Chris Walsh: ‘Clarification’ of Ogden Memo Leaves MMJ in Even Murkier State

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With July 4th in the rearview mirror, many Americans are recovering from holiday hangovers tied to beer or mass amounts of hot dogs and burgers.

This year, however, those involved in the medical marijuana industry find themselves battling another type of indigestion. And I don’t think chugging Pepto-Bismol is enough to ease this bellyache.

As I wrote about last week, the Justice Department sent out a long-awaited letter ahead of the holiday weekend clarifying its position on medical marijuana. Yet it wasn’t exactly what the industry was looking for. Far from it. The DOJ essentially said that anyone involved in growing, selling or distributing pot could be subject to federal prosecution, even if they are abiding by state laws.

Responses to the memo run the gamut.

Some people think it could severely limit – or even destroy – the industry going forward and lead to the closure of dispensaries, while others believe it will deter patients from trying to obtain weed to ease their pain. A handful say it will push medical marijuana further underground and back into the hands of drug dealers and cartels.

But it might not be as severe as it seems on the surface (or as dire as I initially made it out to be).

Dispensary owners I’ve talked to in Colorado say that, if anything, the letter is a solid reminder that the 800-pound gorilla is still around – which many people seem to have forgotten, given that he’s been quietly hanging out in a dimly lit corner on the room watching the party unfold. It’s easy to overlook the fact that medical marijuana dispensaries are still illegal when you see one on every block and hear about states paving the way for the industry.

Owners also seem to agree with my previous assessment that the DOJ letter could spook states that have recently approved medical marijuana laws or those moving in that direction as well as individuals who have been considering opening up a dispensary. And you can bet that people supporting the industry – bankers, investors, landlords and even suppliers – might think twice before getting involved.

However, the people I’ve talked to think that dispensaries in states with existing regulations, particularly California and Colorado, will likely continue to move forward with their efforts to regulate the industry, rather than attempt to eliminate it via crackdowns. Most owners say they will continue with business as usual, although they admit that the risks are a bit higher now.

After having some time to reflect, I can say this about the letter: It has clouded up the picture even more. The government was unequivocal in the letter when talking about its view of medical marijuana dispensaries, saying that state laws will not shield them from prosecution. But it did not reveal what it plans to do about these dispensaries going forward. Will it leave enforcement entirely in the hands of states? Will it launch a sweeping crackdown and also target ancillary businesses that support the industry? Or will it simply keep the status quo in tact, letting the industry continue to operate in a gray legal area?

I tend to agree with the view that the government is covering its bases and will only look to go after dispensaries operating outside of state laws as well as commercial cultivation companies and large-scale operations. The DOJ is likely looking to create just enough fear to limit the industry’s growth and keep it from spiraling out of control. The most telling part of the letter is what the government didn’t say. I could have urged states to aggressively prosecute growers and sellers, or it could have said that the government will put resources into a crackdown. I even could have warned state employees that they could face prosecution too. That would likely have stopped the industry in its tracks, if that was the intent. The fact that the letter didn’t say these things is cause for optimism.

Chris Walsh is the editor of Medical Marijuana Business Daily