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The Cole Memo

By Patrick Murphy – Associate at Law Office of Kimberly R. Simms, APC

He’s finally done it – On January 4^th, just three days after California opened its newly regulated cannabis market, Attorney General Jeff Sessions announced his decision to double down on the failed drug war by rescinding the 2013 Cole Memo. 

What is the Cole Memo?

The Cole Memo instructed the Department of Justice to take a hands-off approach to federal cannabis enforcement in states that have legalized cannabis. It directed U.S. attorneys to focus their limited resources on eight enforcement priorities including:

• 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.

What Does the New Memo do?

The new Memo is vague and does not specifically encourage U.S. prosecutors to open enforcement actions against cannabis business. Instead, the new Memo restates the Department of Justice’s current position, that U.S. attorneys have the discretion to determine whether their limited resources are best used to enforce federal law against cannabis crimes in states that have legalized cannabis.

Regardless of your views on cannabis, it seems at odds with common sense to provide little if any guidance, resulting in varying enforcement standards among the 93 US attorneys across the country. Unfortunately for the Southern California community, our local U.S. attorney, Adam Braverman, has stated, “The Department of Justice is committed to reducing violent crime and enforcing the laws as enacted by Congress. The cultivation, distribution, and possession of marijuana has long been and remains a violation of federal law. We will continue to utilize long-established prosecutorial priorities to carry out our mission to combat violent crime, disrupt and dismantle transnational criminal organizations, and stem the rising tide of the drug crisis.”

As a result, we have been advising our clients that now is not the time to take risks.  It is critical to limit your exposure by strictly following state law. 

What does that mean for the future of cannabis in California?

Although uncomforting, we expect that Sessions’ decision will do little to halt California’s $5 billion industry from moving full steam ahead. In response to Sessions’ decision, the Bureau of Cannabis Control Chief Lori Ajax, has stated, “We expect the federal government to respect the rights of states and the votes of millions of people across America, and if they won’t, Congress should act. Regardless, we’ll continue to move forward with the state’s regulatory processes covering medicinal and adult-use cannabis.”

The most likely consequence of Sessions’ decision is that traditional investors, who were just getting comfortable with the cannabis industry, will shy away.  For example, in the wake of Sessions’ announcement on January 4th, cannabis stocks took a drastic plunge as of 11 AM.  The two largest cannabis companies on the market, Canada’s Canopy Growth Corp. and Aphria Inc. dropped 17%. That said, the market seems to have regained its confidence and cannabis stocks have since rebounded surpassing their previous value before Sessions’ recession of the Cole Memo.

Is there a silver lining?

Yes! Sessions’ decision may finally force Congress to act. There has been a tremendous amount of bipartisan pushback which will hopefully translate to the passage of the Rohrabacher-Blumenauer Amendment, a bill that would prevent the spending of federal funds from interfering with states implementing their own medical cannabis laws, and expand the bill to include protections for both medical and adult-use laws. Another avenue for protection would be for the Senate to continue to pass Senator Leahy’s senate appropriations amendment, which is similar to the Rohrabacher-Blumenauer Amendment in that it prevents the Department of Justice from using any of its funds to enforce federal marijuana laws in states with legalized medical marijuana.

In California, Assemblyman Reggie Jones-Sawyer (D-Los Angeles) has committed to revive and pass AB 1578, a bill that would make California a sanctuary state against federal raids on cannabis businesses. AB 1587 would bar state and local officers from expending resources to aid the federal agency from enforcing federal cannabis laws unless a court order is signed by a federal judge.

In the end, Sessions is fighting a losing battle. According to Politico near 70% of Americans favor some kind of cannabis legalization. States that have legalized cannabis have become dependent on the hundreds of millions of dollars in tax revenue and thousands of jobs the cannabis industry has generated. More importantly, Sessions’ refer madness fear mongering has done little to scare those of us in the cannabis industry. We are an industry that has progressed through constant uncertainty and will continue to do so.

Should you have any questions or concerns, we encourage to reach out to the Law Office of Kimberly R. Simms, APC.