A Top Cannabis Lawyer on What Losing the Cole Memo MeansTobias Coughlin-BogueJanuary 5, 2018
“Today the shops are open, the dispensaries are open,” said Carlos Blumberg, a Nevada cannabis lawyer and the founder of the Nevada Dispensary Association. “There are state laws that allow them to be open, there are state laws that allow cards to be issued, there are state laws that allow for cultivation and edibles.”
The same disparity between state and federal law that existed before the Cole memo was rescinded still exists, he noted, and the feds have the same authority to crack down on cannabis now that they did before. All the Cole memo did, he pointed out, was give guidance on ways to avoid that crackdown.
“You need to get to know the US attorney in your jurisdiction, which you should have done anyway!”Hilary Bricken, cannabis attorney
“What we’ve had with the Cole memo was a certain amount of clarity as to what the federal government was looking for,” said Daniel Shortt, a Seattle attorney at the cannabis-centric firm Harris Bricken and founding member of the University of Washington law school’s Cannabis Law and Policy Project. Federal law on cannabis hasn’t changed significantly since the Marihuana Tax Act of 1937, Shortt said, but he still cautioned that Sessions’ move wasn’t something to take lightly, legally speaking.
“For people who are advising these businesses or working with these businesses, it’s important to explain what’s happening here,” Shortt said. “This is a significant change. It’s important to make sure people are aware of the impact of the Cole memo.”
To get a sense of that impact, Leafly consulted Hilary Bricken, also of Harris Bricken, who is one of the nation’s foremost experts on cannabis law. She spoke about about what the decision means and what the cannabis industry and its customers can do to protect themselves.
Leafly: If you’re a business owner or a member of the industry, what should you do and what should you be concerned about?
Bricken: Well, number one, you shouldn’t panic. Number two, it’s business as usual. You stick to state-law compliance, you have a good relationship with your regulators, you pay your taxes. At the same time, you should not ignore this, and you need to get to know the US attorney in your jurisdiction, which you should have done anyway! And I don’t mean a meet-and-greet with tea and sandwiches. You need to find out what their prosecutorial record is and what they care about. Some of them have made their names on certain sectors of enforcement, and you need to know if they’re super drug-focused or not.
Are there different concerns for medical cannabis and adult-use cannabis businesses?
In the 9th Circuit, certainly, because of the Rohrabacher–Blumenauer amendment. We have good case law for the 9th Circuit that says [the federal government] can’t spend money to interfere with state-law-abiding medical cannabis operators. [Eds. note—states in the 9th US Circuit Court of Appeals are California, Oregon, Washington, Montana, Idaho, Nevada, Arizona, Hawaii, and Alaska.]
I wouldn’t put it past the DOJ to try their hand in federal court in some of these other circuits to get a different result. Because that [amendment] on its face does not say that operators are protected in any way.
From an investment standpoint, do people stand to lose the money they’ve put into businesses?
You could see a really zealous prosecutor go from employees at the store or principals of the company to the investors to the ancillary businesses that support them in order to try to wrap it up in a big criminal ring. But it would totally depend on the US attorney. Some of them I don’t think are going to care at all. They’re seasoned pros and vets and they’re not going to do anything politically volatile. These other ones in more conservative places—like, for example, the Eastern District of Washington, with [former US Attorney] Michael Ormsby and the Kettle Falls Five—in a jurisdiction like that, yeah, you could stand to lose majorly.
Would they be prosecuted under conspiracy law?
Aiding, abetting, conspiring to violate the Controlled Substances Act. White-collar crimes for money laundering. I think that’s what they would look at. And I say “zealous prosecutor” because those are not easy charges to bring. You’d really have to build that case and be totally dedicated.
So maybe if you’re an investor, you’re worried last?
I would say in the line for getting punched in the face, you’re not first. You’re certainly not last.
What does this mean for people who just want to smoke and possess cannabis?
Y’know, technically, legally, if they’re in possession of it or consuming it, they too are involved in a federal crime. However, based on the recent past, it is highly unlikely that certain U.S. Attorneys would ever prioritize the prosecution of state-legal consumers. So, while prosecution is legally possible because of current federal laws, it’s still not very likely.
In California, numerous people are in the midst of the legal-cannabis licensing process. Would you, as a lawyer, encourage such people to continue participating in that process? Is it a smart move?
It’s funny, I never really give any advice about encouraging or not encouraging clients. My position is, “Can you sleep at night?” If you’re afraid and uncomfortable, you don’t need to be doing this. But if you can tolerate the risk, it may work for you. And you should proceed in the face of that risk, cautiously. It’s such a personal decision, whether you view this as being about civil liberties or a business opportunity or whatever.
How much does the rescinding of the Cole memo increase that risk they’re taking?
Well, it depends on where they’re located. If I were in LA County, San Diego County, or Orange County, I would definitely be researching my US prosecutor in the Southern District. If I’m in San Francisco, Oakland, San Jose, maybe less so. Even then, like what happened with Harborside, they kind of got a rogue US attorney in the Northern District. So I would say the risk is definitely there. It’s always been there, but now it’s crystallized, in that your independent US prosecutor is completely in charge. So you have to know what they care about if you want to mitigate your risk.