Impact of New Department of Justice Guidance on Marijuana Industry

In January 2018, Attorney General Jeff Sessions rescinded policies adopted under President Obama’s administration that instructed law enforcement and federal prosecutors to take a hands-off approach to enforcing federal marijuana laws. This post will discuss the potential impact of this policy change on businesses within the marijuana industry, but it will first start by providing the genesis of the Obama administration’s approach and outlining the new administration’s approach.

Genesis of Current Federal Approach to Marijuana Enforcement
In 2009 law enforcement and federal prosecutors sought clarification on how to enforce federal marijuana laws in light of the expanding legalization of marijuana at the state level. In response, the U.S. Department of Justice (DOJ) issued guidance on how to approach the matter. While the DOJ clearly reiterated the prohibition of marijuana under federal law, they also instructed law enforcement and prosecutors to focus their efforts on the most serious threats to the public’s health and safety. As states continued to enact medical and adult-use programs. the DOJ issued updates to its original 2009 guidance in a comprehensive 2013 memo authored by then Deputy Attorney General James M. Cole. This memo would come to be known as the “Cole Memorandum,” and would instruct prosecutors to de-prioritize the prosecution for marijuana but still focus on the following objectives:

  • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
  • Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  • Preventing the distribution of marijuana to minors

This memorandum gave many states the greenlight to legalize medical and/or adult-use recreational marijuana. By the end of 2016, 29 states had passed some form of legalization.

New Administration Results in New Approach to Marijuana Enforcement
With a new administration was set to take over in 2017, many wondered if the laissez-faire approach of the Obama administration would continue. Despite being vocal of his personal opposition to industry, Attorney General Jeff Sessions made assurances to lawmakers that he would concede to the administration’s stance that it should be decided by the states, and not interfere with those in compliance with local law. However, in January 2018 Attorney General Sessions issued new guidance that essentially nixed the Department of Justice’s prior approach to marijuana enforcement under the Cole Memorandum. In the new memo, he rescinded the hands off approach prescribed in the Cole Memorandum and instead left the decisions to prosecute marijuana related laws up to local federal prosecutors.

Impact of DOJ’s New Approach to Marijuana Enforcement
Some in the industry and media took this as a sign of increased scrutiny to come; however, we believe that business will continue as usual. The new administration stating that previous guidance is redundant is hardly a declaration of an imminent crackdown. This latest guidance simply reiterates that marijuana is illegal federally but that prosecutors have the flexibility to prioritize which crimes should be prosecuted locally.

Our belief that business will continue as usual is driven by the following:

  • The Department of Justice only has limited funds to pursue and prosecute crimes. As a result, federal prosecutors will focus their time and resources on crimes that actually negatively impact their communities. This sentiment has been echoed by several federal prosecutors
  • Many national and local politicians have come out in opposition to the policy changes. If the DOJ starts cracking down on operations within legalized states, expect these politicians to exert their political influence to intervene

In our opinion that with the ever-widening division between state and federal law, one the thing that remains clear – the best way to minimize exposure to yourself and your business is staying in strict compliance with all rules and regulations.