Federal policy toward state-legal cannabis: DoJ speaks out

The Justice Department has issued formal guidance to federal prosecutors on dealing with state-licensed cannabis businesses. [The link is to a .pdf. Full text below.] Instead of the formal contractual agreements I had been pushing for, DoJ decided on a policy of prosecutorial discretion, aka “waffling” or “muddling through.”

That’s more or less what I had expected. This is news, but it’s not history. Still, the statement is, in one regard, more explicitly accommodating to state law than might have been guessed. Previous guidance had singled out large-scale, for-profit enterprises as targets. The new memo takes that away: even a big firm won’t be a target unless its operations impinge on one of eight specified federal priorities: distribution to minors, connections with gangs and cartels, out-of-state distribution, dealing in other drugs or other criminal activity, violence and firearms use, driving other the influence and other public-health damage; production on public lands; and possession on federal property.

[Press release here. Jacob Sullum atReason Hit & Run has reactions from the usual suspects. Both the dismay of the opponents of legalization and the enthusiasm of its supporters seem to me to overplay the significance of the statement. Ilya Somin at the Volokh Conspiracy expresses more skepticism, without explaining how he thinks the Justice Department should have reacted in the face of an unrepealed federal criminal statute. For other coverage, see CNN, HuffPo, NYT, and AP]

Several things to note:

1. This makes it somewhat safer to be a state-licensed cannabis grower or retailer, but it doesn’t make it safe. Today’s policy statement – as opposed to a binding rule, which would be part of the U.S. Attorneys Manual explicitly does not constrain the discretion of the United States Attorneys in Washington and Colorado. It creates no rights or remedies. It is subject to revision at any time, and that revision would have retroactive effects.

2. Still, it’s a substantial change for DoJ to say that simply being a large for-profit entity is no longer enough, by itself, to justify prosecution. Matthew Davies, I take it, would not have faced prosecution had this policy been in place and had he been operating in Colorado rather than California.

3. The memo refers to “robust” state regulatory schemes. Not clear how that applies to the less-than-robust controls on medical marijuana in California and Washington. The U.S. Attorney for the Western District of Washington, where the feds have allowed the growth of a large system of essentially unregulated medical outlets under a very loosely-written state law, immediately issued a statement saying that the continued operation of that system is “not tenable.” That could be the biggest news of the day.

In my view, it would make no sense for the feds to crack down on the medical outlets before commercial outlets are in operation. But this clearly puts pressure on the Washington State legislature to write some new rules; there’s no obvious reason why patients and non-medical users can’t be served by the same system, with only the non-medical users subject to tax.

4. It’s not clear how, or if, the latest DoJ guidance will influence federal policy toward California’s medical-marijuana system. Medical providers seem to have beaten back a legislative effort to bring that system under some sort of control, defeating advocates of full commercial legalization who regard the current wild-West system as an embarrassment and a hindrance to convincing California voters to go the whole hog in 2016. But if the feds were to make it clear that robust state regulation would help protect the medical business from federal enforcement, the political calculus might shift, which from my perspective would be a Good Thing.

5. With federal enforcement receding somewhat, the biggest threat facing an otherwise law-abiding cannabis entrepreneur in Colorado or Washington is probably criminal violence rather than law enforcement. Treasury Department interpretations of various laws currently mean that banking services are unavailable to cannabis businesses unless they pretend to be something else. The result is that the industry operates on all cash, and can’t even use armored-car services to transport the cash. That creates enormous opportunities for robbery. Now that DoJ has indicated its willingness to accommodate state-level legalization, perhaps the Treasury will act to reduce the public-safety risks created by denying the industry the ability to use banks and credit card processors.

Update Jon Caulkins adds two important points:

* Removing size as a targeting criterion will tend to shift the industry from more craft-oriented to more industrial production and from momma-poppa retailing toward mass marketing.
* Removing the threat of federal action against grow sites tends to favor outdoor over indoor growing.

The link above is to a non-OCR .pdf file. Here’s the full text in ascii:

US. Department of Justice Office of the Deputy Attorney General
The Deputy Attorney General Washington, DC 20530
August 29, 2013

MEMORANDUM FOR ALL UNITED STATES ATTORNEYS
FROM: James M. Cole Deputy Attorney General
SUBJECT: Guidance Regarding Marijuana Enforcement

In October 2009 and June 2011, the Department issued guidance to federal prosecutors concerning marijuana enforcement under the Controlled Substances Act (CSA). This memorandum updates that guidance in light of state ballot initiatives that legalize under state law the possession of small amounts of marijuana and provide for the regulation of marijuana production, processing, and sale. The guidance set forth herein applies to all federal enforcement activity, including civil enforcement and criminal investigations and prosecutions, concerning marijuana in all states.

