Marijuana businesses rush to decipher Sessions’ decision as legal experts advise caution

(Marijuana Business Daily is providing live updates to this breaking story and its impact on the cannabis industry. Check them out here.) 

Marijuana industry executives nationwide are scrambling to understand how Attorney General Jeff Sessions’ decision to rescind Obama-era protections for the legalized cannabis industry will affect their companies and employees.

Legal experts cautioned against making hasty decisions – given that it remains to be seen whether Sessions and the U.S. Justice Department will unleash a widespread crackdown on state-legal marijuana industries.

Rather, they said, companies should continue to abide by state marijuana laws.

“I advise clients continue to focus on operating their businesses in compliance with the applicable rules and regulations and try to ignore the chaotic, political and shock-motivated headlines which have unfortunately become the norm,” said Laura Bianchi, head of the cannabis practice at the Rose Law Group in Scottsdale, Arizona.

“While it is certainly alarming to see him (Sessions) take this position, I see it as having little to no impact at this stage.”

Nevertheless, the threat to the industry shouldn’t be disregarded, said Adam Fine, managing partner of the Boston office of cannabis-focused law firm Vicente Sederberg.

“Could they disrupt the industry?” Fine asked. “Sure.”

Sessions announced Thursday that the Justice Department is ripping up the Obama-era Cole Memo that allowed states to permit legalized cannabis businesses.

Sessions’ new stance will instead allow U.S. prosecutors in the 30 states and the District of Columbia with legal marijuana laws to decide how aggressively to enforce longstanding federal law prohibiting the sale and cultivation of the plant.

Decision raises questions

Sessions’ move raises a slew of questions for medical and adult-use marijuana businesses:

  • Which recreational states have federal prosecutors who are hostile to marijuana?
  • Do marijuana-hostile prosecutors have the money and manpower to go after legalized rec businesses?
  • Will state law enforcement authorities help the feds – or not?
  • Should owners suspend their businesses or continue operating per usual?

A key question is whether federal prosecutors who decide to target marijuana businesses will have the people and the money to take action.

“The overarching issue is that it comes down to resources,” said Fine.

Fine believes that federal prosecutors who want to enforce federal marijuana prohibition won’t have the money or personnel to shutter the industry – though they could pose problems for individual businesses.

Federal officials, for example, could send cease-and-desist letters to marijuana business owners, authorize U.S. government seizures of property or pursue federal forfeiture cases, Fine said.

“A few letters here and there might scare people,” he said. “They could create major problems.”

But he added that federal prosecutors are unlikely to get much help from local law-enforcement authorities in states where marijuana is legal.

“People don’t need to rush and do something dramatic,” Fine added.

“My sense is that many groups will continue to operate like they have been, but they will be evaluating if there are any new risks.”

Follow the rules

Aaron Herzberg, managing partner of the Puzzle Law Group in Los Angeles, doesn’t believe the federal government would be able to shutter the industry – or that business owners would be cowed into closing.

“Everyone will keep going full steam ahead. It’s like banking,” said Herzberg, who owns stakes in five marijuana business licenses in California.

“It’s too big to fail. I can’t imagine this putting the brakes on the industry.”

That said, Herzberg said he could imagine federal prosecutors going after businesses that are “bad actors” – i.e., those who permit product to bleed into the black market or break other state regulations.

“I’m aware of well-known cannabis companies shipping cannabis across state lines,” Herzberg said.

“In states with legalized cannabis, as long as businesses are compliant, they’ll be left alone. If there’s a blatant disregard, yeah, they’ll go after them.”

Krista Whitely – CEO of Altitude Products, a cannabis products company in Las Vegas – agreed that compliance is a key to businesses protecting themselves from federal interference.

“My experience is that embracing and exceeding regulatory requirements is the best protection against the federal government,” she said.

Whitely doesn’t expect most businesses to stop operating. And if federal officials do try to crack down on marijuana businesses, she doesn’t expect them to be successful.

“This is bigger than just cannabis, it’s about states’ rights,” Whitely said.

“If the federal government will impede states’ ability to collect marijuana taxes, the states will sue the federal government, and I don’t think the federal government can win this battle.”

She added: “Being a cannabis entrepreneur isn’t for the faint of heart. These are people who are used to taking risks. I don’t see any of those people being bashful.”

Medical cannabis safe?

San Francisco cannabis attorney Henry Wykowski noted that state-legal medical marijuana businesses face less of a threat from a federal crackdown given the protections provided by the Rohrabacher-Blumenauer Amendment currently in effect.

“Sessions has always made a distinction between medical and adult use. That’s the first thing I would look at,” Wykowski said. “No. 2, we still have the benefit of the Rohrabacher Amendment, so that sort of ties them up for the time being.

“Then what I think we’re going to see is the elected officials in states that have legalized cannabis are going to come out very forcefully in defense of the industry.”

