AG Sessions rescinds Cole Memo, roiling marijuana industry

, AG Sessions rescinds Cole Memo, roiling marijuana industry

Attorney General Jeff Sessions has rescinded an Obama-era policy that paved the way for legalized marijuana to flourish in states across the country, creating new confusion about enforcement and use only three days after California’s new legalization law went into effect.

Marijuana Business Daily is continually updating this breaking story and its impact on the cannabis industry. All times are Eastern.

8:15 p.m.

Alaska’s top marijuana regulator is the first casualty of the updated federal policy on marijuana enforcement.

Peter Mlynarik said the repeal of the Cole Memo removes the underpinning on which the Alaska marijuana industry is based.

He says the decision does away with the federal government “looking the other way” in states that have legalized marijuana.

Mlynarik is also a police chief for the city of Soldotna. He says his resignation from the board is effective Thursday.

Alaska Gov. Bill Walker says he’s committed to upholding the will of Alaska voters, who legalized recreational pot use in 2014.

8 p.m.

Massachusetts’ top federal prosecutor says his office will “aggressively” pursue serious marijuana crimes but isn’t directly addressing the state’s legal recreational pot law.

U.S. Attorney Andrew Lelling issued a statement late Thursday after Attorney General Jeff Sessions announced the Justice Department was rescinding a previous policy that allowed legal marijuana to flourish without interference from federal prosecutors in states, like Massachusetts, where it is permitted.

Lelling, who took office last month after being nominated by President Donald Trump, said his office would “aggressively investigate and prosecute” cases involving the bulk cultivation and trafficking of marijuana. His statement makes no reference to the state’s voter-approved law, but does say his office would use “prosecutorial discretion” in enforcing federal law.

6:45 p.m.

Don’t tell Vermont there’s a crackdown coming on states flouting federal drug law.

The Vermont House voted to allow adults over 21 to possess small amounts of marijuana and grow their own plants beginning in July, rejecting two attempts Thursday to slow marijuana legalization in response to the repeal of the Cole Memo, the Burlington Free Press reported.

The measure now heads to the Senate, which has already approved the bill but in a slightly different form. Once the differences are reconciled, the bill heads to Vermont Gov. Phil Scott.

Scott vetoed a recreational marijuana measure last year but has previously said he’ll sign this year’s version.

It’s not clear whether Scott could change his mind in response to Sessions’ actions Thursday.

Vermont would be the first state to legalize adult-use marijuana through the state legislature, not by voter initiative.

Marijuana activists praised Vermont’s vote despite fears that the Department of Justice would interfere.

“It is becoming clear that states are tired of helping the federal government enforce outdated and harmful marijuana policies and are ready to make this legal for adults,” Matthew Schweich, interim executive director for the Marijuana Policy Project, said in a statement Thursday.

6:15 p.m. 

Two more U.S. attorneys are saying that rescinding the Cole Memo won’t change how they consider marijuana prosecutions.

Annette Hayes, U.S. attorney for the Western District of Washington, released a statement saying that Sessions simply “reiterated his confidence” that U.S. attorneys can decide which marijuana crimes to prosecute.

“U.S. Attorneys are in the best position to address public safety in their districts, and address the crime control problems that are pressing in their communities,” said Hayes, who said prosecutions are aimed at “those who pose the greatest safety risk” to the public.

Similar remarks came out Thursday from a U.S. Attorney on the East Coast.

Halsey Frank, the U.S. attorney for the District of Maine, told Marijuana Business Daily in an email that he “will follow long-established principles to prosecute federal crime” including “wise use of limited resources.”

5:30 p.m.

The cost of federal marijuana enforcement will likely prevent a wave of new crackdowns on the industry.

That’s the analysis from a governance expert at the Brookings Institution, an influential Washington-based think tank.

Sessions “does not have unlimited resources to enforce federal law,” wrote John Hudak, deputy director of the Center for Effective Public Management .

“Chasing after the thousands of legal marijuana growers, processers, and dispensaries and the tens of thousands of people they employ will cost DEA significant amounts of federal tax dollars,” Hudak wrote.

Hudak pointed out that any money spent fighting marijuana could be spent by the Justice Department fighting terrorism or other crimes.

“It is clear the public would rather dollars be spent on other priorities,” Hudak wrote.

5 p.m.

New medical marijuana markets shouldn’t worry as much as the adult-use markets about Sessions’ move to rescind the Cole Memo, according to one cannabis attorney.

Steve Schain, an attorney who practices in Pennsylvania and New Jersey, tells Marijuana Business Daily that the Rohrabacher-Blumenauer amendment bans the use of federal dollars to prosecute businesses complying with medical-marijuana laws.