As the Department noted in its previous guidance, Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue. to large-scale criminal enterprises, gangs, and cartels. The Department of Justice is committed to enforcement of the CSA consistent with those determinations. The Department is also committed to using its limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way. In furtherance of those objectives, as several states enacted laws relating to the use of marijuana for medical purposes, the Department in recent years has focused its efforts on certain enforcement priorities that are particularly important to the federal government:

• 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.

These priorities will continue to guide the Department’s enforcement of the CSA against marijuana-related conduct. Thus, this memorandum serves as guidance to Department attorneys and law enforcement to focus their enforcement resources and efforts, including prosecution, on persons or organizations whose conduct interferes with any one or more of these priorities, regardless of state law.

Outside of these enforcement priorities, the federal government has traditionally relied on states and local law enforcement agencies to address marijuana activity through enforcement of their own narcotics laws. For example, the Department of Justice has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for personal use on private property. Instead, the Department has left such lower-level or localized activity to state and local authorities and has stepped in to enforce the CSA only when the use, possession, cultivation, or distribution of marijuana has threatened to cause one of the harms identified above.

The enactment of state laws that endeavor to authorize marijuana production, distribution, and possession by establishing a regulatory scheme for these purposes affects this traditional joint federal-state approach to narcotics enforcement. The Department’s guidance in this memorandum rests on its expectation that states and local governments that have enacted laws authorizing marijuana-related conduct will implement strong and effective regulatory and enforcement systems that will address the threat those state laws could pose to public safety, public health, and other law enforcement interests. A system adequate to that task must not only contain robust controls and procedures on paper; it must also be effective in practice. Jurisdictions that have implemented systems that provide for regulation of marijuana activity

In jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana, conduct in compliance with those laws and regulations is less likely to threaten the federal priorities set forth above. Indeed, a robust system may affirmatively address those priorities by, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states, prohibiting access to marijuana by minors, and replacing an illicit marijuana trade that funds criminal enterprises with a regulated market in which revenues are tracked and accounted for. In those circumstances, consistent with the traditional allocation of federal-state efforts in this area, enforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity. If state enforcement efforts are not sufficiently robust to protect against the harms set forth above, the federal government may seek to challenge the regulatory structure itself in addition to continuing to bring individual enforcement actions, including criminal prosecutions, focused on those harms.

The Department’s previous memoranda specifically addressed the exercise of prosecutorial discretion in states with laws authorizing marijuana cultivation and distribution for medical use. In those contexts, the Department advised that it likely was not an efficient use of federal resources to focus enforcement efforts on seriously ill individuals, or on their individual caregivers. In doing so, the previous guidance drew a distinction between the seriously ill and their caregivers, on the one hand, and large-scale, for-profit commercial enterprises, on the other, and advised that the latter continued to be appropriate targets for federal enforcement and prosecution. In drawing this distinction, the Department relied on the common-sense judgment that the size of a marijuana operation was a reasonable proxy for assessing whether marijuana trafficking implicates the federal enforcement priorities set forth above.

As explained above, however, both the existence of a strong and effective state regulatory system, and an operation’s compliance with such a system, may allay the threat that an operation’s size poses to federal enforcement interests. Accordingly, in exercising prosecutorial discretion, prosecutors should not consider the size or commercial nature of a marijuana operation alone as a proxy for assessing whether marijuana trafficking implicates the Department’s enforcement priorities listed above. Rather, prosecutors should continue to review marijuana cases on a case-by-case basis and weigh all available information and evidence, including, but not limited to, whether the operation is demonstrably in compliance with a strong and effective state regulatory system. A marijuana operation’s large scale or for-profit nature may be a relevant consideration for assessing the extent to which it undermines a particular federal enforcement priority. The primary question in all cases — and in all jurisdictions — should be whether the conduct at issue implicates one or more of the enforcement priorities listed above. As with the Department’s previous statements on this subject, this memorandum is intended solely as a guide to the exercise of investigative and prosecutorial discretion. This memorandum does not alter in any way the Department’s authority to enforce federal law, including federal laws relating to marijuana, regardless of state law. Neither the guidance herein nor any state or local law provides a legal defense to a violation of federal law, including any civil or criminal violation of the CSA. Even in jurisdictions with strong and effective regulatory systems, evidence that particular conduct threatens federal priorities will subject that person or entity to federal enforcement action, based on the circumstances. This memorandum is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any matter civil or criminal. It applies prospectively to the exercise of prosecutorial discretion in future cases and does not provide defendants or subjects of enforcement action with a basis for reconsideration of any pending civil action or criminal prosecution. Finally, nothing herein precludes investigation or prosecution, even in the absence of any one of the factors listed above, in particular circumstances Where investigation and prosecution otherwise serves an important federal interest.

cc:
Mythili Raman
Acting Assistant Attorney General, Criminal Division

Loretta E. Lynch
United States Attorney
Eastern District of New York
Chair, Attorney General’s Advisory Committee

