Murchison & Cumming LLP

2018: Out With Cole (Memo), In With What?

January 4, 2018

By: Heidi C. Quan

Just as the state has allowed legalized adult use of cannabis, the feds have thrown a wrench in California's new "Green Rush" era.

Attorney General Jeff Sessions has rescinded the 2013 Cole Memo which set forth federal involvement and enforcement in states that have legalized cannabis. The Cole Memo detailed enforcement directives that allowed states to move forward with legalization so long as they had sufficient regulations in place. While the Cole Memo did not decriminalize cannabis, it essentially adopted a policy of non-interference and a "hands-off" approach for federal prosecutors in states were cannabis had been legalized. Attorney General Sessions has now reminded federal prosecutors that federal law prohibits the possession and sale of marijuana and they are to use their own discretion in weighing whether charges were appropriate.

In a statement, Sessions said that he has directed federal prosecutors to "use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country."

With the rescission of the Cole Memo, will this stifle investment and growth of this newly state legalized industry? Will the federal government raid, prosecute and enforce federal criminalization of cannabis? The interest of federal prosecutors in pursuing cannabis businesses will depend heavily on specific regions and locales and their respective views on cannabis.

Banking, investment and insurance issues are already significant obstacles for cannabis industry businesses. This new uncertainty created by the rescission of the Cole Memo will undoubtedly have a chilling effect on these already troublesome areas for the industry.

Undoubtedly, court actions by states with legalized cannabis will surely be on the horizon.

 

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