What cannabis businesses must do to prepare for greater scrutiny from the federal government
By Omar Sacirbey
After Attorney General Jeff Sessions ripped up the Cole Memo and gave U.S. attorneys greater leeway to prosecute marijuana businesses, many industry executives and experts wondered whether the days of the federal government leaving legal cannabis alone were over.
Sessions’ decision, disclosed in a Jan. 4 memo, raised three questions:
1. Would there be a return to 2010-2012? That’s when federal agents routinely raided marijuana dispensaries and grows in California and other states, making the cannabis industry a treacherous one to do business in.
2. Should marijuana businesses be prepared to fight against federal intervention?
3. Has the marijuana industry entered a new normal marked by heightened caution and worry?
The answers to those three questions are: no, yes and yes. As of mid-February, there had been no widespread crackdown on state-legal marijuana businesses. Many lawyers and others argue that the new Sessions Memo didn’t change much – that, according to current policy guidance, top U.S. attorneys have more or less the same legal leeway as they did when the Obama-era Cole Memo was in force.
Moreover, the attorney general’s decision didn’t change the fact that federal drug enforcers are already stretched thin by way of resources. If the feds go after any marijuana companies, they will probably target those operating in the black market or licensed businesses breaking state cannabis laws – not licensed operators in good standing.
“For the most part, we are still dealing with the status quo,” said Darren Weiss, an attorney with Verano Brands, an infused product manufacturer in Maryland.
Still, unless Congress changes federal marijuana laws, cannabis business owners remain vulnerable to federal action. Taking precautions that reduce – if not completely eliminate – risk and exposure makes practical business sense. And while 2012-style raids seem unlikely, federal authorities could try less conspicuous methods of interference.
“The federal authorities know the public won’t stand for militaristic enforcement, but they could get away maybe with backdoor enforcement, things not necessarily in the public eye,” said Rachel Gillette, an attorney with Greenspoon Marder in Denver.
She pointed to the Financial Crimes Enforcement Network (FinCEN), a U.S. Treasury Department agency. An Obama-era FinCEN memo effectively gives banks permission to serve marijuana customers, provided they can prove those businesses are complying with state laws.
“Maybe we’ll see the feds crack down on banks or businesses that can’t meet FinCEN requirements,” Gillette said. She also noted that state-legal marijuana “is a heavily taxed and audited industry, so we might see more tax authority enforcement.”
Some cannabis business owners might see taking the recommended precautions as onerous and resist shelling out cash for them out of principle or a lack of money.
But, according to experts, MJ business owners should realize that their industry – while more regulated than others – isn’t the only one facing costly scrutiny from Uncle Sam. Think health care, pharmaceutical, food, alcohol, gambling and the like.
Moreover, many of the practices that cannabis companies should be executing are things that smart businesses in any regulated market are already doing, not only because of compliance requirements but because they make for good business practices.
Experts said the most important of those is compliance. “Your best defense against federal interference is to stay in strict compliance with your state law and local law,” Gillette said. That means paying taxes, keeping thorough records and backing them up and making sure facilities meet safety standards, among other demands.
There are several other measures that marijuana business can undertake to reduce exposure to federal interference:
- Make sure you have a knowledgeable lawyer.
- Change your inventory practices.
- Diversify product lines and develop backup business plans and exit strategies.
- Build alliances with other local businesses and other institutions.
- Educate landlords and banks about your business and the risks.
“These are things that businesses should have been doing anyways,” Weiss said.
It’s fair to say the cannabis industry has entered a “new normal” after the end of the Cole Memo. But the new normal is in many ways the same as the old normal – which is to say that until federal cannabis laws change, marijuana businesses need to take measures to reduce their risks while strengthening their business positions.
And while Sessions’ decision may not have been a fire but a fire alarm, his next move might unleash something more serious. So it makes sense for businesses who haven’t taken such measures to start.
