Sessions Rescinds Cole Memo, Which Protected State-Legal Cannabis From Feds

(AP Photo/Alex Brandon)

Editor’s note: This story will be updated throughout the day Thursday following reports that US Attorney Jeff Sessions is rescinding the Cole memo, an Obama-era policy that protected state-legal cannabis from interference by federal law enforcement.


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Massachusetts US Attorney Issues Warning

Update, Jan. 5, 2:35 p.m. — Massachusetts’ top federal prosecutor said Thursday that his office will “aggressively” pursue serious marijuana crimes but isn’t directly addressing the state’s adult-use cannabis law.

US Attorney Andrew Lelling, who took office last month after being nominated by President Donald Trump, issued a statement late Thursday in which he said his office would “aggressively investigate and prosecute” cases involving the bulk cultivation and trafficking of marijuana. His statement makes no reference to the state’s voter-approved law, but does say his office would use “prosecutorial discretion” in enforcing federal law.

The state’s Cannabis Control Commission, in charge of regulating recreational and medical marijuana, said it would press ahead with implementing the state law despite the Sessions announcement. The first adult-use cannabis shops in Massachusetts are slated to open later this year.

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LA Cannabis Industry: Sessions ‘More Bark Than Bite’

Update, 4:44 p.m. PST — Daniel Yi, vice president of corporate communications at dispensary chain MedMen, called the announcement “problematic” but said nothing has changed on the ground level. After all, he said, the Sessions memo issued Thursday did not declare a federal crackdown on cannabis but rather dictated that federal marijuana enforcement will be left to the discretion of individual US attorneys in states across the country. In California, Yi expects these prosecutors to be in tune with the overall direction of the state. “To us, at the end of this day, the story here is that this only underscores the fact that we need to end the federal prohibition” he said.

“We will not be bullied by an out-of-town and out-of-touch politician.”
Herb Wesson, LA City Council president

Jason Beck, owner of Alternative Herbal Health Services, in West Hollywood, has operated the shop as a medical dispensary since 2004 and just introduced adult-use sales on Tuesday. While people who are new to the cannabis industry are “freaking out” over Sessions’ decision, he said it’s par for the course for industry veterans like himself. He described the memo as “more rhetoric” and “lip service.” He added: “I’ve been raided three times already by the federal government, so I already know what time it is.”

Los Angeles City Council President Herb J. Wesson released a statement indicating the city had no signs of slowing its regulatory rollout. “We will not be bullied by an out-of-town and out-of-touch politician,” he said. “The voters of California and Los Angeles have spoken.”

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Cannabis Stocks Drop 13% as Investors Yawn

Update, 4:20 p.m. PST — Today’s Justice Department move threw a shock in the cannabis industry, but cannabis investors seemed to take the news in stride. The Cannabis Stock Index, which tracks the combined daily price movement of 75 cannabis-related companies, began the day at 180.02, and ended at 156.12, a drop of 13.3%.

The action on today’s CSI, which is compiled by Alan Brochstein’s New Cannabis Ventures and 420 Investor, could indicate that a number of investors used today’s news as a signal to sell some of their holdings and lock in some profits. Cannabis stocks have made an impressive run over the past two months, tripling in price since early November. Much of that gain can be attributed to increased investor interest in cannabis stocks as the Jan. 1 start of California’s adult-use cannabis era approached.

Charts courtesy of New Cannabis Ventures and the 420 Investor.

A 13% loss is significant, but it’s nothing like the massive slide cannabis stocks took in 2014. That year, which saw the January start of Colorado’s adult-use retail era, included a massive 4x spike in prices, followed by a yearlong slide back down below their previous values.

Alaska Authorities Vow to Protect Cannabis Market

Update, 3:29 p.m. PST — From the governor to the attorney general to the state’s top senator, Alaska politicians are ready to defend their state’s legal cannabis market.

Alaska Gov. Bill Walker said he’s committed to upholding the will of Alaska voters, who legalized recreational cannabis use in 2014. He said he would work with the Justice Department and the state’s Republican congressional delegation—which has cast cannabis as a states’ rights issue—to prevent federal overreach.

Alaska’s senior U.S. senator, Lisa Murkowski, said she had asked Sessions to work with states and Congress if he thought changes were needed. The Republican called his announcement “disruptive” and “regrettable.”

