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Tuesday, January 9, 2018

DOJ guidelines threaten legal cannabis trade

A Jan. 4, 2018, memo by U.S. Attorney General Jeff Sessions gives law enforcement the right to prosecute marijuana-related activities, even in states that have legalized these practices. Sessions maintains marijuana cultivation, distribution, possession and use have always been illegal, despite the previous administration's policy against prioritizing prosecution of several types of cannabis-related activities in states that have legalized it.

"It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission," Sessions wrote. "Therefore, today's memo on federal marijuana enforcement simply directs all U.S. Attorneys to use previously established prosecutorial principals that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country."

The D.O.J. said the new guidelines rescind those outlined in a 2013 Department of Justice memo to all United States Attorneys originally drafted by former U.S. Attorney General James M. Cole (known as the Cole Memo) and revert to the Controlled Substances Act of 1970. DOJ representatives called Sessions' guidance a "return to the rule of law," intended to "reduce violent crime, stem the drug crisis and dismantle criminal gangs."

Payments, legal analysts react

While the impact of Sessions' guidance is yet unknown, legal experts and payments analysts expect it to shine a light on the growing cannabis industry. "Legal pot sales: a multibillion-dollar industry in limbo," published by The Green Sheet Dec. 11., 2017, issue 17:12:01, reported the market for legal cannabis products is huge and growing. Author Patti Murphy wrote, "The website Marijuana Business Daily estimates total annual demand for recreational cannabis in the United States exceeds $45 billion."

Bill White, Interim CEO at Intellicheck Inc., cited fear of underage access as one of the biggest barriers to cannabis market acceptance. "Fueling these fears [is] the readily available and easily accessible supply of sophisticated fake IDs," he stated. "The solution rests with the adoption of robust technology solutions that provide accurate ID authentication."

Nathaniel Gurien, CEO of Fincann, a payment solutions and banking compliance firm, said the Cole Memo set priorities but did not restrain local authorities from prosecuting marijuana sales to minors or out-of-state shipments. However, the Rohrbacher-Blumenauer budget amendment specifically prohibits the DOJ from using federal funds to enforce federal marijuana laws against state-sanctioned medical marijuana facilities, he noted.

"This development will undoubtedly have an at least temporary chilling effect, particularly on new investment and banking," Gurien added. "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."

Mitchell Kulick, founder of Feuerstein Kulick LLP, a cannabis law firm, said the Rohrabacher-Farr amendment prohibits the DOJ from using budgetary resources to interfere with or prosecute legal medical marijuana businesses. He expects additional clarity on the DOJ's position on cannabis after members of Congress vote on the following amendments to:

  • Extend Rohrabacher-Farr for another year
  • Extend the Rohrabacher-Farr protections to adult use markets
  • Provide for a reliable safe harbor for banks servicing state legal marijuana businesses
  • Reform Section 280e of the Tax Code that penalizes legalized marijuana use

"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," Kulick said. "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."

A bump in the road

Some cannabis industry leaders believe the DOJ is out of touch with popular sentiment and expect its new guidance to help decriminalize marijuana. Leslie Bocskor, President of Electrum Partners LLC, called Sessions' guidance both a bump in the road and an opportunity. "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," he said. "Additionally, we expect the Attorney General to announce new guidance to replace the Cole memo in the near future."

"Rescinding a memo doesn't wipe out public opinion, nor does it reverse scientific advancements," stated Shanel Lindsay, founder and President of Ardent LLC. "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."

Mike Kramer, co-founder and CEO of 420 Blockchain, a blockchain solution provider in the cannabis industry, urged cannabis industry stakeholders to implement best practices to combat federal prohibition.

"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," Kramer stated. "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." end of article

Editor's Note:

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