Our special package in the following pages will help you prepare, if you haven’t done so already. It covers a range of topics – from raising funds and wooing investors, to pacifying landlords and banks. We also examine what it means for medical marijuana businesses and look at the top U.S. attorneys who will be in charge of enforcing the law – and much more.
LEGAL HELP: Lawyering Up
By Omar Sacirbey
Marijuana business owners who don’t already have a lawyer need to get one ASAP. At the very least, you should know a lawyer who has been vetted so you can call that person. A lawyer can help ensure your business complies with local and state laws – and defend you in the event the feds knock on your door.
How do you find an attorney who is both knowledgeable and courageous enough to stand up for clients against a deep-pocketed federal government? Ask lots of questions, advised cannabis attorney Michele Brooke of Brooke Law Group in Pasadena, California.
“Marijuana business owners need to get from their lawyers an honest evaluation regarding their individual businesses,” Brooke said.
One issue to ask about is attorney-client privilege, she said. That privilege is given to the clients and attorneys by law. But the law makes an exception in cases of crimes involving fraud – a category under which marijuana businesses could be prosecuted.
But a good attorney, if ordered by the government or a court to provide documents or information about a cannabis client, will fight that order and not give in – even if that lawyer risks landing in legal hot water, Brooke said.
That means marijuana business owners seeking a lawyer – and perhaps those who already have legal representation – should ask attorneys what they would do if called to testify or served with a subpoena to produce client records.
“Lawyers in this industry need to make up their mind that they’re going to be resilient and that they’re going to maintain client confidences at their own peril,” Brooke said. “Not every lawyer is willing to do that. Clients really need to make sure their lawyer is going to be loyal to them if a subpoena is issued and there are possible consequences.”
Marijuana executives nervous about broaching the topic with a potential attorney shouldn’t be. It’s a perfectly reasonable question for clients to ask lawyers, and lawyers know that, Brooke said.
“You just raise it. Don’t bring any third parties in, just people who need to be in the room. You ask them what they would do if they were served with a federal subpoena for my records,” Brooke said. “You want to make sure you have the right person taking care of your case if it arises.”
INVENTORY: Keeping a Low Profile
Marijuana businesses can avoid drawing scrutiny from the feds by keeping inventories and production runs under control
By Bart Schaneman
While the likelihood of a raid by federal drug enforcers is an open question, cannabis businesses can take steps to keep a low profile and avoid a crackdown.
Growers can avoid the temptation to expand their operations. Infused product makers can keep their production batches small. And retailers, who may have fewer options, can keep their operations lean and mean.
Advice for Growers
Hezekiah Allen, the executive director of the California Growers Association, recommends that cultivators stay small.
“Don’t be greedy,” he said. “A modest-sized small business is unlikely to be a target.”
When deciding how much product to keep on hand, it’s important to be aware of the federal laws for possession of cannabis, he added.
“That’s really what we talk about when we talk about federal crackdowns,” Allen said. “We’re talking about federal crimes and federal sentencing. At the end of the day, it’s a five-year mandatory minimum sentence for growing 51 plants. And folks should be hyperaware of that.”
Allen doesn’t advise farmers try to break up their operations into several smaller grows.
“Having multiple small grows isn’t any better,” he said. “That’s conspiracy.”
He re-emphasized keeping a low profile and being a good neighbor.
“We have a long history of weathering federal crackdowns here in California, so it’s really nothing new, from our perspective,” Allen said.
Advice for Infused Product Makers
Julie Dooley, president of Julie’s Natural Edibles in Denver, said small batches is one way that her company has always kept a low-key profile.
While her business has produced small batches mostly for freshness reasons, it also works for raids, she said.
In the event of a visit from the Drug Enforcement Agency, for example, Dooley’s entire product inventory could be seized. Having a little amount on hand would reduce the financial blow.
Like Allen, she recommends keeping your head down.
“I wouldn’t be doing an all-out blitz on marketing,” Dooley said.
