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August 30, 2013 11:11 AM How the Department of Justice Is Going to Deal with Pot

By Mark Kleiman

The Justice Department has issued formal guidance to federal prosecutors on dealing with state-licensed cannabis businesses. [The link is to a .pdf. Full text below.] Instead of the formal contractual agreements I had been pushing for, DoJ decided on a policy of prosecutorial discretion, aka “waffling” or “muddling through.”

That’s more or less what I had expected. This is news, but it’s not history. Still, the statement is, in one regard, more explicitly accommodating to state law than might have been guessed. Previous guidance had singled out large-scale, for-profit enterprises as targets. The new memo takes that away: even a big firm won’t be a target unless its operations impinge on one of eight specified federal priorities: distribution to minors, connections with gangs and cartels, out-of-state distribution, dealing in other drugs or other criminal activity, violence and firearms use, driving other the influence and other public-health damage; production on public lands; and possession on federal property.

[Press release here. Jacob Sullum atReason Hit & Run has reactions from the usual suspects. Both the dismay of the opponents of legalization and the enthusiasm of its supporters seem to me to overplay the significance of the statement. Ilya Somin at the Volokh Conspiracy expresses more skepticism, without explaining how he thinks the Justice Department should have reacted in the face of an unrepealed federal criminal statute. For other coverage, see CNN, HuffPo, NYT, and AP]

Several things to note:

1. This makes it somewhat safer to be a state-licensed cannabis grower or retailer, but it doesn’t make it safe. Today’s policy statement – as opposed to a binding rule, which would be part of the U.S. Attorneys Manual explicitly does not constrain the discretion of the United States Attorneys in Washington and Colorado. It creates no rights or remedies. It is subject to revision at any time, and that revision would have retroactive effects.

2. Still, it’s a substantial change for DoJ to say that simply being a large for-profit entity is no longer enough, by itself, to justify prosecution. Matthew Davies, I take it, would not have faced prosecution had this policy been in place and had he been operating in Colorado rather than California.

3. The memo refers to “robust” state regulatory schemes. Not clear how that applies to the less-than-robust controls on medical marijuana in California and Washington. The U.S. Attorney for the Western District of Washington, where the feds have allowed the growth of a large system of essentially unregulated medical outlets under a very loosely-written state law, immediately issued a statement saying that the continued operation of that system is “not tenable.” That could be the biggest news of the day.

In my view, it would make no sense for the feds to crack down on the medical outlets before commercial outlets are in operation. But this clearly puts pressure on the Washington State legislature to write some new rules; there’s no obvious reason why patients and non-medical users can’t be served by the same system, with only the non-medical users subject to tax.

4. It’s not clear how, or if, the latest DoJ guidance will influence federal policy toward California’s medical-marijuana system. Medical providers seem to have beaten back a legislative effort to bring that system under some sort of control, defeating advocates of full commercial legalization who regard the current wild-West system as an embarrassment and a hindrance to convincing California voters to go the whole hog in 2016. But if the feds were to make it clear that robust state regulation would help protect the medical business from federal enforcement, the political calculus might shift, which from my perspective would be a Good Thing.

5. With federal enforcement receding somewhat, the biggest threat facing an otherwise law-abiding cannabis entrepreneur in Colorado or Washington is probably criminal violence rather than law enforcement. Treasury Department interpretations of various laws currently mean that banking services are unavailable to cannabis businesses unless they pretend to be something else. The result is that the industry operates on all cash, and can’t even use armored-car services to transport the cash. That creates enormous opportunities for robbery. Now that DoJ has indicated its willingness to accommodate state-level legalization, perhaps the Treasury will act to reduce the public-safety risks created by denying the industry the ability to use banks and credit card processors.

Update Jon Caulkins adds two important points:

* Removing size as a targeting criterion will tend to shift the industry from more craft-oriented to more industrial production and from momma-poppa retailing toward mass marketing.
* Removing the threat of federal action against grow sites tends to favor outdoor over indoor growing.

The link above is to a non-OCR .pdf file. Here’s the full text in ascii:

US. Department of Justice Office of the Deputy Attorney General
The Deputy Attorney General Washington, DC 20530
August 29, 2013

MEMORANDUM FOR ALL UNITED STATES ATTORNEYS
FROM: James M. Cole Deputy Attorney General
SUBJECT: Guidance Regarding Marijuana Enforcement

In October 2009 and June 2011, the Department issued guidance to federal prosecutors concerning marijuana enforcement under the Controlled Substances Act (CSA). This memorandum updates that guidance in light of state ballot initiatives that legalize under state law the possession of small amounts of marijuana and provide for the regulation of marijuana production, processing, and sale. The guidance set forth herein applies to all federal enforcement activity, including civil enforcement and criminal investigations and prosecutions, concerning marijuana in all states.

As the Department noted in its previous guidance, Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue. to large-scale criminal enterprises, gangs, and cartels. The Department of Justice is committed to enforcement of the CSA consistent with those determinations. The Department is also committed to using its limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way. In furtherance of those objectives, as several states enacted laws relating to the use of marijuana for medical purposes, the Department in recent years has focused its efforts on certain enforcement priorities that are particularly important to the federal government:

• Preventing the distribution of marijuana to minors;
• Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
• Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
• Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
• Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
• Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
• Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
• Preventing marijuana possession or use on federal property.

