Marijuana Industry Bracing for DOJ’s Response to Cannabis Legalization in Colorado, Washington

The long wait is almost over.

Attorney General Eric Holder revealed this week that the Department of Justice is close to issuing an official response to cannabis legalization in Colorado and Washington, saying residents of the two states “deserve an answer and you will have one soon.”

Entrepreneurs hoping to capitalize on the emerging recreational marijuana market have been on the edge of their seats for several months. How the government responds to the new state laws will have huge business implications. Billions of dollars in revenues and countless opportunities are at stake.

Colorado and Washington became the first two states to legalize marijuana for adult use in the November elections, yet the Obama administration has sidestepped the issue and offered up vague comments about how it will respond. As a result, industry professionals have tried to read between the lines whenever a federal official says something about cannabis legalization, no matter how small.

Still, entrepreneurs in Colorado and Washington have already started writing up business plans for retail operations, hoping for the best. And dozens of companies have cropped up to capitalize on this emerging market, providing everything from legal services to educational events to consulting.

If Holder sticks to his word, they’ll know more about their long-term business prospects shortly.

On Tuesday, Holder told state attorneys general gathered in the nation’s capital that the federal government has been conducting an in-depth review of the new laws. That analysis is almost complete, Holder said, and the government is now in the final stages of determining how it will address recreational sales.

It’s tough to say at this point which way officials are leaning.

The government could take several approaches:

– In a worst-case scenario, it could challenge the laws in their entirety, possibly by suing the two states to prevent retail stores from opening. This option is reportedly still on the table, but it would create a highly contentious situation, lead to drawn-out legal battles and set up a state-federal showdown.

– At the other extreme, the government could decide to completely respect rights states’ rights on the issue and allow Colorado and Washington to proceed as they see fit. Don’t get your hopes up for this option: There’s almost no chance the feds will take a completely hands-off approach given that the issue involves a federally banned drug.

– It could attempt to find a middle ground by influencing the regulations covering production and sales of cannabis or challenging some aspects of the laws that it deems most egregious. This might be the best solution the industry can hope for given the circumstances.

There are of course other options as well. The government could employ a strategy (if you can call it that) similar to the uneven and confusing one it has used on the medical marijuana industry, maintaining that recreational cannabis is illegal but letting district attorneys decide how to address the situation. Or its response could depend on the exact rules and regulations each state develops to oversee the industry and whether they are successful at preventing the diversion of marijuana to other areas of the country.

Regardless, individuals in Colorado and Washington will likely still be able to consume marijuana, as Obama has already indicated that he won’t target cannabis users in those states. At the very least, therefore, the market for products and services aimed at recreational users will expand over the coming years, even if retail cannabis stores never open.

11 comments on “Marijuana Industry Bracing for DOJ’s Response to Cannabis Legalization in Colorado, Washington
  1. Headcoach on

    I’m a little confused. Is not the medical use of Marijuana accepted by the voters in Washington DC? Does not congress have the say on what they allow the voters to vote on during election time? With more states placing Medical Marijuana on their ballots this March, wouldn’t seem logical that the more state that favor it, the Government will have to yeld and change it from the class 1 category drug to a class 2 drug, opening the door for more research?

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  2. Unbe Hagen on

    Hi Headcoach, Federally funded US Research on NATURAL substances in cannabis was done over twelve years ago. The NIH researched the substances in cannabis so well that the NIH found it important to make application for a US Federal Gov’t Patent $$$$ for it titled “Cannabinoids As Antioxidants and Neuroprotectants” on Feb 2 2001–TWELVE YEARS AGO. NIH discovered that these cannabinoids are effective in treating “stroke, trauma, Alzheimer’s, Parkinson’s, and AIDS dementia”. Antioxidants slow deterioration caused by oxidation. Neuroprotectants guard and defend nerves and the nervous system. US Gov’t Patent 6630507 was issued to the US Dept of Health and Human Services as $$$ SOLE PATENT OWNER $$$$ on Oct 7 2003. The FACTS of the Federally Funded research, application and issuance/sole ownership of this patent document proves the Schedule I classification of cannabis as a substance having “no currently accepted medical use” has been officially, scientifically, and biologically INVALID for NINE to TWELVE YEARS. Free the US Citizen Cannabis Prisoners in honor of sequestration. This is a HEALTHFUL Vegetable Food since Feb 2 2001/Oct 7 2003 says the Federally Funded NIH and Federally Funded US DHHS.

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  3. Jack on

    I believe the best option is a state federal show down
    Republicans would have to suddenly go against their states right platform as well as capitalizing on their anti anything Obama suggests.

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  4. Jack on

    The Dea et al already gave the research go ahead to pharmas. Remember tht rescheduling could cause an even bigger head ache (i recommend smoking a Sativa for tht)
    The govt could easily block access for a decade or more while pharma waits for FDA approval.
    I think its a bad option
    Its a way to prevent rec cannabis and a way to ensure profits for pharma over all those who have fought this battle tooth and nail throughout the years.
    Pharma wants a patent , so they have to crush it up into a pill as they cannot patent a naturally growing substance.

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  5. moldy on

    Right now marijuana is more popular than Obama and he knows this. He could do many “bad” things that would affect those states but there’s always an election coming up and if he throws his base under the bus AGAIN, well, it could spell trouble for HIS party in 2014 and 2016.

    Reply
  6. FedUp on

    Well, well, well, Johnny can put his lips on Jimmy and the President wants to give him monetary benefits, but, if Jack puts his lips on a joint, he gets arrested. What a messed up world.

    Reply
  7. Unbe Hagen on

    Hi Jack, The gov’t already has the patent It was issued to the US DHHS Oct 7 2003. The patent number is 6630507 “Cannabanoids As Antioxidants and Neuroprotectants”.

    Reply
  8. jack on

    its not even a drug,its an herb. also when I studied government in high school states rights supercede federal except in time of war. look it up

    Reply

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