Stay tuned on LinkedIn to find out when the MCA will release social equity applications for MD.
K&M is currently helping clients transition to the regulated market.
Don’t forget DC has 2 licensing rounds for internet retailers in 2024.

The Green Elephant in the Room: Legal limbo in the US cannabis industry

The fact of the matter is that the cannabis industry only exists as a legal fiction. Lawyers and lay folk alike recognize that marijuana (or “marihuana” if you are a federal bureaucrat) is a federally illegal, controlled substance with no accepted medical use; nevertheless, the industry that thrives from this plant is given express protection by the majority of states’ legislatures in exchange for its heavy, tax-generating potential. This open conflict between state and federal law is unprecedented in the modern era. As more states enact marijuana laws, this fundamental disconnect will have to be addressed substantively by Congress.

The quiet equipoise that currently exists between the Fed and states hinges on a handful of memoranda which provide “guidance” on marijuana policy. This patchwork of memoranda addresses law enforcement, banking practices and tax treatment with respect to state legal marijuana-related businesses. Though these memoranda do provide an overview of how the Feds intend to treat the legal marijuana industry, the policies they preach are not law.

Much of the current federal law enforcement policy regarding legal marijuana is based on an August 29, 2013 memorandum issued by then Deputy Attorney General, James M. Cole. The “Cole Memo” gives deference to state and local authorities to regulate “marijuana-related conduct” within their state. Practically speaking, this means that the Feds will not interfere with marijuana-related businesses that strictly adhere to state law. In reality, however, the Cole Memo is just a stale policy statement and does not have the force or effect of law. As the new Attorney General takes the helm at the DOJ, the Cole Memo could easily be replaced with new policy that more closely aligns with the largely unknown marijuana policies of the Trump Administration.

Members of Congress on both sides of the partisan divide have attempted to bring some clarity to the dubious status of marijuana by introducing bills that would codify the treatment of marijuana-related businesses. But to date only one bill, the socalled Rohrabacher-Farr Amendment has actually become law. This Amendment, effectively prohibits the Department of Justice (DEA, FBI, U.S. Attorneys) from spending federal taxpayer dollars to interfere with the implementation and enforcement of state medical marijuana laws. Most recently, the Amendment was included in a short-term spending bill and will remain in effect until April 28, 2017.

In March 2015, a bipartisan group of Senators introduced the “Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015”. The CARERS Act would have increased federal protections for patients in states with legal medical marijuana, removed the federal restrictions on medical marijuana research, permitted Veterans’ Administration doctors to recommend medical marijuana and equalized the federal banking regulations that apply to marijuana related businesses. Though the CARERS Act had impressive bipartisan support, it died inauspiciously in Committee.

In 2017, a bipartisan group of ‘pro-pot’ Representatives from the West Coast, launched the “Congressional Cannabis Caucus” in an effort to develop marijuana policy reforms at the federal level. This group’s focus will presumably be on bridging the chasm between states and the Fed on this issue, but it is too early to tell.

It is high time for Congress to make a move. The legal marijuana industry is generating billions of dollars in state tax revenue and the majority of states have enacted either medical or adult-use marijuana laws. The current federal marijuana policies are antiquated and do not reflect majority of Americans’ opinion about marijuana; or embrace the revenue-generating potential of a national marijuana industry. If there continues to be a dearth of actual law regarding legal marijuana, this game of chicken between the Feds and states will continue.

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