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Sessions’ action did have one casualty, however: The chairman of Alaska’s Marijuana Control Board has resigned. Peter Mlynarik says the DOJ decision removes the underpinning on which the marijuana industry in Alaska is based. He says the decision does away with the federal government “looking the other way” in states that have legalized marijuana.

Mlynarik is also a police chief for the city of Soldotna. He says his resignation from the board is effective Thursday.

 

FinCEN Cannabis Banking Guidance Still Applies

Update, 3:29 p.m. PST — The US Treasury Department’s 2014 policy guidance on banks and credit unions that do business with cannabis-related companies remains unaffected by today’s Justice Department move, as far as we can tell. That guidance can be found here.

Leafly’s Cannabist Capitalist columnist, Alan Brochstein, reminded us this afternoon that the Financial Crimes Enforcement Network (FinCEN), which issued the guidance to banks, is part of the Treasury Department, not the Justice Department. Jeff Sessions has no say in Treasury policy.

Although the FinCEN guidelines remain in place, today’s move by the Justice Department will undoubtedly cause some financial institutions to take a hard look at their current politics and relationships with cannabis-related companies.

As of July 2017, FinCEN reported that 296 banks and 94 credit unions were providing banking services to marijuana-related businesses:

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Elizabeth Warren and Adam Schiff Suggest Congressional Action to Reinstate Cole Memo

Update, 2:39 p.m. PST — Just added to our roundup of political pushback:

Adam Schiff, US Representative for California:

“As more states, including California, legalize and regulate marijuana, both for medicinal and recreational use, turning back the clock on federal enforcement is a waste of limited resources. I believe the hands-off policy should be reinstated, by Congressional action if necessary.”

Elizabeth Warren, US Senator from Massachusetts:

“The Justice Department’s reckless decision to rescind its policy allowing states to enforce their own drug policies puts our public health and safety at risk. Congress needs to take immediate action to protect state marijuana laws, and the patients that rely on them.”

California’s AG Would Fight Federal Crackdown

Update, 2 p.m. PST — California’s Democratic attorney general says his office will vigorously enforce the state’s new adult-use cannabis law despite the threat of a federal crackdown. Attorney General Xavier Becerra says California voters decided it is best to regulate rather than criminalize cannabis. He says Californians “embrace, not fear, change.”

Becerra says the state’s Department of Justice will do what it can to protect California’s interests. California Gov. Jerry Brown, another Democrat, is vacationing in Mexico and did not immediately comment. Sessions’ decision comes three days after California became the largest state to legalize sales of adult-use cannabis. Voters approved the law in 2016.

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Washington Officials Pledge to Defend State Program

Update, 1:36 p.m. PST — Washington state Gov. Jay Inslee was quick to defend his state’s legal cannabis industry in the wake of US Attorney General Jeff Sessions’ decision Thursday morning to rescind the Cole memo. “In Washington state we have put a system in place that adheres to what we pledged to the people of Washington and the federal government,” the governor said in a statement. “We are going to keep doing that and overseeing the well-regulated market that Washington voters approved.”

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“Make no mistake,” Inslee added. “As we have told the Department of Justice ever since I-502 was passed in 2012, we will vigorously defend our state’s laws against undue federal infringement.”

“Federal law enforcement will find no partner with Seattle to enforce the rollback of these provisions.”
Seattle Mayor Jenny Durkan

In Seattle, Mayor Jenny Durkan, a former US attorney, said she would instruct the Seattle Police Department not to cooperate with federal cannabis enforcement. “Let’s be clear: Our Seattle Police Department will not participate in any enforcement action related to legal businesses or small personal possession of marijuana by adults,” she said in a statement. “Federal law enforcement will find no partner with Seattle to enforce the rollback of these provisions.”

At the Washington State Liquor and Cannabis Board, it also appears to be business as usual. The agency’s spokesperson, Brian Smith, said they were deferring to the governor’s office for an official statement, but he offered licensees a bit of assurance about day-to-day operations. “Our director, Rick Garza, met with marijuana licensing staff earlier this morning,” he told Leafly. “He told them that if they hear questions from licensees, that they are to tell them that nothing has changed. [That] we will continue to adhere by the Cole memo, that we’ll keep processing their applications, that deadlines facing licensees still apply.”

