Scope of Federal Medical Marijuana Crackdown Remains Unclear

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Last spring, Depute U.S. Attorney General James Cole attempted to clarify the federal government’s position on the burgeoning medical marijuana industry. In a memo sent to state attorneys, Cole said that anyone involved in growing or selling marijuana for any reason – and particularly large-scale operations – could face prosecution and might be violating money laundering and federal financial laws. The bottom line: Medical marijuana businesses are at risk, even if they are in full compliance with state laws.

The memo sent shock waves through the medical marijuana community. Until that point, many dispensaries, growers and infused-product manufacturers assumed they were in the clear as long as they followed local regulations. Now, it seemed, no one was safe. Using Cole’s memo as justification, businesses that support the industry – most notably financial institution – began severing ties with the sector, making it hard for dispensaries to open bank accounts. States and cities began backtracking on medical marijuana laws, with some banning dispensaries altogether.

Then, in the past few weeks, U.S. attorneys in California launched a widespread crackdown on medical marijuana businesses in the Golden State, threatening landlords that have MMJ tenants, conducting raids on dispensaries and warning of more actions to come.

All of this can be traced back to that one memo, which seemed to make things murkier rather than clarify the situation. Are all dispensaries and growers in states with medical cannabis laws subject to prosecution ,or is the government only interested in large-scale operations and businesses violating local laws? Will the federal government move beyond California in its crackdown? Should states and cities with MMJ laws now ban dispensaries and grow operations?

The man behind the federal memo offered no further clarification when asked about it recently. After a news conference on an unrelated issue, Cole told the media that the memo “says what needs to be said,” adding that U.S. attorneys in each state have some leeway in how they enforce federal regulation. He declined to comment further.

The federal government’s response – or lack thereof – has upset many MMJ professionals, who just two years ago lauded President Obama for his tacit support of the industry. Everyone in the industry is now on edge, wondering if they’ll find federal agents at their doors. Others are worried that the entire industry will crumble over the next few months.

If Cole’s recent comments are any indication of how the federal government will handle the situation in the near future, those hoping for further clarification aren’t going to get it any time soon.