In the meantime, she’s chugging along with her business while minding her P’s and Q’s.
“Keeping your books in order is really important,” Dooley added. “I’ve never been raided, so far. Even though it doesn’t make any sense, and it shouldn’t happen, it doesn’t mean it can’t.”
Advice for Retailers
Kc Franks, the owner of two Lux Pot Shop cannabis retail stores in Seattle, said “there’s really not going to be too much change” in how he adjusts product inventory at his shops.
Because the Washington state market isn’t vertically integrated, he purchases his product from a range of producers and processors.
As a result, Franks is competing for market share among both customers and vendors.
“As a retailer I have to manage my relationships with producers and processors,” Franks said. “If I’m not purchasing product from them, then they’re going to go find people to sell product to. Then, when I need to purchase more product, they may not be available to me.”
At one of his stores, he carries as much as $200,000 in product and operates with just enough inventory to meet demand.
“We’re already riding that line of what we can have,” Franks said. “In the event that [U.S. Attorney General Jeff] Sessions’ guys come into town and start pulling up floorboards, I don’t know that there’s much we can do about it. We’re all pretty unprotected.”
You should sell out your product rather than stockpile it, Franks noted. Because it’s an agricultural commodity, cannabis is date-oriented.
In Washington state, every package has a harvest date. That date doesn’t even consider the time required for curing the marijuana after it is cultivated.
A product can easily look like it’s a year old, Franks said. That makes it hard to hold on to unsold product.
In the meantime, he’s philosophical about what the future may hold.
“Even if something occurs, there’s not much you can do about it,” Franks said. “You sort of have to get raided before you can do anything.”
ALTERNATE PLANS: Spreading Your Bets
Marijuana business owners can expand into non-MJ ventures to avoid putting all their eggs in one basket
By Omar Sacirbey
Marijuana business owners seeking protection from potential interference by the feds should consider diversifying into products and services outside the marijuana industry.
That could include starting a non-plant-touching business line – or at the very least, having a business plan ready to launch if circumstances warrant.
It’s something that has always made good business sense, particularly in the marijuana industry. And it makes even more sense now after the end of the Cole Memo protections. Spreading your bets could make you a lower priority for the feds if they take widespread action.
“Diversification, new product lines, these are things that people should have been doing anyways because of the inherent uncertainty in this market that’s always existed, even with the Cole Memo,” said Darren Weiss, an attorney for infused product maker Verano Brands in Maryland. Weiss also advises cannabis business clients in other legal markets.
“Anyone using the Sessions development as a springboard for diversification is a little behind the times,” Weiss said. “This is proof positive of the need to think like this in an uncertain marketplace.”
Weiss noted that now is a particularly good time for retailers and infused product manufacturers to act.
“For people who are in the retail world or manufacturing world, it is a good time. Not just because of this decision,” Weiss said of the Cole Memo’s demise. “Diversification is not only a safety valve, but a smart business strategy that spreads the risk of a product line failing – across multiple products.”
The pivot is relatively easy to make for manufacturers of marijuana-infused products. Why? You can use many of the same processes and equipment to make products that don’t contain marijuana. For example, if your company makes cannabis-infused chocolate, you can develop lines or brands infused with other products that aren’t federally prohibited or as strictly regulated, such as hemp-derived CBD. Those products could fall into categories like medical, health, nutraceutical and holistic.
“There are a lot of products you can come up with to be not so reliant on cannabis,” Weiss said.
Just ask Julianna Carella, who founded the Bay Area edibles brand Auntie Dolores in 2008. She quit the MJ-infused products business at the end of 2017 because she reckoned the profit margins in California’s newly regulated marijuana market would be too small to succeed.
Carella now focuses solely on her hemp-based CBD products for pets, Treatibles, which don’t carry the same regulatory baggage as MJ-infused goods.
Retailers also can make the pivot relatively easily.