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More Legal-State Republicans Push Back

Update, 1:09 p.m. PST — Nevada Sen. Dean Heller joined his fellow Republican, Colorado Sen. Cory Gardner, in pushing back against the DOJ move this morning. Heller issued this statement this afternoon:

“Knowing Attorney General Sessions’ deference to states’ rights, I strongly encourage the DOJ to meet with Governor Sandoval and Attorney General Laxalt to discuss the implications of federal marijuana enforcement policy. I also urge the DOJ to work with the congressional delegations from states like Nevada that have legalized marijuana as they review and navigate the new policy.”

NJ Sen. Cory Booker Takes It to the Senate Floor

Update, 1:09 p.m. PST — Sen. Cory Booker, sponsor of the Marijuana Justice Act, which would end prohibition nationwide, is currently making the case for legalization, and against the Sessions move, on the floor of the US Senate:

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Colorado Attorney General: ‘Don’t Freak Out’

Update, 12:56 p.m. PST — Colorado’s attorney general tells people who use and sell cannabis legally in her state: “Don’t freak out.”

The interim US Attorney in Colorado has said he doesn't expect any change in his approach as a consequence of the Sessions order.

That’s Cynthia Coffman’s advice after US Attorney General Jeff Sessions’ shift on marijuana enforcement. Coffman said local federal prosecutors now have discretion on how to enforce the still-remaining federal laws against marijuana. The interim US Attorney in Colorado has said he doesn’t expect any change in his approach as a consequence of the Sessions order.

Coffman said that her office could fight back if the federal government did prosecute businesses who are complying with Colorado laws. She said the businesses could argue that the federal government allowed the marketplace to flourish and is now improperly changing direction.

“I think we’ll have a strong argument should the federal government try to change the rules,” Coffman said.

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Trump Press Secretary: No Comment, Essentially

Update, 12: 55 p.m. PST — When asked about the president’s position on cannabis legalization and Attorney General Sessions’ move today, Trump administration Sress Secretary Sarah Huckabee Sanders said: “The president believes in enforcing federal law.” What followed was not clarifying in any way. C-SPAN has the video clip:

Have Questions? We Have Answers

Update, 11:55 a.m. PST — We’ve tried to answer some common questions about what Sessions’ move might mean for state-legal cannabis. Does it mean the end of legal cannabis? Not by a long shot. But it does open the door to increased interference by federal prosecutors in states where cannabis is legal. Read more here.

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Here’s the Full Justice Department Order

Update, 11:15 a.m. PST — The Department of Justice has finally released the full one-page order on its web site. According to the DOJ:

“In the memorandum, Attorney General Jeff Sessions directs all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities. This return to the rule of law is also a return of trust and local control to federal prosecutors who know where and how to deploy Justice Department resources most effectively to reduce violent crime, stem the tide of the drug crisis, and dismantle criminal gangs.”

 

Colorado Sen. Cory Gardner is Livid

Update, 10:35 a.m. PST — Sessions’ move to rescind the Cole memo prompted Colorado Sen. Cory Gardner to take to the Senate floor, where he let loose. “With no prior notice to Congress, the Justice Department has trampled on the will of the voters in CO and other states,” Gardner said. “President Trump had it right. This must be left up to the states.” That relatively mild statement doesn’t reflect Gardner’s anger, though, which must be seen to be appreciated: 

For more reaction from major political players, see David Schmader’s roundup, published a few minutes ago: Politicians Outraged: Sessions Move ‘Trampled the Will of the Voters’

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Massachusetts Regulators Undaunted

Update, 10:27 a.m. PST — Massachusetts cannabis regulators say “nothing has changed” for them after a shift in official US policy toward legal cannabis. The Cannabis Control Commission said Thursday it will continue to fulfill the will of voters by implementing the state law that allows for the sale of adult-use cannabis.

The five-member cannabis commission is finalizing regulations that will allow Massachusetts’ first commercial cannabis shops to open this year. Sales are expected to begin as soon as July. A spokesman for Republican Gov. Charlie Baker said Baker believes Sessions made the “wrong decision” and he supports implementation of the state law.

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AP: US to End Policy That Let Legal Cannabis Flourish

WASHINGTON — Attorney General Jeff Sessions is rescinding the Obama-era policy that had paved the way for legalized marijuana to flourish in states across the country, two people with knowledge of the decision told The Associated Press. Sessions will instead let federal prosecutors where pot is legal decide how aggressively to enforce federal marijuana law, the people said.

