Former Deputy Attorney General James Cole wasn’t especially surprised when he learned earlier this year that Attorney General Jeff Sessions rescinded his 2013 landmark namesake memo that provided guidance to U.S. attorneys on marijuana enforcement priorities. But he’s also skeptical that the policy regression will stand the test of time.
In a phone interview with Marijuana Moment, Cole discussed how the memo came to fruition (he conversed with President Barack Obama during the drafting, but declined to comment on the substance of those conversations), the future of cannabis policy in the United States and how, contrary to Sessions’s past statements, good people do smoke marijuana.
Cole, who will be a keynote speaker at the National Cannabis Industry Association’s Cannabis Business Summit & Expo later this month, is currently a partner at the law firm Sidley Austin LLP.
This interview has been lightly edited for length and clarity.
Marijuana Moment: Can you describe your reaction after hearing that Jeff Sessions rescinded your memo?
James Cole: I was not completely surprised. Certainly, the attorney general had expressed his views about marijuana and the marijuana industry. He had also, however, expressed views that he thought that the memo did a pretty good job of trying to rectify and regulate a difficult area because of the legal complications of it.
As to his reasons that it was unnecessary, I didn’t agree with that. I thought that, in fact, it was necessary. My concern in drafting the memo was public safety and trying to make sure that, accepting the fact that marijuana was going to be used on an increasing basis based on the resolutions in the states, you wanted to keep the cartels and the gangs out of it. And the best way to do that was by providing a regulatory scheme that would allow legitimate businesses that are well-regulated to exist so they can comply with the law, so that any revenue that may be generated can be brought into the state coffers, so that the enforcement of the regulations can be funded.
It just seemed to me that certainty being the hallmark of any business, the uniformity of the policy throughout the United States was a necessary element. Right now you’ve got 93 different U.S. attorneys who are given the discretion to decide what to do, and that does not bring certainty or uniformity. Whether there will be a change of enforcement activity, I don’t know. There’s certainly a change in policy and there’s certainly less comfort in the industry about what to do.
MM: On that last point, it doesn’t appear that there’s been a lot of eagerness on the part of federal prosecutors to crack down on the legal marijuana industry since the memo was rescinded. What do you make of that?
JC: I think some of it is a political reality. In the states that have legalized marijuana, obviously U.S. attorneys—although a lot of them are not permanently appointed, many are just acting at this point—they are political creatures. They are politically appointed in one form or another, and many times they look at being a U.S. attorney as a political stepping stone. So I think they’re responsive to what the political will is in the states where they reside.
That’s one of the realities that really enters into the enforcement mechanism. Is this really a place to use the resources of the federal government or not? The concerns that come in that jurisdiction can be vast and wide, and you may have a U.S. attorney in one jurisdiction—one that doesn’t have legalization—reaching out into a jurisdiction that does have legalization because there’s some kind of jurisdiction hook. I haven’t seen that yet. I don’t know if that’s ever going to happen, but that could be one of the concerns. At the end of the day, the rescission of the memo may prove to be more symbolic than it is substantive.
MM: When you started drafting the memo, were you having conversations about the issue with President Obama or White House staffers?
MM: Can you speak to the nature of those conversations?
JC: No, I cannot. No, I don’t talk about my conversations with the president.
MM: What would you tell marijuana business owners concerned about the possibility of a federal crackdown?
JC: Obviously, in most jurisdictions, lawyers are limited in what kind of advice they can give in this space because it is illegal under federal law. So we can advise quite easily about whether or not a particular course of conduct that somebody wants to take is legal or not. We can advise on what we believe the Department of Justice enforcement policy is—it’s a little less certain than it used to be. We can advise on what other laws come into play.
But ultimately, it comes down to a risk appetite for most companies that want to operate here as to whether or not they will accept a level of risk that whatever they’re doing may get prosecuted with whatever comes with that—which is both the threat of fines, maybe imprisonment, perhaps forfeiture.
MM: Do you feel that federal marijuana legalization is an inevitability?
JC: I believe it is. I look at the new [congressional] legislation that’s been proposed, which is, I believe, simple and straightforward. I think Congress is where the activity needs to take place. I think it is moving toward that. There’s growing acceptance of it. I think it’s a matter of ‘when’ and not ‘if’ at this point.
