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Can Repeal of the Cole Memo Stop Legal Cannabis?

According to reports from the Associated Press, Attorney General Jeff Sessions will be announcing his plans to repeal an Obama-era policy that has protected legalized marijuana on a state level from federal intervention.

What Exactly is the Cole Memo?

Essentially, the Cole Memo was put in place in 2013 to provide a certain level of protections to states that had legalized cannabis through its voters. Leafly explains,

The Cole Memo was a document originally drafted by former US Attorney General James M. Cole in 2013. Cole issued a memorandum to all US attorneys that was published through the Department of Justice on August 29, 2013. The memo indicated that prosecutors and law enforcement should focus only on the following priorities related to state-legal cannabis operations:

  • Preventing the distribution of marijuana to minors;
  • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;
  • Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  • Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
  • Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
  • Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
  • Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
  • Preventing marijuana possession or use on federal property.”

So What Do Cannabis Industry Experts Think?

Here are some initial reactions:

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“The Cole Memo is a ‘feel-good’ US Dept of Justice guidance that does not actually restrain local US AGs from enforcement but sets Deptartment priorities with regard to marijuana, e.g., sales to minors or diversion of product out of state. The Rohrbacher-Blumenauer budget amendment (which prohibits use of federal funds for DOJ enforcement of federal marijuana laws against state-sanctioned medical marijuana licensees) is still likely to be renewed at the end of January.

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

– Nathaniel Gurien, CEO, FINCANN

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“The state regulated and legal cannabis industry has created tens of thousands of jobs, more than a billion dollars in tax revenue, and has taken market share from foreign criminal enterprises. We have also seen statistically significant declines in opioid overdose deaths in the states that have decided to opt out of federal cannabis prohibition. Going after the state legal and regulated cannabis industry would not only damage the economies and undermine public safety in the states that have opted out of federal cannabis prohibition, it would also export all of our legal cannabis jobs to Canada and other countries. That will not make America great again. It would be a tremendous mistake, and a violation of the core principles of Federalism, for the federal government to interfere with the states and shift all of those jobs and revenues back to drug cartels and other criminal actors.”

– Neal Levine, Chairman of the New Federalism Fund

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“Reasonable minds can disagree on the wisdom of recreational marijuana laws, but it’s inarguable that the timing of this announcement is outrageous, waiting for legitimate businesspeople to make significant investments in what they thought was lawful commerce, and then dropping the curtain once all the money is spent and before any of the revenues come in.

It’s clear that, for all it’s talk about bringing business back, this administration is determined to extinguish the multi-billion dollar cannabis industry, and the influx of tax revenues it brings, as well as the “pursuit of happiness” consumers may enjoy.”

-Chuck Siegel, CEO of BloomBoss

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“InMed, as a pharmaceutical company, has a very well defined pathway to commercialization which includes stringent regulatory oversight by the FDA.  While overall acceptance of the medical benefits of MJ by the public-at-large is nice to have, our target audience are physicians and caregivers who treat patients with serious illnesses. The policy shifts announced today do not have a direct impact on our business model. At this time we do not have any partnerships in the US.  Certainly, stability on all levels is important and we look forward to things normalizing in the US.”

-Eric Adam, CEO of InMed Pharmaceutical

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“Jeff Sessions continues to astound the cannabis industry and the country with his ignorance to scientific fact. It’s a shame that this decision will likely lead to increased suffering of medical cannabis patients that could lose access to their medicine and significant wastes of federal funds. I expect any actions he and the Justice Department take against the industry will be met with significant pushback from states that are benefiting greatly from an economic and quality of life standpoint. The cannabis industry will continue on regardless of this decision, and in the long run, this should only be a road block.”

-Jeffrey Zucker, President of Green Lion Partners

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“With Jeff Sessions reportedly set to roll back the Cole memo that extends legal protections to marijuana businesses in the US, Medipure Pharmaceuticals operates in Vancouver, Canada under strict guidelines of Canadian federal regulatory agencies including Health Canada. Ultimately Medipure Pharmaceuticals feels this news will have nothing but a positive effect on our overall business as we are doing business in accordance with all regulations and laws. It’s been widely reported that industry and investor interest is looking “up North” because of the progressive stance of the Canadian Prime Minister. If anything, this only further illustrates that Canada is the best place to conduct research in the cannabinoid field.”

-Boris Weiss, CEO of Medipure Pharmaceuticals

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“This is another expected bump in the road. It is almost as if the rally in publicly traded stocks in the legal cannabis sector was too much for the AG to bear. 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. This is an opportunity. Additionally, we expect the Attorney General to announce new guidance to replace the Cole memo in the near future.”

-Leslie Bocskor, President of Electrum Partners

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“Jeff Sessions continues to act contrary to the desires of the American people. The actions to rescind the Cole Memo are just further evidence of an administration that is not of the people. It is my belief that state leaders on both sides of the aisle will work aggressively to protect state’s rights, and that America’s fastest growing industry ( Cannabis) will continue to thrive in spite of this nonsensical action.”

-Krista Whitley, CEO of Altitude Products

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“The one-page memo sent to federal prosecutors by Jeff Sessions this morning regarding marijuana enforcement removes the guiding principles states and industry participants have relied upon for years. In place of the Ogden and Cole memos, Jeff Sessions has emphasized that marijuana is a dangerous drug and that marijuana activity remains a serious crime and encouraged federal prosecutors to consider the “general principles” governing federal prosecutions. This creates more uncertainty and confusion, and will have a far reaching impact on the already precariously positioned industry in terms of banking and securing investments.  I cannot say for certain that this will increase federal prosecution – although it certainly empowers those with vendettas against the marijuana industry to act. What I can say for certain is states like California and Colorado who have invested significant amounts of time and money into developing comprehensive marijuana programs will not go down without a fight. Everyone should be carefully watching Congress to see whether follows the DOJ’s lead by removing the protections provided by the Rohrbacher-Blumenauer amendment in the coming weeks.”