The people familiar with the plan spoke on condition of anonymity because they were not authorized to discuss it before an announcement expected Thursday.

Trump's personal views on marijuana remain largely unknown.

The move by President Donald Trump’s attorney general likely will add to confusion about whether it’s OK to grow, buy, or use marijuana in states where cannabis is legal, since long-standing federal law prohibits it. It comes days after adult-use cannabis shops opened in California, launching what is expected to become the world’s largest market for legal recreational marijuana, and as polls show a solid majority of Americans believe the drug should be legal.

While Sessions has been carrying out a Justice Department agenda that follows Trump’s top priorities on such issues as immigration and opioids, the changes to policy reflect his own concerns. Trump’s personal views on marijuana remain largely unknown.

Sessions, who has assailed marijuana as comparable to heroin and has blamed it for spikes in violence, had been expected to ramp up enforcement. Cannabis advocates argue that legalizing the drug eliminates the need for a black market and would likely reduce violence, since criminals would no longer control the marijuana trade.

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The Obama administration in 2013 announced it would not stand in the way of states that legalize marijuana, so long as officials acted to keep it from migrating to places where it remained outlawed and out of the hands of criminal gangs and children. Sessions is rescinding that memo, written by then-Deputy Attorney General James M. Cole, which had cleared up some of the uncertainty about how the federal government would respond as states began allowing sales for recreational and medical purposes.

Legalization advocates condemned Sessions’ move as a return to outdated drug-war policies that unduly affected minorities.

The cannabis business has since become a sophisticated, multimillion-dollar industry that helps fund schools, educational programs, and law enforcement. Eight states and the District of Columbia have legalized marijuana for recreational use, and California’s sales alone are projected to bring in $1 billion annually in tax revenue within several years.

Sessions’ policy will let US attorneys across the country decide what kinds of federal resources to devote to marijuana enforcement based on what they see as priorities in their districts, the people familiar with the decision said.

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Sessions and some law enforcement officials in states such as Colorado blame legalization for a number of problems, including drug traffickers that have taken advantage of lax marijuana laws to hide in plain sight, illegally growing, and shipping the drug across state lines, where it can sell for much more. The decision was a win for legalization opponents who had been urging Sessions to take action.

“There is no more safe haven with regard to the federal government and marijuana, but it’s also the beginning of the story and not the end,” said Kevin Sabet, president and CEO of Smart Approaches to Marijuana, who was among several anti-marijuana advocates who met with Sessions last month. “This is a victory. It’s going to dry up a lot of the institutional investment that has gone toward marijuana in the last five years.”

Threats of a federal crackdown have united liberals who object to the human costs of a war on cannabis with conservatives who see it as a states’ rights issue. Some in law enforcement support a tougher approach, but a bipartisan group of senators in March urged Sessions to uphold existing marijuana policy. Others in Congress have been seeking ways to protect and promote legal cannabis businesses.

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Marijuana advocates quickly condemned Sessions’ move as a return to outdated drug-war policies that unduly affected minorities.

Sessions “wants to maintain a system that has led to tremendous injustice … and that has wasted federal resources on a huge scale,” said Maria McFarland Sanchez-Moreno, executive director of the Drug Policy Alliance. “If Sessions thinks that makes sense in terms of prosecutorial priorities, he is in a very bizarre ideological state, or a deeply problematic one.”

A task force Sessions convened to study cannabis policy made no recommendations for upending the legal industry but instead encouraged Justice Department officials to keep reviewing the Obama administration’s more hands-off approach to marijuana enforcement, something Sessions promised to do since he took office.

The change also reflects yet another way in which Sessions, who served as a federal prosecutor at the height of the drug war in Mobile, Alabama, has reversed Obama-era criminal justice policies that aimed to ease overcrowding in federal prisons and contributed to a rethinking of how drug criminals were prosecuted and sentenced. While his Democratic predecessor Eric Holder told federal prosecutors to avoid seeking long mandatory minimum sentences when charging certain lower level drug offenders, for example, Sessions issued an order demanding the opposite, telling them to pursue the most serious charges possible against most suspects.

 

The Associated Press contributed to this report.