MM: Are there good people who smoke marijuana, contrary to what Sessions has said in the past?
JC: Yes, there are. There are. There are cancer patients, there are people with glaucoma, who get palliative effects from smoking marijuana. I wouldn’t call them bad people. I disagree with that.
Photo courtesy of the Department of Justice.
USDA Touts Hemp Industry’s Growth But Says Challenges Remain
Hemp production in the U.S. has scaled up rapidly since lawmakers lifted federal prohibition of the crop, with more acres of hemp grown in the country today than at any point since the 1940s. But the fledgling industry is still very much in flux, and reporting practices that vary wildly from state to state have hampered efforts to fully understand it.
Those are the top-level takeaways of a report released Wednesday by the U.S. Department of Agriculture (USDA) that explores the economic viability of the American hemp industry as the country transitions to a legal era.
After decades of prohibition due to hemp’s close relationship to its high-THC cannabis cousin marijuana, Congress in 2014 approved state-level pilot programs, allowing growers in certain states to produce and sell hemp as part of limited research initiatives. In 2018, lawmakers went further, ending federal hemp prohibition entirely. Since then, the sector has exploded.
“Under the pilot programs, United States industrial hemp acreage reported by States increased from zero in 2013 to over 90,000 acres in 2018, the largest U.S. hemp acreage since the 146,200 acres planted in 1943,” the USDA study found. “By December 2019, hemp could be grown legally in every State except Idaho, Mississippi, and South Dakota.”
As of last year, more than 146,065 acres of planted hemp were reported to the agency.
— Economic Research Service (@USDA_ERS) February 19, 2020
The 83-page report, “Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs,” attempts to draw conclusions about the legal, logistical and economic challenges that might arise as US farmers return to a crop that hasn’t been grown in the country for generations.
One of the biggest obstacles, the study shows, is keeping everyone on the same page.
“There is no systematic comprehensive data source regarding the emerging United States hemp industry or requirement to report a consistent set of data for the pilot programs,” noted the authors, who said they drew on annual reports, website information, internal USDA data, unstructured discussions with state agencies and other third-party information to compile the document.
“States collected data at various times and levels of aggregation,” the study says. “For example, some States report hemp data by intended end use (i.e., grain, fiber, cannabidiol (CBD) or other extracts) while others do not report data.”
Inconsistency between state requirements was one of the main obstacles highlighted by the report. USDA found that state-level hemp programs ran into a handful of common problems, starting with the difficulty of passing state-level legislation to regulate the new programs. Other problems arose in obtaining “critical production inputs,” such as seeds and insecticides, or in trying to easily distinguish industrial hemp from high-THC marijuana, which remains federally illegal.
A fundamental problem, the USDA report found, was “lack of basic data and information for decision-making”—something that should come as no surprise to anyone who’s watched a legislative hearing on cannabis.
Getting stakeholders involved early seemed to help smooth some wrinkles, the study found. In some states, authors wrote, “hemp legislation failed repeatedly, typically because of law enforcement concerns or lack of public support.”
“Colorado and Kentucky are two examples of States that included law enforcement stakeholders early when establishing their pilot programs,” the report notes. “This allowed an early basis for dialogue and shared knowledge.”
Data from state pilot programs also led analysts to conclude that while industrial hemp is a burgeoning industry in the U.S., it likely won’t emerge as a strong economic player in every state.
“As with other crops, it is not likely that hemp will be economically viable in every State,” the study concludes. “States that moved quickly to establish pilot programs were not leading producers of competing major field crops,” it found, and “growers are not likely to plant or process hemp if more profitable options exist.
Hemp-producing states could also run into competition internationally, the report says, acknowledging that the U.S. is one of many hemp-producing regions globally. “While the reintroduction of hemp production in the United States is relatively recent,” it says, “hemp production has already been legal in other parts of the world,” including Canada, Europe and China.
Under a recent trade deal with the U.S., China agreed to import more American-grown hemp and other agricultural products over the next two years.
