-paying industry against attacks by the DOJ, a huge fight is brewing between states and the DOJ.  Is this how we want our governments, Federal and State, to spend precious resources? The will of the people has already been demonstrated at the polls and made the answer to this question clear.  The silver lining of AG Sessions’ actions today is that Congress won’t be able to continue to ignore these big issues and hide behind the status quo provided by the Cole memo.  AG Sessions has thrown down a gauntlet, and it is time for Congress to heed the will of the people that it serves and enact laws and pass amendments that protect and clarify the fastest growing industry in America.”

Mitchell Kulick, Partner, Feuerstein Kulick LLP

Leave a comment