Oregrown, a cultivation and retail business in Portland, Oregon, sells snowboards as well as cannabis. The diversification allows Oregrown to be more of a lifestyle business rather than one focused solely on cannabis.
“It’s just a commonsense move,” said Aviv Hadar, an Oregrown co-founder.
But a pure cultivation pivot is harder, especially for large-scale commercial growers, because the investments you’ve made in things like security, lights and heating and cooling are a lot harder to recoup with vegetables and produce versus marijuana.
“It’s not going to be a particularly lucrative transition,” Weiss said. “You’ve got bills that wouldn’t be required for any other crop. This is an area where indoor cultivators are hit particularly hard because it is very difficult to pivot at a moment’s notice for indoor cultivators.”
Terra Tech’s Example
But cultivators can make the switch. Consider Terra Tech, the California company that today holds 10 retail and cultivation licenses in California and Nevada. Back in 2013, Terra Tech was a hydroponic grow equipment company that wanted to get into the cannabis industry. But crackdowns were still common, and the risk compelled the Terra Tech team to stay out.
“We were thinking about it then, but being a public entity, we believed there was too much risk at that point,” said Mike James, Terra Tech’s chief operating officer. “You have to understand that in 2010, 2011, 2012, that was before the Cole Memo came out. And the Department of Justice, FBI, local law enforcement, they were cracking down on people growing weed, selling weed in states where it was legal. We stayed on the sideline until the Cole Memo came out.”
Around the same time as the Cole Memo came out in 2013, Terra Tech acquired an organic lettuce and herb greenhouse grower in Belvidere, New Jersey: Edible Garden. A few weeks after acquiring Edible Garden, Terra Tech filed applications for medical marijuana business licenses in Nevada.
“It was truly a hedge, but a hedge in a business that we thought we could truly build up,” James said, adding that he believes having Edible Garden helped Terra Tech win all eight Nevada licenses it had applied for. “I think it added a lot of credibility to what we were doing. We weren’t somebody growing weed in their basement.”
Indeed, Edible Garden retails in major grocery chains like Walmart, ShopRite, Kroger and Market Basket. The company generated about $5 million in revenue in 2017, James said. So if the feds were to crack down on cannabis, James and his partners would have a successful business to fall back on.
How to Pivot
For business owners who decide to create a new product line or alternate business, the first thing they should do is create a business plan. “Similar to as if they were starting from scratch,” Weiss said.
Key elements should include:
- Brainstorming new product ideas.
- Putting those product ideas through focus groups.
- Figuring out new material costs as well as the costs for retooling equipment and retraining employees.
- Determining the market potential for any new products.
- Calculating a new product’s wholesale price.
- Calculating the margins.
“Treat it as you would a new enterprise or venture,” Weiss said. “Run the numbers.”
REAL ESTATE: Property Squeeze
Cannabis business owners will have to be even more diligent about wooing landlords panicked by the Cole Memo decision
By Omar Sacirbey
U.S. Attorney General Jeff Sessions has made it even more difficult for marijuana entrepreneurs to find a rental property for their businesses.
That means cannabis business owners will have to do even more hand-holding and educating when it comes to dealing with landlords in the post-Cole Memo era. And they may need to seek out smaller landlords – and be more flexible about rental terms.
Before Sessions tore up the Cole Memo, it already was tough for marijuana business owners to find a rental space. Zoning restrictions reduced the amount of rentable properties. Also, most landlords didn’t want marijuana tenants because they feared that government authorities could take legal action against them – or their property.
Spooked by Sessions
According to marijuana industry participants, the Sessions decision has scared even more landlords away from cannabis, complicating the lives of MJ entrepreneurs in search of a home for their business.
Justin Galindo, a California commercial real estate agent for 420Properties.com – a real estate service that helps cannabis entrepreneurs find properties – determined that for every dozen properties zoned for cannabis, only one or two landlords were willing to rent those spaces to cannabis businesses. And that was before the Cole Memo news.