“Any acts or omissions of Attorney General Sessions will have zero impact on both existing and prospective licensees, whether commercial or clinical registrant,” Schain said.

Schain says he thinks the timing of Sessions’ announcement is linked to recent developments of recreational markets.

“The incredible gains made in Nevada’s adult-use and California’s burgeoning adult-use markets have drawn the ire of Attorney General Sessions,” he said.

4:30 p.m.

Massachusetts Gov.  Charlie Baker is the first GOP governor to weigh in on repeal of the Cole Memo, joining Democratic colleagues in criticizing the decision.

“The administration believes this is the wrong decision and will review any potential impacts from any policy changes by the local U.S. Attorney’s Office,” Baker spokesman Brendan Moss to MassLive.com.

Governors in Colorado and Washington also criticized the decision, as have members of Congress from both parties.

Massachusetts’ five-member Cannabis Control Commission said in a statement Thursday that it wouldn’t change plans to regulate recreational marijuana.

4 p.m.

The top federal prosecutor in Colorado is the first U.S. attorney to respond to repeal of the Cole Memo.

U.S. Attorney Bob Troyer of the District of Colorado implied that prosecution priorities won’t change.

“The United States Attorney’s Office in Colorado has already been guided by these principles in marijuana prosecutions — focusing in particular on identifying and prosecuting those who create the greatest safety threats to our communities around the state,” Troyer said.

The 2013 Cole Memo was addressed to the 94 U.S. attorneys scattered across the country, and Sessions’ updated guidance applies to those federal prosecutors, too.

Troyer said the Sessions announcement simply “directed that federal marijuana prosecution decisions be governed by the same principles that have long governed all of our prosecution decisions. ”

3:45 p.m.

Add the conservative billionaire Koch brothers to the list of folks critical of repealing the Cole Memo.

Freedom Partners, an organization that coordinates Koch-backed political activities, called on Sessions to follow President Donald Trump’s lead and leave marijuana policy to the states.

“At a time when our prisons are wildly overcrowded and taxpayers are forced to spend hundreds of billions of dollars each year to fund a failed War on Drugs, we believe it’s time for a new, smarter approach to drug policy,” Freedom Partners Chairman Mark Holden said in a statement Thursday.

Holden said that enforcing federal marijuana laws puts a “massive burden” on taxpayers.

“Instead of prosecuting non-violent individuals for an act that has already been legalized in half a dozen states and decriminalized in several others, this administration should work with Congress to reform our outdated federal sentencing laws,” Holden said.

3:30 p.m.

Canadian marijuana stocks initially tumbled Thursday but then pared their losses after the Cole Memo repeal.

Analysts said the surprise decision could end up being a “net positive” for Canadian firms with no U.S. operations – and funnel more investment money into local cannabis businesses.

Prospects are cloudier for Canadian firms with operations in the U.S.

One Canadian company operating in the U.S. said it will continue following the tenets of the Cole Memo. 

British Columbia-based Sunniva is building a 325,000-square-foot medical marijuana production facility in California.

“Sunniva remains committed to following the laws of the State of California as well as the tenets of the Cole memo, whether it is currently in effect or not,” Leith Pedersen, Sunniva’s president and co-founder, told Marijuana Business Daily.

3:15 p.m.

Isolated federal marijuana prosecutions are more likely than an industry-wide crackdown. That’s according to a California attorney with stakes in five cannabis companies.

“It’s too big to fail,” said Aaron Herzberg, managing partner of the Puzzle Law Group in Los Angeles. “I can’t imagine this putting the brakes on the industry.”

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

“Embracing and exceeding regulatory requirements is the best protection against the federal government,” she said.

2:45 pm.

The attorney general has racial motivations for repealing the Cole Memo, according to a top-ranking official with the Democratic National Committee.

“The war on drugs didn’t stop drug usage; it just ruined a lot of lives,” said Minnesota Rep. Keith Ellison on Twitter.

“Jeff Sessions is reviving it because he believes in using the criminal justice system as an instrument of racial and economic control of poor people and brown people.”

Ellison is vice-chairman of the DNC.

2:15 p.m.

The marijuana industry’s economic impact is the focus of a Nevada member of Congress joining other politicians in marijuana states criticizing repeal of the Cole Memo.

The repeal “undermines Nevada’s $622 million dollar industry, threatens nearly $1 billion in new investments, and jeopardizes thousands of new jobs and more than $60 million dollars in tax revenue,” said Democratic Rep. Dina Titus.

A longtime supporter of the cannabis industry in Congress, Titus called on lawmakers to put marijuana policy in law, not an enforcement memo that could be changed by a new administration.

