The End of Marijuana as a Schedule I Banned Substance?

On January 4, 2018, Attorney General Jeff Sessions rescinded what is commonly referred to as “The Cole Memorandum.” The Cole Memo was drafted in 2013 by United States Deputy Attorney General James M. Cole and governed federal prosecution of offenses related to marijuana/cannabis. Under the memo, U.S. attorneys generally refrained from prosecuting state-licensed cannabis businesses unless they violated state as well as federal law. For the most part, this was not an issue, as those states which had legalized marijuana heavily regulated its use, and it was mainly limited to medical marijuana. The memo was rescinded by Attorney General Sessions in January 2018. However, whereas the Cole Memo outlined steps states could (and should) take to avoid federal prosecution, the memorandum issued by Attorney General Sessions was much more … succinct.

In three paragraphs and a footnote, Sessions rescinded five Department of Justice documents providing guidance on marijuana, including the Cole Memorandum. Sessions stated that prosecutors were to “follow the well-established principles that govern all federal prosecutions.” The language Sessions utilized is fairly vague and does not provide clear directions for federal prosecutors. Almost immediately, the question(s) that loom are “Who?”; “What?”; “Where?”; “When?” “Why?” and “How?” The memo is quiet on these questions, but you can be sure they will arise.

Who do federal prosecutors bring actions against – dispensaries legally providing marijuana to customers in accordance with well-established state law; growers who have contracts to provide various marijuana products to businesses in accordance with state law requirements; insurance companies providing coverage for both businesses? What constitutes a violation worthy of a federal prosecution – is it the small dispensary that only serves one town within Colorado? Is it the large scale farm growing marijuana for dispensaries across California? What type of violation justifies the federal government prosecuting an individual or company? Where do you focus your prosecutions – on farmers, dispensaries, insurance companies, banks? Do you make an example out of one state? Where does the federal government focus its prosecutions?

When are such actions justified,  is it your first offense that lands you in the cross-hairs of the Department of Justice? Are companies, farmers and insurance agencies going to receive a warning about an alleged violation(s) or will a U.S. Attorney’s office simply bring charges? Why are certain companies and farmers, banks and insurance companies targeted? How will the federal government decide when action is appropriate? These last questions are an amalgamation of all the others. How does the Department of Justice justify bringing charges against one dispensary, but not another, this farmer, but not that farmer; five actions in Colorado, but 20 in California. What is a well-established principle, when principles that had been in place for the last four years were just rescinded?

Attorney General Cole’s memo detailed steps that states which legalized marijuana could take to avoid federal prosecutions. This involved keeping the drug away from children, requiring strict laws that governed is sale, such as requiring prescriptions or doctors’ notes in states that only legalized medical marijuana. One can envision the problems as more than half the country has legalized marijuana in some form or another. Thousands of jobs have been created, tax plans have been put in place, legal infrastructure has been developed. Not surprisingly, the legislators have already started the process of trying to overrule Sessions’ decree.

There are currently four marijuana-related bills pending in the House of Representatives: The Respect State Marijuana Laws Act of 2017 (House Bill 975), The Ending Marijuana Prohibition Act of 2017 (House Bill 1227), Marijuana Revenue and Regulation Act (House Bill 1823), and Regulate Marijuana Like Alcohol Act (House Bill 1841).

House Bill 975 – The Respect State Marijuana Laws Act of 2017 would amend the Controlled Substances Act so that its language does not apply to people complying with state marijuana laws. House Bill 1227 – The Ending Marijuana Prohibition Act of 2017 seeks to deregulate marijuana federally, but includes prohibitions such as interstate sales and trafficking. House Bill 1823 – The Marijuana Revenue and Regulation Act seeks to amend the Internal Revenue Code to provide for taxation and regulation of marijuana products. Finally, House Bill 1841 – The Regulate Marijuana Like Alcohol Act would remove marijuana from the Controlled Substances Act, transition oversight of marijuana to the ATF and treat marijuana similar to alcohol under federal statutes.

This will be an ongoing area of debate and will certainly bring forth a lot of arguments, as well as potentially new case and statutory framework in the very near future. Banks, insurance companies, dispensaries and farmers will want to pay close attention over the next few months, as pre-existing safeguards such as the Rohrabacher-Blumenauer amendment (discussed in one of our earlier blogs) are set to expire. In addition, states have begun to take action to legalize marijuana in response to the sweeping change from Attorney General Sessions. We anticipate that change will be the norm going forward with regards to marijuana’s legal status, not the exception. Companies would do well to stay on top of this fast moving area of the law.

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