For now, the rising tide of interest in hemp-derived CBD appears to be lifting all boats. “Global production was small and relatively stable until the recent worldwide interest in CBD oil,” the USDA study found. “There is some demand for hemp as a sustainable natural fiber, hemp seeds and protein as a food ingredient, and hemp extracts for cosmetics and food, but CBD oil has been the primary source of demand growth.”
Earlier this month, USDA officials said they won’t be able to comply with a request by farmers and some state lawmakers to increase the federal THC limit on industrial hemp, which is currently defined as cannabis that contains no more than 0.3 percent THC. Advocates had asked for that limit to be increased to 1 percent, but the agency said that’s a job for Congress.
They did, however, say that a new public comment period will be opened before hemp rules are finalized.
Photo courtesy of Brendan Cleak.
Businesses Are More Profitable And Innovative In States With Legal Marijuana, Study Finds
States have been experimenting with various forms of marijuana legalization for years and, according to new research, business is better where cannabis is legal.
To investigate the impact legalization has on the economy, researchers at the University of Iowa analyzed 9,810 corporations between 1991 and 2017, finding “a multitude of positive effects” after a state enacts medical marijuana laws.
“Firms headquartered in marijuana-legalizing states receive higher market valuations, earn higher abnormal stock returns, improve employee productivity, and increase innovation,” the authors said.
The study, which was reviewed by Marijuana Moment but has yet to be published, found that having cannabis laws on the books can unleash the previously untapped potential of employees and helps companies attract new talent.
Corporations “become more productive and hire more productive human capital from out of state after the passage of the law,” the authors wrote.
They also report that “firms earn higher net income per employee” after a medical cannabis law is passed, and “the positive impact is sustained over the next two years.”
Additionally, the study found a 4.2 percent increase in company value, which translates into an average increase of the market-value of corporations by $166 million after a medical marijuana law is enacted.
“Firms experience an increase in profitability likely due to the positive shock to the human capital post-legalization,” the study finds.
“State-level medical marijuana laws have a considerable positive impact on firms in the state, likely by having a positive impact on the human capital of firms.”
Higher profits and more productivity aren’t the only benefits a company sees after marijuana is legalized. When it comes to stock prices, companies located in states with medical cannabis fare better than those in jurisdictions where the plant is prohibited.
Additionally, the stock value of corporations in medical marijuana states increased by 4.56 percent. An “equal-weighted portfolio” composed of similar stocks located in states without a medical marijuana program showed a loss of about two percent annually.
Returns on stocks were also 4.44 percent higher per year for companies in states that have legalized.
What’s the source of such financial benefits? The authors suggested that companies will ramp up innovation after marijuana laws are passed, making the company more profitable over time, compared to their counterparts in areas that don’t permit cannabis at all.
“Our results imply that after marijuana legalization, firms not only apply for more patents and receive more citations on those patents, but also are more productive and efficient in generation innovation output from labor and [research and development] input,” the study determined.
“We also find an increase in both entrepreneurial activity and venture capital funding in states that legalize marijuana.”
Finally, the study measures the “innovation productivity” of those working, living and moving to the state, following the passage of a medical marijuana law.
“The inventors that are in the state both before and after legalization become more creative” post-legalization, the authors found.
And when it comes to attracting new talent from other states, “more inventors relocate to states after medical marijuana legalization than before passage of the law.”
The benefit is two-fold for such corporations. In addition to being “able to attract more productive inventors” in states with medical marijuana “relative to states that do not legalize,” existing employees also see an uptick in innovation after a cannabis law is passed, the study concluded.
Company Gets Trademark For The Word ‘Psilocybin,’ Frustrating Decriminalization Advocates
As psychedelics reform efforts pick up across the U.S., there’s an increasing weariness among advocates about the potential corporatization that may follow.
That’s why many found it alarming when a California-based company announced on Thursday that it had successfully trademarked the word “psilocybin,” the main psychoactive constituent of so-called magic mushrooms.
Psilocybin™ is a brand of chocolates that do not contain the psychedelic itself but are meant to “begin educating, enlightening and supporting the community in upgrading their inner vibrations in order to get everything they want of their time here on earth,” according to a mission statement.