Michele M. Leonhart
Administrator Drug Enforcement Administration

H. Marshall Jarrett
Director Executive Office for United States Attorneys

Ronald T. Hosko
Assistant Director
Criminal Investigative Division Federal Bureau of Investigation

Comments

  1. Interested observer says

    Prof. Somin said it better than I– this changes nothing. The new “guidance” memo still gives the local U.S. Atty enough leeway to indict a ham sandwich if he/she wishes, and the Administration has shown no interest in reigning in the aggressive approach taken by certain US Attorneys. Plus, most legal scholars see the pre-emption argument as a loser. What the media is touting as big news is really just another punt.

    • Mark Kleiman says

      You, and Prof. Somin, might ponder the difference between “This doesn’t go as far as I’d like” and “This changes nothing.” To the folks on the ground in Colorado and Washington, this is a big deal. As I say above, this is news, even though it’s not history.

      • says

        I don’t think so, unless we actually see results in implementation. This statement is a rorschach test that would allow a prosecutor to continue business as usual if he or she wished to, because there’s no way a state can legalize without quite a lot of the “bad” stuff the DoJ identifies continuing to go on.

        Remember, the DoJ lied on medical marijuana. They don’t have a good record on this. So in the absence of a statement that says “we aren’t prosecuting and we will dismiss any prosecutor who disobeys this directive”, I don’t think anyone who supports individual freedom and the will of the people on this issue should assume that this statement is necessarily going to change anything.

        • Interested Observer says

          Correct, my comment was not intended to imply “this doesn’t go as far as I like.” My observation was that the news media is grossly overstating the guidance memo as a big change from the previous status quo. In fact, the legalese in the memo gives individual prosecutors the same virtually unfettered discretion they previously enjoyed. I agree with Prof. Kleiman that the official Federal response could have been a lot worse; but the media is falsely making this out to be a big change in the gov’t. position.

          • Mike says

            Having slept on this, despite all the optimism of people with commonsense and the rending of garments by the prohibition-obsessed, I’ve made up my mind about the new DOJ marijuana memo.

            Pure and simple, it’s the newest version of Jim Crowism.

            Live in an enlightened state where marijuana is legal, you’ve got one system of justice. Live in another state where the old regime maintains its deathgrip on power and you’ll find, as a marijuana consumer or patient, that there is an entirely different standard of justice. I suppose most of the South will be down for continuing prohibition, along with some of the more wacko red states. It took about 70 years to overturn Jim Crow — the legal embodiment of white supremacists — but there’s no need for such delays here.

            Where federalism could play a constructive role here is in setting a standard of protecting the rights of marijuana consumers. But Holder seems to have completely missed the boat on that.

    • Mark Kleiman says

      I’m not sure it was ever “attornies” in American English. I can’t recall ever having seen the word spelled that way. But yes, the plural of “United States Attorney” (the title of the chief federal prosecutor in each of the 94 judicial districts) is “United States Attorneys.”

      • James Wimberley says

        Joke. The plural of dildo is dildoes. I suspect that when dodos were alive, they were referred to with an e.

        • Warren Terra says

          The dictionary (or at least a dictionary, one high up in a Google query) suggests both “dodos” and “dodoes” are acceptable. Though my spellcheck admits “dodos” but not “dodoes” (and also not “spellcheck”, for whatever that’s worth), and my own prejudice is strongly for “dodos”.

          It seems a real quandary. We should let the people decide, once we figure out a proper way for them to rule on whether the plural of “referendum” is “referendums” or “referenda”.

  2. Ed Whitney says

    FWIW in the past two or three days there has been a spike in visits to several Denver area emergency rooms for acute intoxication from synthetic marijuana (AKA “spice” and “Black Mamba). This product is commonly sold on the internet. Does anyone know if there have been similar spikes in other cities? A contaminated batch from the internet could well be sold in several states.

    Shake head and insert moral of story here .

  3. says

    Not as something that will carry any legal weight for a defendant, but as a philosophical concession from the U.S. Department of Justice, this bit seemed just stunning:

    “Indeed, a robust system may affirmatively address those priorities by, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states, prohibiting access to marijuana by minors, and replacing an illicit marijuana trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for.”

    It’s beneficial to replace an illicit trade in the hands of crooks with a tightly regulated market? Who’d imagine such a thing?

  4. Mike says

    This changes little immediately. It does strike an important change of position in acceding to the fact that prohibition as it’s been known is on its way out. Now the scramble begins to redefine the story of cannabis in the USA. Not exactly imprimatur, it actually reveals the political weakness of attempting to sustain an untenable position at this point. As evidenced here regularly, there seems to be considerable enthusiasm inside the beltway for Prohibition-Lite with this memo as evidence for that. Keep it under control, DC sez, whatever that really means.

