Medical cannabis businesses get breathing room after Congress extends key protections

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By Bart Schaneman

Congress’ decision to pass a $1.1 trillion spending bill that includes key protections for legal medical marijuana businesses is a clear sign the federal government will take a hands-off approach to the MMJ industry – at least in the near term.

As a result, medical cannabis businesses can enjoy a level of certainty for at least six months.

That’s welcome relief for medical marijuana operators given the new Trump administration’s mixed messages about cannabis policy.

But recreational marijuana businesses are still operating in limbo, as the protections don’t extend to the adult-use side of the industry.

News of the extension is expected to encourage investors to keep pumping money into the medical cannabis industry. And the development will reassure business owners in medical cannabis markets that are starting to roll out, such as Hawaii and Maryland.

“It’s important to the industry because it’s one of the first pronouncements from the federal government acknowledging that federal protections are in place for businesses in unambiguous compliance with state law operating in regulated states,” said Ean Seeb, co-founder of Denver Relief Consulting.

The catchall spending bill unveiled Monday extends a policy that prohibits the Justice Department from using federal money to interfere with states’ medical marijuana laws. That provision, previously called the Rohrabacher-Farr Amendment, has been in place since 2014.

Since then, Congress has extended the MMJ amendment several times – including just last week, when it granted an extension of seven days, until May 5.

The new extension – which is expected to be formally approved this week – expires Sept. 30, the expiration date for the spending deal.

To be sure, the long-term legal uncertainty has not evaporated for the marijuana industry. Moreover, the amendment’s language does not extend to recreational laws or businesses, which remain vulnerable to interference by the Justice Department.

Sessions a wild card

U.S. Attorney General Jeff Sessions has been the big wild card for the marijuana industry. The Alabama Republican has issued harsh comments about marijuana, although he recently signaled his department is not about to crack down on the cannabis industry.

Some states have begun taking steps to protect MJ businesses and consumers against any crackdown. And a number of cannabis businesses have put their investment plans on hold in recent months.

“Business owners have slowed down on spending and slowed down on building new cultivation facilities,” said Christie Lunsford, a Denver-based consultant with EndoCannabinoidology. “They’re really mindful about where they’re putting their money, and that’s really smart.”

But, for now, industry officials are heaving a sigh of relief after Congress’ actions on MMJ.

“We are encouraged by the bipartisan support for medical cannabis programs,” said Tai Cheng, chief operating officer of Aloha Green, a vertically integrated medical cannabis business in Honolulu.

“The extension of the amendment … provides emerging medical cannabis dispensary markets with an opportunity to show the public, the patients and the government that state-backed cannabis programs can balance the needs of all parties.”

Matt Abel, a Detroit cannabis attorney, said a client called him just last week concerned about losing federal protections.

“It’s very important that the amendment be reauthorized, otherwise we’re going backwards further into prohibition,” Abel added.

Effect on investors

Despite Trump’s victory, investor interest in cannabis businesses has been growing since the 2016 election. That ultimately could lead to more dollars flowing to cash-squeezed marijuana companies.

Denver cannabis attorney Rachel Gillette, with the firm Greenspoon Marder, said the news from Congress will only increase potential investors’ confidence.

“I don’t think I’ve seen one deal not go through because people were worried about interference from the federal government,” she added.

Seeb agreed, saying “that so long as the protections remain in place, we will not see a decrease in investment. Extending the protections will allow for people who are not experienced with investing in the industry to have mitigated concerns prior to becoming a virgin investor.”

New-market jitters?

Brian Fox, CEO of Greene Fox Enterprises in St. Louis – which has operations in California and Illinois and recently won processing and dispensary licenses in Maryland – said Congress’s move reaffirms his belief that the federal government will not interfere with the medical marijuana industry.

Fox added that the growers he’s been in contact with in Maryland also don’t see federal interference on the horizon and are working to get their businesses up and running as soon as possible. “It’s full steam ahead,” he said.

He also is confident Congress will extend the protection again next September, when it comes up for a vote.

“I believe they’ll keep extending it and they’ll eventually make it permanent,” Fox said.

Omar Sacirbey contributed to this report.

Bart Schaneman can be reached at