Soon after founder Scarlet Ravin shared news of the trademark on LinkedIn, advocates raised questions and concerns: What does that mean on a practical level for other psilocybin organizations? Why should one brand get exclusive rights (to a certain legal extent) to the scientific name of a natural substance?
The reality of this particular trademark is more nuanced than it might appear at first glance. While it’s true that the company was granted the distinction by the U.S. Patent and Trademark Office, it’s specifically for educational materials and it’s listed on the supplemental register, rather than the principal register, which means it would be incumbent upon the brand to prove that it has earned distinctiveness of the mark if the issue went to court.
“It’s certainly good for her business to have that mark, but I think at the end of the day, it’s going to be somewhat weak,” Larry Sandell, an intellectual property attorney at Mei & Mark LLP, told Marijuana Moment. He added that this example is “indicative that people are trying to stake early claims to IP.”
“Even if they might be somewhat overreaching, people see a potential new market here and they want to stake out their ground,” he said. “It’s a big next space that people are anticipating a legal market. Maybe it’s where cannabis was five to 10 years ago.”
Despite those legal limitations, reform advocates view the trademark as emblematic of a bigger issue—that someone would presume to take ownership of a substance that’s at the center of a national debate on whether or not to criminalize individuals for using it.
Kevin Matthews, who led the successful campaign to decriminalize psilocybin mushrooms in Denver last year and is the founder of the national psychedelics advocacy group SPORE, told Marijuana Moment that he didn’t doubt Ravin had the right intentions—to promote education into the substance—but he said the decision to trademark is nonetheless questionable.
“This being an open-source movement, trademarking the word psilocybin, in some ways it feels like—although I don’t think this is her intention—it’s lacking perspective,” he said. “Does that mean we can’t use psilocybin as SPORE because we’re an educational non-profit and she’s a for-profit branded company? It doesn’t make a lot of sense to me. She needs to let go of the trademark.”
Ravin said that her goal in trademarking psilocybin was to prevent the substance from being becoming the next cannabis, which she said has been corrupted from its “true spiritual, medicinal benefit” and turned into a corporate commodity.
“Knowing that psilocybin is going to be next [to be legalized] I feel strongly guided by the deepest part of my heart to really offer a sense of education of what could be when you take such a strong, beautiful medicine and to give people an education platform here and now to let them know what’s coming, how to receive it, how to get the most benefit from,” she told Marijuana Moment in a phone interview.
“We paved the way for this being a medicinal offering and not a consumer, recreational shitshow. That was our intention,” Ravin said. “The only way that we are going to have access to mainstream consumers is by having some sort of trademark on the word so that we can use it for something that’s not what it actually is.”
“With this being something that we can now put into market with a box of chocolates that has no psilocybin in it, but as you can already see, it creates a platform for discussion of what the beauty of this plant can do,” she said. “Me and my movement and my team, we don’t own the word. We’re not going to ever sue anyone who also uses the word—we’re opening a doorway for ourselves and anyone that wants to see this educated upon so that we can hit people who are unfamiliar with it now with downloads to actually have this be a safe, successful psychedelic transition.”
Asked to react to criticism about the trademark from advocates, Ravin said “we’re all here to follow spirit guidance to show love and light, and the visions I had of doing what we’re doing now was based upon breaking boundaries and breaking perceptions and allowing people to have an opportunity to sink into being one unit.”
“Yeah, it might be coming out, we might be using the platform of psilocybin. We can use any platform to do this,” she said. “We can use any platform to come together as a whole, and the longer that people sit in duality and say, ‘oh now she’s going to have a stronger voice than me is just looking at something not through their heart,’ it’s looking at it through ego and judgement.”
“The more that we describe what we’re doing, the more people I think will start to feel our unity and we’ll be able to move together as a stronger force than pointing fingers and trying to separate one another,” she said. “Those days are done.”
Ravin said that once the Psilocybin™ chocolates are ready for market, she plans to contribute 10 percent of profits to the Multidisciplinary Association for Psychedelic Studies (MAPS), which is involved in researching therapeutic benefits of psychedelic substances.
Photo courtesy of Wikimedia/Workman.