    The shift in public opinion on marijuana has gone from glacial to tidal to not quite tectonic in relation to shifts in our culture and the often trumped-up reaction to them. But there is risk in waiting any further from the Comfortable-with-Prohibition-Classs. The government either gets with it or faces the rise of a new politics based on resistance to the everyday repression of prohibition that will infect both parties and/or give rise to a third. The jury system is poised for breakdown, as in many jurisdictions it may become know that the juries just prefer to let folks walk in the face of bi-partisan intransigence to legalization. Things fall apart.

    The best this can really do is set off a debate about what needs to change. Sen. Leahy’s upcoming hearing in early September will likely provide better clues on the political fallout, but needs to be a beginning, rather than another headscratcher about, “Oh gee, we got a problem, Houston.” This is something that requires some leadership to make work in Congress. Around DC, I’m not sure there’s much of that or the other requirement, commonsense about where the American people are on this, which is way ahead of their chicken-livered politicians.

  5. Kt says

    Letting big growers use the sun would be a good thing. In northern CA, growers bury containers, use hydroponics run on gas generators. Terrible waste of energy and bad for the environment.

    I suppose meth labs are worse.

  6. says

    Will government in full-legalization states always need to keep trying to distinguish between patients and everyone else? Maybe, with full legalization, (1) economies of scale will kick in and (2) the prohibition premium will fade so much that non-medical users will pay an after-tax price lower than patients have ever paid (or maybe even hoped for). Even if the two groups (healthy folks and patients) are “served by the same system,” some costs of deciding who is a patient and who is not will continue — like doctor’s fees. Another category of costs is non-financial, like the disrespect for law that comes from healthy people beating the system and avoiding tax by pretending to be sick. But let me be clear: I think marijuana has real medical uses. To the extent that the public has confidence that medical recommendations do in fact separate sick people from healthy people, I backtrack.

    Pat Oglesby
    Center for New Revenue

    • Patrick Devlin says

      Two issues may drive a majority of medical marijuana card holders to the recreational market in Washington state. First, there is a belief that up to 90% of “patients” in the current system don’t have legitimate medical issues and there is little sympathy for aiding their continuing fraud. To move these people out of the system the state will has two options. First, it can tighten up the regulations of who can access a medical dispensary. Secondly, the state can increase the renewal fee for medical card holders, with appropriate discounts for low income patients, to adequately cover the costs of regulation and oversight. Higher renewal fees will make the cost/benefit of getting a card low when access at the retail.

      I question whether prices will fall at the retail level with economies of scale. While prices for raw material in Humboldt County, California have fallen dramatically in the last few years, the price at retail has remained stable (http://www.harborsidehealthcenter.com/category/flowers/SMO0). This would seem to indicate the consumer (in a quasi-legitimate market) has been trained to expect a specific price and/or retailers are hesitant to pass on the lower cost of raw material – if any exist. Interestingly, the vast majority of products available at Harborside are from indoor grows bringing into question whether outdoor grown marijuana has the same quality of indoor grown weed. Several articles originating in Humboldt County indicate indoor grown marijuana fetches a 15-35% premium over that grown outdoor.

  7. Ralph says

    I have a question which seems simple but I have not seen it explicitly dealt with: why can’t MM folks purchase under the regs set for the rest of us? They already have to pay for their MJ. Why must there be two systems? Help!

    This seems to be what Pat Oglesby is sniffing around.

    • Keith Humphreys says

      This is exactly right. Where do people who drink cranberry juice because they like the taste buy it?: The grocery story. Where do people who drink cranberry juice because they suffer from chronic bladder infections buy it?: The grocery store.

          • says

            So far as I can tell, all the RBC commentators argue in good faith. The experience of those of us who’ve been pro-marijuana over the years has been that good faith is hard to find on the other side*. So sometimes we are just a little gun-shy. That’s a habit worth breaking.

            *Yes, and in many places on our side, which is why I withdrew from activism on the issue some time ago.

  8. says

    Those of you who think this isn’t a big deal, consider this: When Bill Clinton told that “I didn’t inhale” lie*–a lie almost no one believed, which was kind of the point of the exercise–think how far back from a rational policy that one sentence put us all.** In much the same way, this, like Barack Obama’s forthright admission of having been a teenage stoner, advances us. Truth often hurts but almost always helps.

    *Or was it bullsh*t? That might be closer to the truth***.

    **The more I think about that man and his presidency, the worse he gets.

    ***Which is hard to find in this debate.

  9. Patrick Devlin says

    A bigger deal than the announcement itself is the lack of vocal Republican opposition to the move. The Obama Administration is masterful in announcing this startling change of course in a time of potential war with a Congress that’s behaving badly. Whether it was planned or not, the timing couldn’t have been better.

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