Reversing an Obama administration policy, Attorney General Jeff Sessions issued January 4 a memorandum to all U.S. Attorneys directing them to enforce federal laws involving marijuana.
The memorandum followed the legalization of recreational marijuana in California on January 1, increasing to 30 the number of states and the District of Columbia which have legalized the use, production and sale of marijuana in some form.
The memorandum reversed an Obama Administration policy outlined in a 2013 memorandum that directed United States Attorneys to refrain from prosecuting medical marijuana businesses and users in states where it was legal.
Attorney General Sessions said the memorandum “simply directs all U.S. Attorneys to use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country.”
Attorney General Jeff Sessions has long-opposed the legalization of marijuana.
“I am definitely not a fan of expanded use of marijuana,” Sessions said shortly after taking office. “But states, they can pass the laws they choose. I would just say, it does remain a violation of federal law to distribute marijuana throughout any place in the United States, whether a state legalizes it or not.”
Growers seeking to engage in the production or sale of marijuana in those states where it has been legalized already face significant regulatory hurdles and financial costs imposed by those state governments.
While some growers in those states have converted all or some of their production to marijuana despite the risks, regulatory hurdles and costs, any commerce involving marijuana remains illegal under federal law.
Federal statutes and regulations intended to detect drug trafficking, terrorist activity, and other criminal acts have served as a major obstacle to businesses engaged in marijuana commerce from obtaining financial services, including banking.
Federal law labels marijuana a controlled substance and requires banks to report related transactions as suspicious activity. No bank, credit union or financial-services company can knowingly accept business accounts with any marijuana connection.
As a result, businesses involved in marijuana have been forced to operate on a cash-only basis.
In addition, the Internal Revenue Code bars businesses involved in “drug trafficking” from utilizing those deductions under the federal tax code resulting in businesses involving marijuana not being allowed to deduct operating expenses from their income.
In some cases, businesses engaged in marijuana commerce have been subject to pay up to 70 percent of their net income to the federal government. Some businesses have been audited by the Internal Revenue Service and have been forced to shut down.
The US Department of Treasury has issued guidance that placed additional liability on financial institutions if businesses utilizing their services engage in illegal activity, preventing financial institutions from accepting licensed growers, retailers and dispensaries involved with marijuana as ordinary banking customers.
The conflicts between federal laws and those of several states involving marijuana will continue to cause uncertainty as the floral industry grapples with the realities of some growers moving away from floral products and toward marijuana.