Now the pickings are even slimmer.
“A lot more people are waiting to see what happens. They’re nervous that it’s a possibility that the federal government can come in and cause problems for them,” Galindo said of landlords.
It’s also driven up rental prices for marijuana businesses. Landlords who are willing to rent to marijuana businesses know how rare that is and how they can raise prices, Galindo said. He estimates that marijuana properties that previously went for $4-$5 per square foot will now go for double that.
Darren Weiss – an attorney for Maryland infused product company Verano Brands who has clients in multiple states – has spoken with 10-15 landlords who are now nervous about renting to his cannabis clients. Weiss was able to allay the concerns of about half those landlords.
“The hysteria surrounding this has had a negative expense on my business, especially in relation to landlords that have gotten spooked by this,” Weiss said. “More landlords are saying: ‘It’s not worth it to me – even if I can command a higher rent or sales price for my property – if there is a threat of the feds cracking down.’”
Options for MJ Entrepreneurs
What did Weiss do to persuade those landlords who didn’t walk away? Education.
“I’ve had multiple conversations over an hour long with landlords across the country to explain the Cole Memo and what the new guidance does,” he said. “The first thing they say on the phone is, ‘Well, I understand the feds no longer will step aside when it comes to cannabis, and they will go after businesses.’ We have to educate banks, landlords and their attorneys that that’s not the situation. We have to be educators again.”
Galindo noted marijuana entrepreneurs seeking property will likely have more success with smaller landlords.
Property management companies and large landlords who own whole buildings are less likely to rent to marijuana businesses because there is a greater likelihood that existing tenants may object to having a marijuana business as a neighbor.
Another way to make yourself more attractive to a hesitant landlord is to be willing to go into long-term leases of at least five to 10 years, with the option of renewing the lease.
Some landlords are comfortable with businesses as long as they have city permits, but it’s hard to obtain permits without real estate. Some landlords, however, are willing to sign a lease contingent on the business getting its city license.
“Letting landlords know that you’re getting a permit from the city and that you want a long-term lease, that’s a good formula for getting these properties,” Galindo said.
COMPLIANCE: Why It Still Pays to Follow the Rules
By Kristen Nichols
In this post-Cole Memo era, marijuana industry employees need to be even more scrupulous about dotting their i’s and crossing their t’s.
That’s because states in violation of federal drug law want to show that their medical and adult-use marijuana programs are not spreading crime, such as the sale of MJ to minors. That makes employee compliance with local and state regulations more important than ever, according to a recruiter who places employees in all states with legal hemp or cannabis.
“Now that the Cole Memo is gone, the industry is even under more of a magnifying glass,” said James Yagielo, CEO of HempStaff, a Miami recruitment firm that runs dispensary training classes for prospective employees in 11 states and consults with licensed cannabis operators across the nation.
“Now, if something happens, something goes wrong, there’s going to be more media coverage of it. There’s more awareness of the conflicts between the federal government and cannabis. So if there is a raid, more outlets are going to cover it.”
Yagielo and other cannabis compliance specialists suggest beefing up on staff training. Even if mass federal raids begin, the companies thought to have lax standards will likely be the first ones targeted.
Here are tips from compliance specialists:
- Train everybody. Sometimes the employees who know the most about cannabis know the least about local and state regulations. A master grower who knows more than you about terpene profiles may know less about regulations than a newbie trimmer or cashier. Give no one a pass when it comes to compliance training, not even yourself.
- Don’t ignore local regulators. Federal drug enforcers don’t have the money to bust every marijuana operator, so they’ll likely go to local cannabis inspectors and police for advice on problematic cannabis operators.
- Keep meticulous records. Say an employee diverts product or doesn’t do a good job checking IDs. Having a record that the problem employee was trained to follow the rules, then broke them anyway, may give a business owner some protection in case of a raid.
