Cannabis industry awaits impact of Sessions’ pot policy

The Department of Justice’s Thursday morning announcement that it is rescinding Obama-era directives for the government to not enforce federal marijuana laws in states where the substance is legal has left Colorado unsure what this means for the cannabis industry.

The decision, made by Attorney General Jeff Sessions, counteracts the 2013 Cole memo, which essentially said the federal government would back off in prosecuting marijuana-related enforcement in states where it’s legal.

That leaves eight states and Washington D.C., including Colorado and California as of Jan. 1, in the lurch for whether dispensaries, growers and consumers could risk federal prosecution.

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“Right now, of course, people in the industry are going to be concerned, and there’s a general uncertainty,” Andrew Matranga, assistant teaching professor of journalism at the University of Denver and a cannabis expert, said in an email to BizWest. “Will this mean that the general consumer will be kept away from the dispensary for fear of being part of a bust? Possible, but that’s something that remains to be seen. Theoretically, that could have happened at any point since 2013.”

Sessions’ memo told prosecutors to use their own discretion, keeping in mind the department’s limited resources and the gravity of the crime.

Several in Colorado politics have come out against Sessions’ decision, including Sen. Cory Gardner, who threatened to withhold approving nominations of Justice Department leaders.

“This reported action directly contradicts what Attorney General Sessions told me prior to his confirmation,” Gardner, a Republican, tweeted Thursday morning. “With no prior notice to Congress, the Justice Department has trampled on the will of the voters in Colo. and other states.”

Representative Jared Polis released a statement admonished Sessions’ decision, especially after President Trump said in 2016 that the issue should be up to the states.

“It is absurd that Attorney General Sessions has broken Trump’s campaign promise and is now waging war on legal marijuana and states’ rights,” Polis said in a prepared statement. “The growing Colorado economy is in jeopardy with the news that the Attorney General will now go after states that have decided to regulate marijuana.  The Trump Administration needs to back off, and allow marijuana to be treated like alcohol under the law.”

Polis added that the state’s marijuana industry has created 23,000 jobs and generated $200 million in tax revenue and that he called on the President to overrule Sessions’ decision.

Industry groups have also expressed concerns, such as the Colorado Bankers Association, which has been working with Colorado’s cannabis businesses and with regulators to apply banking to the industry.

“We expect this will have a chilling effect on the marijuana industry in Colorado,” Don Childears, president and CEO of the Colorado Bankers Association, said in a prepared statement. “While banks are more concerned about the actions of their regulators than they are about federal prosecution, this move further blurs the direction the Cole memo gave us as a temporary stay of enforcement. That, we believe, will result in further caution and perhaps retreat by both bank regulators and banks that are serving the industry or contemplating doing so.”

Childears, like many others in the industry, said the only way to really solve the problem of federal prosecution in states where cannabis is legal is for Congress to make a decision on the matter.

“There are a lot of representatives from these Cannabis Capitols, and it’s important that they represent their constituents,” Matranga said in his email. “For us who are watching this industry, it’s more tension-and-release for these stakeholders.”

Patrick Rea, program director of Boulder-based cannabis tech accelerator Canopy, told BizWest that while many businesses will take a wait-and-see approach, he expects Sessions’ decision to galvanize advocates and policy makers who want to see firm protections for the growing industry.

He added that there already are other protections, such as the Rohrabacher-Farr amendment (also known as the Rohrabacher-Blumenauer amendment) which prevents the Justice Department from spending funds interfering with state implementation of medical marijuana.

While he doesn’t expect sales to decline or for the cannabis-ancillary startups Canopy works with to be heavily impact he does expect Coloradans to start having a more nuanced understanding of how the U.S. Attorney in Colorado views the cannabis industry.

“This is essentially pushing the decision-making to the 93 regional U.S. attorneys instead of centralizing it in D.C.,” Rea said. “Attorneys are individuals, they have their prerogatives, some are more conservative, some more progressive. It will be interesting to see what happens.”

Colorado’s U.S. Attorney, Bob Troyer, said he will follow the approach passed down by the Department of Justice to focus on those that pose the greatest safety threats.

“Today the Attorney General rescinded the Cole Memo on marijuana prosecutions, and directed that federal marijuana prosecution decisions be governed by the same principles that have long governed all of our prosecution decisions,” Troyer’s statement said. “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.  We will, consistent with the Attorney General’s latest guidance, continue to take this approach in all of our work with our law enforcement partners throughout Colorado.”

With California now legalized, Rea said he expects even more resistance with a bigger dog in the fight.

“A lot of these laws are amendments to state constitutions,” Rea said. “When they’re amendments to constitutions, the governor, attorney general, lieutenant governor, all of them take an oath of office to defend the state constitution. This will become a large fight with a lot of players and actors. There is a lot of resistance to any action that comes from the federal government.”

That being said, all the players will have to wait and see what happens next.

“To expect things to change overnight is not what will happen,” Rea said, “if anything happens.”