In Massachusetts, where regulators are close to finalizing rec industry regulations, the state’s recently established Cannabis Control Commission issued a statement saying that it would stay the legalization course.

“As far as the mandate and the work of the Cannabis Control Commission is concerned, nothing has changed,” the commission’s statement said. “We will continue to move forward with our process to establish and implement sensible regulations for this emerging industry in Massachusetts.”

Omar Sacirbey can be reached at [email protected]

Senior reporter John Schroyer contributed to this report.

11 comments on “Marijuana businesses rush to decipher Sessions’ decision as legal experts advise caution
  1. massvocals on

    The… Federal Government has over 279 billion in asset forfeiture funds, taken from citizen’s. The direction the little Napoleon big eared elf is doing will be an action on his agents , who will have to do all the work and all the arrests and after few of theseThe people, will realize there vote within there state is and was meaningless, this will start a war when they charge those growers who are growing over a 100 plants a life and death term in federal jail , with that kinda investment would you not defend your state rights , I think you will see it

    Reply
    • Michael on

      I think people are missing the main point which is when Attorney General Jeff S
      essions brought back the Civil asset forfeiture he did it for this particular reason

      Reply
  2. massvocals on

    no state law has jurisdiction in federal court there will be no defense for those growers/patients / ect…. there will be no other choice but to stage a constitutional amen to preempt the war this is what we all new was coming president trump must be informed send him tweets now stop the little elf have him fired

    Reply
  3. massvocals on

    The Constitutional Republic will be challenge over Cannabis like the paper the Constitution of the united States of America printed upon if JS wins rip the constitutional paper up and invoke the democracy they all talk about which means we the people would be at war

    Reply
  4. massvocals on

    Please keep in mind, Massachusetts growers, The complaints will go to greedy federal courts, under federal laws, where state laws have no jurisdiction. The only question will be if the state invokes its land rights over the federal agents for trespassing, however, Any growing over 100 – 1000 plants will see federal charges with life and death sentences. Hugh bail fees long court costs and law
    yer fees, this plan will be little elf’s vision of old new drug war just say police state

    Reply
  5. massvocals on

    This comment is not true as state police help national guard in Massachusetts a few years ago 2014 But he added that federal prosecutors are unlikely to get much help from local law-enforcement authorities in states where marijuana is legal.

    Reply
  6. Cold in Florida on

    While it may not be a popular opinion, I for one would encourage Mister Herzberg to “drop a dime” and “turn stoolie” on those “well known businesses” he refers to who are breaking ALL the laws – both State and Federal – as well as the policies of the Cole Memo that were rescinded today.

    If this industry has a future, it can only be found by travelling down a path in which the good actors who choose to accept the regulations work in concert with the appropriate authorities to deny the bad actors their place at the table.

    Those well known businessmen he refers to are no better than the Mexican cartels who peddle weed and heroin with equal enthusiasm to teenagers everywhere they are able. They deserve nothing more than our scorn, and whenever possible, punishment meted out by whatever authority is appropriate.

    Reply
  7. Rick Fague on

    I understand why people might react emotionally to this story, my first reaction was emotional as well.

    After thinking it through, however, this might just be the straw that finally breaks Congress’s back and forces them to legalize at the federal level. While it’s difficult to know what will happen, I prefer to stay focused on the big picture, which is that two thirds of the country want federal legalization and half the country already has state legalization in some form or another.

    So let’s stay optimistic, numbers like those are going to be extremely difficult for the fed to ignore. Besides, Sessions is just a temp, it looks pretty certain that he’ll be gone in 2021.

    Reply
  8. Jeff Brown on

    Congress must get off their ass and move. It was they who put cannabis in schedule ! ( the most dangerous substances with no medical use. Clearly it has medical use as the states and people say it does. Congress must do the will of the people and states or be voted out.

    Reply
  9. Jeff Brown on

    Cannabis is the most useful plant on the planet; food, clothing, shelter, energy, medicine, insight, re-creation. It has been mankinds companion and helpmate since the beginning. Any law against it is a crime against humanity, creation and the Creator.

    Reply
  10. Dianne on

    I’m with you there Jeff, Cannnabis is primarily a medicine and was regularly prescribed as such before 1937 when the gov’t outlawed it along with the huge hemp industry, which decimated the industry in America but did so to give to oil companies, plastics, textiles, big pharma, etc., the big bucks, then promptly stigmatized MJ making the movie “Refer Madness,” and it did not help that the entertainment industry was abusing it. Most people are ignorant of it’s proper use and do not know what they are talking about when it comes to MJ, especially medical MJ. I do not believe kids should be using it at all, but where are they getting it and why? But the fact that RSO cures cancer, CBD oil stops epileptic attacks in seconds, MS is effectively arrested, cures sleep issues, pain issues, muscle pain issues PTSD which is huge for vets and much, much more.

    Reply

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