Attorney General Jeff Sessions’ rescission of the Obama-era “Cole Memo” on January 4, 2018 created a stir in the expanding domestic cannabis industry. In a single page the Sessions Memo rescinds previous Department of Justice guidance, which limited federal prosecution of marijuana-related activity.
The Sessions Memo gives federal prosecutors more latitude in determining which marijuana activities to prosecute, stating that prosecutors should weigh multiple elements, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.
Although the announcement is certainly significant, the federal government has traditionally relied on state and local law enforcement to prosecute individuals in violation of narcotic laws. This, however, is no consolation for financial institutions that have taken on marijuana-related accounts as a result of Financial Crimes Enforcement Network (FinCEN) guidance issued on February 14, 2014. FinCEN guidance, which was premised upon Cole Memo enforcement priorities, gave banks a way to comply with their federal Banking Secrecy Act obligations, while accepting marijuana-related business accounts. The FinCEN guidance was meant to enhance the availability of financial services for marijuana-related businesses, but the uncertainty surrounding the legitimacy of that guidance in the wake of the Sessions Memo is expected to have a chilling effect upon banking within the cannabis industry.
Additionally, on the horizon is the January 19, 2018 expiration of the Rohrabacher-Blumenauer Amendment, which prohibits funds available to the Department of Justice from being used to prevent states from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana. The expiration of the Rohrabacher-Blumenauer Amendment and any forthcoming FinCEN guidance are developments that marijuana-related businesses should closely monitor.
Notwithstanding the Sessions Memo, New Jersey Governor-Elect Phil Murphy and New Jersey State Senator Nick Scutari, the prime sponsor of the New Jersey Compassionate Use Medical Marijuana Act, intend to proceed with efforts to legalize recreational marijuana in New Jersey. New Jersey Senator Cory Booker and politicians from states where marijuana is legal have all expressed concern about the confusion that the Sessions Memo will cause. Attorney Craig Carpenito, appointed by Jeff Sessions as interim U.S. Attorney for the District of New Jersey last week, has not publicly stated his position on marijuana laws.