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In the Realm of Protection Against Enforcement of the CSA Against Cannabis Businesses, All Is Not Lost!

January 11, 2018

The Cole Memo Is Dead, But Prosecutorial Discretion and the Rohrabacher–Farr Budget Amendment Still Offer Some Protections To Cannabis Businesses, and Two Out of Three Ain't Bad (Or At Least It's All We've Got!)

In a somewhat unexpected move, on January 4, 2018, U.S. Attorney General Jeff Sessions issued a Justice Department memo that rescinded the Cole Memo, which is an Obama-era policy that directed Department of Justice (DOJ) officials to not go after state-legal cannabis businesses for violations of the federal Controlled Substances Act (CSA). While this is a very unfortunate development for the rapidly growing cannabis industry, this does not leave all state-legal cannabis businesses completely vulnerable to enforcement of the federal CSA.

First, AG Sessions' memo is clear that it is not directing federal prosecutors to immediately and aggressively pursue all cannabis businesses. Quite to the contrary, AG Sessions’ memo plainly states that “prosecutors should follow the well-established [DOJ] principles” when “deciding which marijuana activities to prosecute under the laws with the Department’s finite resources.” Because of these principles that guide the prosecutorial discretion of federal prosecutors, AG Sessions’ memo says that the guidance in the Cole Memo was simply unnecessary. Given all of this language, it appears that federal prosecutors in states where cannabis is legal can, and likely should, use their discretion to avoid prosecuting legitimate cannabis businesses that are acting lawfully under state cannabis laws. Doing so would be completely in line with both the language of the memo and the general tenets of prosecutorial discretion. So prosecutorial discretion still offers legitimate cannabis businesses some level of protection against enforcement actions, albeit limited.

Secondly, since 2014 Congress has tied the hands of the DOJ when it comes to enforcing the CSA against state-legal medical cannabis businesses by exercising control over the DOJ’s budget. The Rohrabacher–Blumenauer Amendment (also known as the Rohrabacher–Farr amendment) to the federal budget was first passed by Congress in 2014 and has remained in force since then through repeated passages of the same amendment, including most recently on December 22, 2017. The Amendment reads as follows: “None of the funds made available in this Act to the Department of Justice may be used [in states where cannabis has been legalized] . . . to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” This has the effect of stopping the DOJ from using any federal funding to prosecute state-legal medical cannabis businesses. And federal courts have shown this amendment to be effective in doing just that. In a 2016 court decision relating to ten separate cases that had been consolidated into a single appeal, a three-judge panel of the Ninth Circuit Court of Appeals unanimously held that, before the DOJ can prosecute a medical marijuana business, it must first demonstrate that the business was in violation of the relevant state’s medical marijuana laws. This ultimately resulted in the dismissal of numerous federal CSA enforcement actions against medical marijuana businesses. Thus, medical marijuana businesses currently have an additional layer of protection against enforcement.

As this shows, though the Cole Memo is dead, all is not lost for state-legal cannabis businesses. Medical cannabis businesses that are in compliance with state laws are currently still protected from enforcement actions by the Rohrabacher–Farr Budget Amendment, and all cannabis businesses still have the limited protection that prosecutorial discretion affords them. However, just like the previous Cole Memo, these protections are not guaranteed to last forever. Every time a new budget is passed, Congress could vote to not re-pass the Rohrabacher–Farr Budget Amendment, and the DOJ could at any time choose to remove its prosecutors’ discretion when it comes to cannabis businesses by ordering them to aggressively enforce the CSA against state-legal adult-use businesses. It is for this reason that it is still as important as ever for cannabis businesses to continue to work with lawmakers to move toward full federal legality of cannabis. Until that happens, there will always be risk and uncertainty for cannabis businesses.

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