- Don’t just read the fine print. Keep reading it. You did a meticulous job setting up your cannabis business in order to receive a license. But state and local regulations change frequently. Keep a close watch on your email for industry bulletins from regulators. If you’re following outdated rules, your business could be unnecessarily exposed.
Compliance may keep the wolves at bay in an era of increasing uncertainty. But marijuana business owners will need to be extra vigilant to changes in the legal landscape. Yagielo expects the rules for cannabis operators to get even more complicated in the absence of federal guidelines.
“You’re going to see states implement more regulations if there’s less federal oversight,” Yagielo says.
GRASSROOTS SUPPORT: Organizing allies
By Bart Schaneman
If you want grassroots support for your cannabis business in the age of U.S. Attorney General Jeff Sessions, you’d do well to form alliances within your local community.
Getting neighboring shop owners and community leaders to take your side will not only help protect your business going forward, it will go a long way toward combating the stigma dogging the cannabis industry.
To help move things along, host community events like food and clothing drives, reach out to nearby businesses – both inside and outside the MJ industry – and make inroads with nonprofit groups.
One industry veteran, in fact, insisted this is something every marijuana business owner should have been doing since Day One.
“I hope that we’re not waiting for more pressure from the U.S. government before we do that as an industry,” said Kayvan Khalatbari, a cannabis consultant and former dispensary owner who’s campaigning to be Denver’s next mayor.
A responsible marijuana business should strive to integrate itself into the community and go “above and beyond to re-create perceptions of the cannabis industry,” he added.
Khalatbari has long advocated for businesses to become good partners in the neighborhood.
To prove it to the community, he suggests marijuana business owners participate in local programs.
A few examples: Hold trash cleanups along roadsides or in parks, host free bicycle repair clinics and offer space for urban gardens.
This shows your neighbors that you are “willing to do things that other businesses simply wouldn’t,” Khalatbari said.
He pointed to Berkeley Patients Group in California as a poster child for such efforts. The pioneering medical marijuana dispensary – which today also sells adult-use products – has worked hard to show the surrounding community that it provides a positive impact on the community. It has hosted free holiday events, including a Halloween party, and given out free cannabis to low-income patients.
Khalatbari also recommends that cannabis business owners work with sympathetic nonprofits, faith-based organizations and social justice advocates to help advance the cause of bringing the industry into the mainstream. For example, a business could partner with churches to hold coat drives or canned-food drives during the holidays.
“It really just puts us in a place where we show we’re just like any other business, or any other industry,” Khalatbari said.
FUNDING: Calming Jittery Investors
Marijuana businesses need to educate nervous investors and provide reassurances they are complying with the law
By Omar Sacirbey
Attention marijuana business owners and investment funds: Be prepared for greater scrutiny from potential investors – and go the extra mile to reassure them.
That’s the view of Jon Trauben, a partner at Altitude Investment Partners in New York, and Chet Billingsley, the CEO of California-based Mentor Capital. Both invested in plant-touching marijuana companies after U.S. Attorney General Jeff Sessions revoked the Cole Memo.
According to Trauben and Billingsley, marijuana businesses seeking investors will probably face more due diligence. Similarly, cannabis-minded investment funds raising capital will probably have to spend more time and effort educating apprehensive investors about wagering their money on marijuana.
But all in all, raising capital shouldn’t be harder – although it already is much tougher than in mainstream industries.
“The Sessions announcement was not a helpful statement,” said Trauben, whose firm in January invested in Canndescent, a California cultivation company. “But it hasn’t changed our underlying thesis.”
“We have a fundamental belief in the long run that the cannabis prohibition will wane and we’ll be able to operate more normally, like alcohol,” said Billingsley, who has invested at least $900,000 in California-based G FarmaBrands since the Cole Memo decision.
G Farma has four plant-touching units that sell a range of products – flower, oil extracts and infused beverages – as well as non-plant-touching ventures that include consulting, real estate management and media.