-Kellsi Booth, Associate Attorney for Premium Produce

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“More than half of the US has legalized the use of cannabis, either medically or recreationally, and will most likely not go the other way. We’ve made a concerted effort to provide solutions that do not touch the cannabis plant and will continue to provide our payment solutions to both the legal cannabis industry and others.”

-Wil Ralston, President of SinglePoint

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“Today’s reported decision by the Justice Department to reverse Obama era guidelines set in place by Deputy Attorney General James Cole in 2013  could potentially lead to increased violent crime in States that have legalized the plant for medicinal and adult use. Banking has been a major issue within the industry. This reversal will throw further doubt into the financial sector, potentially leading to an increase in violent crime as cash transactions will once again be the norm. Although the decision is not surprising, it should be viewed as a strong indicator of how this administration may deal with States Rights on a number of issues. That said, the Attorney General has previously stated that he believes Congress needs to address the scheduling of Cannabis in relation to the Controlled Substances Act. Hopefully, this decision will act as a wakeup call to our Congressional leaders, as national polling continues to show strong bi-partisan support for legalization.”

-Erik Knutson, CEO of CanCore Concepts

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“I have seen a great deal of compliance between state regulatory agencies and legal commercial cultivators to provide safe, well-managed cannabis crops to suffering people, from veterans with PTSD to cancer patients to children with radical epilepsy. If the White House Administration and US AG Sessions wish to help stabilize this industry, I believe solving the banking problems and the IRS 280e would be a better use of their resources. I believe the State governors from the 30 medicinally legal states will voice their concerns over the possible withdrawal of the Cole memo.”

-Marco Hegyi, CEO of GrowLife, Inc

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“As much as the public has made it clear what their feelings on cannabis are, AG Sessions and this administration have stayed stern on their position on the cannabis industry and are finally showing signs of an aggressive movement towards dismantling it. 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. Obviously, in the position I’m in, I look at a secure industry with the utmost importance, however if this administration can be potentially liable for collusion, hacking, and a litany of other problems, what makes our community think they wouldn’t take a similar approach to acquiring data on the innermost parts of the cannabis economy? 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.”

-Mike Kramer, CEO of 420Blockchain

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“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. Rescinding a memo doesn’t wipe out public opinion, nor does it reverse scientific advancements.”

-Shanel Lindsay, CEO of Ardent and MA Cannabis Advisory board member

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“This Jeff Sessions nonsense is out of control and the kind of thing that should get him removed from office.  Not only is it one more thing this Administration lied about after campaigning on letting the states decide for themselves, but its also economically stupid given all the money that has been going into the states from taxes through legalization.  Not exactly shocking considering we are talking about the same Federal government who stupidly thought the best way to attack cannabis was to make banking illegal.  Would love to have been in that meeting…”Hey guys, I know how we can get those pot people…lets make them only use cash so we can’t trace, track, or tax any of it and they get to keep it all and make more money…that’ll show em!”  The lack of intelligent thought in our government around this industry is astounding even though its substantially safer than other legal things like alcohol, tobacco, and prescription narcotics.”

-Jason Santos, CEO of Burn TV

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“Our initial take on the news that AG Sessions is rescinding the Cole Memo is that such rescission will in a vacuum allow local US Attorney’s to decide to prosecute people and business violating the Controlled Substance Act, whether or not they are acting in accordance with a robust regulatory State regime. However, any such federal enforcement/interference action, will, for the time being, be limited to actors in recreational states because the Rohrabacher-Farr amendment to the spending bill for the U.S Justice Department (which is currently still in force under Continuing Resolution __) prohibits the DOJ from using any of its budget/resources to interfere with or prosecute State legal MEDICAL marijuana businesses.

Since his confirmation hearings, AG Sessions has indicated that Marijuana is illegal at a federal level and if Congress wants to change that it has the power to do so.  We think that today’s action by AG Sessions may finally prompt Congressional action. This does not mean that Congress is going to de-schedule Marijuana as a controlled substance.  There are a number of interim steps that Congress can take including, but not limited to, voting in favor of some amendments already before it that would (i) extend Rohrabacher-Farr for another year, (ii) extend the Rohrabacher-Farr protections to adult use markets (the Polis-McClintock amendment), (iii) provide for a reliable safe harbor for banks servicing state legal marijuana businesses, and/or (iv) reform Section 280e of the Tax Code that is being applied to the legalized marijuana industry in a penal way and in a manner that was not contemplated by its drafters.

A very complex and complicated area of the law just got more complicated.  Numerous states depend on (and in some cases have already spent) the tax revenue projected to be generated by their State’s legalized program.  Without Congressional action to protect this vibrant, compliant, and tax-paying industry against attacks by the DOJ, a huge fight is brewing between states and the DOJ.  Is this how we want our governments, Federal and State, to spend precious resources? The will of the people has already been demonstrated at the polls and made the answer to this question clear.  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.  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.”

-Mitchell Kulick, Partner, Feuerstein Kulick LLP

 

This story is developing and will be updated accordingly.
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