Attorney General Sessions rescinded, effective January 4, 2018, previous enforcement priorities of the DOJ related to marijuana – including the Cole Memo. The Sessions Memo dictates that federal prosecutors should follow the “Principles of Federal Prosecution” originally set forth in 1980 and subsequently refined over time in chapter 9-27.000 of the U.S. Attorney’s Manual. Sessions goes on to state in his memo that “These principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” It is important to note that Sessions has not previously set any specific enforcement priorities with respect to marijuana, nor has this memo created any new enforcement priorities of the DOJ. Rather Sessions has removed the foundational guidance that states have relied on to regulate the production and distribution of marijuana pursuant to state law and the will of each states’ citizens. The Cole Memo actually set 8 enforcement priorities for the DOJ with respect to marijuana, which Sessions has now unilaterally rescinded.
So what does this mean?
It is important to note that the Cole Memo never legalized marijuana at the federal level, but in fact specifically reserved the DOJ’s authority to enforce federal law, including federal laws relating to marijuana, regardless of state law. Specifically, the Cole Memo provided that “neither the guidance herein nor any state or local law provided a legal defense to a violation of federal law…” What the Sessions Memo creates is broad discretion for federal prosecutors to potentially prosecute state-legal marijuana businesses even if they are not engaged in marijuana-related conduct enumerated by the Cole Memo as being an enforcement priority. At this time, the DOJ has given no indication that there will be any enforcement priorities targeted at state-legal marijuana businesses.
The Sessions Memo will also create uncertainty regarding banking – FinCEN has relied on the Cole Memo to formulate its policy relating to financial services to marijuana-related businesses that many banks rely on to bank the marijuana industry. As of the release of this summary, FinCEN’s guidance has remained and it is unclear if FinCEN will review its current policy to come in line with the Sessions Memo. A change in FinCEN guidance could result in state-legal marijuana businesses losing access to the banking system.
Notwithstanding the foregoing, it should be noted that Congress has already cut-off federal enforcement dollars to the DOJ aimed at prosecuting state-legal medical and industrial hemp businesses per the “Rohrabacher–Blumenauer” amendment to the fiscal budget. This was affirmed by the 9th Circuit when it concluded that §542 of the Consolidated Appropriations Act prohibits DOJ from spending money on actions that prevent medical marijuana states giving practical effect to their state laws that authorize the use, distribution, possession, or cultivation of medical marijuana. Congress is attempting to finalize this budget before January 19th, so it is unclear if the existing Rohrabacher–Blumenauer amendment protecting state-legal medical and industrial hemp businesses will stay. If the amendment prohibiting the DOJ form utilizing funds to prosecute state-legal marijuana businesses does not make the final budget, we will clearly see that Congress is not interested in protecting such businesses. However, there are 30 states that have some form of legalized marijuana laws on the books and numerous congressional leaders (including members of the GOP) have already condemned the Sessions Memo, there is a strong possibility that Congress will clear up any confusion of DOJ enforcement priorities by keeping the amendment to the final budget.
Now is not the time to for the cannabis industry to be complacent. Every participant in the industry needs to contact their congressional representative to ensure the DOJs enforcement priorities respect state’s rights. Cannabis businesses also need to ensure full compliance with state law and develop robust compliance programs. The Cannabis team at Husch Blackwell will continue to monitor this development.