These priorities will continue to guide the Department’s enforcement of the CSA against marijuana-related conduct. Thus, this memorandum serves as guidance to Department attorneys and law enforcement to focus their enforcement resources and efforts, including prosecution, on persons or organizations whose conduct interferes with any one or more of these priorities, regardless of state law.

Outside of these enforcement priorities, the federal government has traditionally relied on states and local law enforcement agencies to address marijuana activity through enforcement of their own narcotics laws. For example, the Department of Justice has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for personal use on private property. Instead, the Department has left such lower-level or localized activity to state and local authorities and has stepped in to enforce the CSA only when the use, possession, cultivation, or distribution of marijuana has threatened to cause one of the harms identified above.

The enactment of state laws that endeavor to authorize marijuana production, distribution, and possession by establishing a regulatory scheme for these purposes affects this traditional joint federal-state approach to narcotics enforcement. The Department’s guidance in this memorandum rests on its expectation that states and local governments that have enacted laws authorizing marijuana-related conduct will implement strong and effective regulatory and enforcement systems that will address the threat those state laws could pose to public safety, public health, and other law enforcement interests. A system adequate to that task must not only contain robust controls and procedures on paper; it must also be effective in practice. Jurisdictions that have implemented systems that provide for regulation of marijuana activity

In jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana, conduct in compliance with those laws and regulations is less likely to threaten the federal priorities set forth above. Indeed, a robust system may affirmatively address those priorities by, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states, prohibiting access to marijuana by minors, and replacing an illicit marijuana trade that funds criminal enterprises with a regulated market in which revenues are tracked and accounted for. In those circumstances, consistent with the traditional allocation of federal-state efforts in this area, enforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity. If state enforcement efforts are not sufficiently robust to protect against the harms set forth above, the federal government may seek to challenge the regulatory structure itself in addition to continuing to bring individual enforcement actions, including criminal prosecutions, focused on those harms.

The Department’s previous memoranda specifically addressed the exercise of prosecutorial discretion in states with laws authorizing marijuana cultivation and distribution for medical use. In those contexts, the Department advised that it likely was not an efficient use of federal resources to focus enforcement efforts on seriously ill individuals, or on their individual caregivers. In doing so, the previous guidance drew a distinction between the seriously ill and their caregivers, on the one hand, and large-scale, for-profit commercial enterprises, on the other, and advised that the latter continued to be appropriate targets for federal enforcement and prosecution. In drawing this distinction, the Department relied on the common-sense judgment that the size of a marijuana operation was a reasonable proxy for assessing whether marijuana trafficking implicates the federal enforcement priorities set forth above.

As explained above, however, both the existence of a strong and effective state regulatory system, and an operation’s compliance with such a system, may allay the threat that an operation’s size poses to federal enforcement interests. Accordingly, in exercising prosecutorial discretion, prosecutors should not consider the size or commercial nature of a marijuana operation alone as a proxy for assessing whether marijuana trafficking implicates the Department’s enforcement priorities listed above. Rather, prosecutors should continue to review marijuana cases on a case-by-case basis and weigh all available information and evidence, including, but not limited to, whether the operation is demonstrably in compliance with a strong and effective state regulatory system. A marijuana operation’s large scale or for-profit nature may be a relevant consideration for assessing the extent to which it undermines a particular federal enforcement priority. The primary question in all cases — and in all jurisdictions — should be whether the conduct at issue implicates one or more of the enforcement priorities listed above. As with the Department’s previous statements on this subject, this memorandum is intended solely as a guide to the exercise of investigative and prosecutorial discretion. This memorandum does not alter in any way the Department’s authority to enforce federal law, including federal laws relating to marijuana, regardless of state law. Neither the guidance herein nor any state or local law provides a legal defense to a violation of federal law, including any civil or criminal violation of the CSA. Even in jurisdictions with strong and effective regulatory systems, evidence that particular conduct threatens federal priorities will subject that person or entity to federal enforcement action, based on the circumstances. This memorandum is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any matter civil or criminal. It applies prospectively to the exercise of prosecutorial discretion in future cases and does not provide defendants or subjects of enforcement action with a basis for reconsideration of any pending civil action or criminal prosecution. Finally, nothing herein precludes investigation or prosecution, even in the absence of any one of the factors listed above, in particular circumstances Where investigation and prosecution otherwise serves an important federal interest.

cc:
Mythili Raman
Acting Assistant Attorney General, Criminal Division

Loretta E. Lynch
United States Attorney
Eastern District of New York
Chair, Attorney General’s Advisory Committee

Michele M. Leonhart
Administrator Drug Enforcement Administration

H. Marshall Jarrett
Director Executive Office for United States Attorneys

Ronald T. Hosko
Assistant Director
Criminal Investigative Division Federal Bureau of Investigation

[Cross-posted at The Reality-based Community]

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Mark Kleiman is a professor of public policy at the University of California Los Angeles.

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