On Jan. 4, 2018, Attorney General Sessions rescinded the Cole Memo, an Obama-era policy that paved the way for legalized marijuana to flourish in states across the country, creating new confusion about enforcement. The previous policy, which was laid out in a 2013 memo from James Cole, the deputy attorney general at the time, said federal prosecutions would focus on cases of peddling pot to minors, selling marijuana across state borders or growing pot on federal land, or when it involved gangs or organized crime. Reportedly, Sessions made the change to avoid creating a safe harbor for the pot industry to do business.
Michael Weiner and Joeseph Lynyak are partners at the international law firm Dorsey & Whitney. Weiner has been working with companies and investors successfully over the past year in Colorado and other states and understands the legal landscape of the cannabis industry. Weiner is a leading legal expert in the financing and investment arena surrounding the cannabis industry. He says today’s news will likely slow down investment.
I think this move will slow down the growth of the industry over the next six months. Potential investors who are not yet involved in the industry will be reluctant to invest in the industry. Also big business will be more reluctant to get involved. However, I don’t think rescinding these memos on its own will change the existing industry. I would be surprised to see a large-scale legal crackdown of legitimate and licensed state businesses.
Over the last several months we have seen heavy interest from Canadian companies looking to invest in the United States cannabis industry and from US companies looking for financing in Canada. With Canada fully legalizing cannabis in July, it will be interesting to see if US cannabis companies simply move to Canada or whether pressure from having a legal cannabis industry on the US border will force the federal government to liberalize its policies.
With Canada and Massachusetts set for legal retail cannabis in July I believe this is a short-term obstacle that will be overwhelmed by the excitement of these new markets and the potential for a Democratic Congress to take action in 2019.
Joseph Lynyak III is one of the nation’s foremost experts in the county on regulatory reform and advising banks and financial institutions when it comes to the marijuana business and investment. His practice includes providing financial intermediaries advice in the areas of regulatory and strategic planning, application and licensing, legislative strategy, commercial and consumer lending, examination, supervision and enforcement, and general corporate matters. He says this news will have a great impact on the banking industry. He stated:
The January 4th rescission of the so-called “Cole Memorandum” increases the risk to banks willing to provide banking services to marijuana businesses. Among other things, the rescission memo clearly states that the enforcement priorities of the Attorney General are significant when deciding what crimes to prosecute—and Attorney General Sessions has been a consistent opponent of a policy of loosening federal drug laws that include marijuana sales.
Because related guidance from FinCEN requires banks to report by the filing of SARs the fact that they are providing banking services to marijuana businesses operating lawfully under local state laws, the rescission of the Cole Memorandum may mean that the required SARs filing are tantamount to admissions of criminal behavior by a bank and its personnel.
This action by the Attorney General invites high-profile prosecutions of banks by aggressive, conservative federal prosecutors despite a national trend toward the permissive use of marijuana.
On August 29, 2013, Cole issued the memorandum to all US attorneys; it was published through the Department of Justice. Today, Sessions rescinded the Cole Memo. This reversal has many asking if Sessions is on the wrong side of marijuana legalization. This decision will open a huge window of opportunity for Democrats in midterm races.
Opinion by Cherese Jackson (Virginia)
NBC News: Sessions to end legal marijuana policy from Obama era
Dorsey & Whitney Law Firm: Michael Weiner and Joeseph Lynyak
Leafy: The Cole Memo: What Is It and What Does It Mean?
All Images Courtesy of Nima Gage Skidmore’s Flickr Page – Creative Commons License