Billingsley believes investors like him must continue to take precautions to reduce their exposure to federal interference.
In the case of G Farma, he drafted contracts that specify his investments are in G Farma business units that aren’t regulated as a marijuana company, like equipment leasing.
“We invest in the portion of G Farma that doesn’t touch the plant, like the equipment. Then we arrange to have an option on anything that is touching the plant,” Billingsley said. “We have to be very careful in the separation of the regulated side of the business and the conduct of normal business.”
Despite the precautions, Billingsley acknowledges that G Farma could still be vulnerable to federal interference, even if it fully complies with local and state laws.
“The operators have tremendous risk, and you have to be able to build a trusting relationship between them over time, and that trust goes both ways,” Billingsley said. “We like the folks at G Farma, and they like us, and we’ll have a long, profitable future together.”
Compliance is Key
Operators seeking capital will need to continue emphasizing compliance while educating investors about the risks so they are not ignored or overblown.
“Compliance remains the underlying basis of our investments. We want strong exceptional management teams who are fully compliant,” said Trauben, whose firm has invested in a total of 11 plant-touching and ancillary companies.
“They need to operate above and beyond minimum standards but at maximum ability. To me, that is the underpinnings of a successful company in what will continue to be an extremely highly regulated industry.”
Calming Nerves Via Education
Many canna-centric fund managers, meanwhile, acknowledge that allaying investor worries requires explaining to them that the risk of federal interference is virtually unchanged.
A few days after the Cole Memo news, for example, Brett Finkelstein – managing partner at Phyto Partners, a Boca Raton, Florida-based firm that invests in ancillary companies – emailed investors explaining why he thought the news was nothing to worry about.
“We are undeterred by the recent news and more excited than ever about the future of the cannabis industry and our portfolio companies,” wrote Finkelstein, whose firm closed its first fund to new investors in January and opened a second one the same month.
“NOTHING has changed and NOTHING will happen to legally operating cannabis businesses or consumers. And NOTHING will happen to our portfolio companies, except that their critical business solutions will become even more important and valuable to the licensed operators.”
MEDICAL MARIJUANA: Out of the Danger Zone
By John Schroyer
If you run a law-abiding, license-carrying medical marijuana business, relax. The end of the Cole Memo does not affect you – at least not right now.
Not only are medical cannabis businesses still protected by the Rohrabacher-Blumenauer Amendment until at least March 23, but U.S. Attorney General Jeff Sessions’ decision was more aimed at recreational cannabis.
The Rohrabacher-Blumenauer Amendment prohibits the Department of Justice – and therefore all U.S. attorneys – from prosecuting any MMJ companies that follow state law.
The amendment was still law as of press time, although it was in danger of expiring in March if not renewed. That said, strong political support for states’ rights on marijuana legalization is likely to force Congress to maintain a hands-off policy toward MMJ businesses. The main question is how.
Until now, the Rohrabacher protections have been approved as an amendment to the federal budget, meaning that the measure needed to be reapproved on an annual basis. But for the past two years, Congress has kept the 2015 federal budget in place instead of writing a new one.
It’s questionable whether the Rohrabacher-Blumenauer Amendment will be attached to any new budget. If not, those MMJ company protections will cease to exist.
However, it’s quite likely that Congress could pass a stand-alone bill to prevent Sessions from attacking legal MMJ businesses. Such bills have been repeatedly introduced over the years, but none have gained any real momentum.
That could change this year, given the growing bipartisan support on Capitol Hill for medical cannabis, or at least for the rights of states to chart their own courses on MMJ.
That does not mean MMJ business owners should be complacent. By all means, consult an attorney to make sure your company is covered and that there aren’t any liabilities.
But as long as the Rohrabacher-Blumenauer Amendment – or its language – remains in federal law, there’s not much Sessions or his U.S. attorneys can do to stop you.