“Congress must immediately respond by passing permanent protections” for the industry, Titus said.

2 p.m.

Washington state Gov. Jay Inslee scoffed at suggestions that his state would bow to pressure from federal prosecutors on marijuana.

“We will vigorously defend our state’s laws against undue federal infringement,” Inslee said in an email.

Inslee also questioned the repeal of the memo, which gave states clear priorities in regulating a new market.

“We have put in place a system in place that adheres to what we pledged to the people of Washington and the federal government; it’s well regulated, keeps criminal elements out, keeps pot out of the hands of kids and tracks it all carefully enough to clamp down on cross-border leakage,” Inslee said.

Washington state’s response comes after politicians in California and Colorado also criticized the Cole Memo repeal.

President Donald Trump’s top law enforcement official announced the change Thursday.

Instead of the previous lenient-federal-enforcement policy of the Cole Memo, Sessions’ new stance will instead let federal prosecutors where marijuana is legal decide how aggressively to enforce longstanding federal law prohibiting it.

In a one-page memo to the nation’s federal prosecutors, Sessions wrote:

“In deciding which marijuana activities to prosecute under these laws with the Department’s finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions” by considering the seriousness of the crime and its impact on the community.

Sessions’ action comes on the heels of the launch of recreational cannabis sales in California, which is expected to become the world’s largest market for legal adult use.

California Lt. Gov. Gavin Newsom was taken aback by the announcement – and vowed to fight the attorney general.

“Jeff Sessions has destructively doubled down on the failed, costly and racially discriminatory war on drugs, ignoring facts and logic, and trampling on the will of California voters,” Newsom said.

“Have no doubt – California will pursue all options to protect our reforms and rights.”

Rec state reactions

A U.S. senator from the first state to regulate marijuana sales, Colorado, said he feels betrayed by the attorney general.

Republican Sen. Cory Gardner said Thursday’s announcement contradicts what he was told by Sessions before he was confirmed as AG.

The congressman is prepared “to take all steps necessary,” including holding up the confirmation of Justice Department nominees, “until the attorney general lives up to the commitment he made to me prior to his confirmation.”

U.S. Rep. Earl Blumenauer, D-Oregon and co-chair of the Congressional Cannabis Caucus called Sessions’ action “outrageous.”

“Going against the majority of Americans – including a majority of Republican voters – who want the federal government to stay out of the way is perhaps one of the stupidest decisions the attorney general has made” added Blumenauer, a sponsor of an amendment that protects U.S. medical marijuana businesses.

“One wonders if Trump was consulted – it is Jeff Sessions, after all – because this would violate his campaign promise not to interfere with state marijuana laws.”

Oregon Gov. Kate Brown noted the importance of the adult-use cannabis industry to her state.

“Over 19,000 jobs have been created by the market Oregon worked carefully to build in good faith and in accordance with the Cole Memorandum,” she said. “The federal government must keep its promise to states that relied on its guidance.

“My staff and state agencies … will fight to continue Oregon’s commitment to a safe and prosperous recreational marijuana market.”

Sessions’ announcement is “disruptive” and “regrettable,” said U.S. Sen. Lisa Murkowski, whose home state, Alaska, launched adult-use cannabis sales in October 2o16.

Murkowski, a Republican, said she has repeatedly discouraged Sessions from changing the policy and asked him to work with states were marijuana is legal and Congress if he thought changes were needed.

Sessions in ‘bizarre state’

The head of the Drug Policy Alliance condemned Sessions’ move as a return to outdated drug-war policies that unduly affected minorities.

Sessions “wants to maintain a system that has led to tremendous injustice … and that has wasted federal resources on a huge scale,” said Maria McFarland Sanchez-Moreno, executive director of the DPA.

“If Sessions thinks that makes sense in terms of prosecutorial priorities, he is in a very bizarre ideological state, or a deeply problematic one.”

Eight states and the District of Columbia have legalized marijuana for recreational use, and California’s sales alone likely will generate $4 billion in annual retail sales in several years, according to Marijuana Business Daily projections.

The move by President Donald Trump’s attorney general likely will add to confusion about whether it’s OK to grow, buy or use marijuana in states where marijuana is legal, since longstanding federal law prohibits it.

The Obama administration in 2013 announced it would not stand in the way of states that legalize marijuana, so long as officials acted to keep it from migrating to places where it remained outlawed and out of the hands of criminal gangs and children.

The memo, written by then-Deputy Attorney General James M. Cole, cleared up some of the uncertainty about how the federal government would respond as states began allowing sales for recreational and medical purposes.

– The Associated Press contributed to this report.