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General James Cole wasn’t especially surprised when he learned earlier this year that Attorney General Jeff Sessions rescinded his 2013 landmark namesake memo that provided guidance to U.S. attorneys on marijuana enforcement priorities.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Marijuana Moment: Can you describe your reaction after hearing that Jeff Sessions rescinded your memo?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.
Marijuana Activists Protest John Boehner’s SXSW Speech
Advocates for social equity in the increasingly legal marijuana economy are protesting keynote speeches by former Republican House Speaker John Boehner and MedMen CEO Adam Bierman at South by Southwest (SXSW).
The Equity First Alliance, a group that promotes racial and social justice in the cannabis industry, said that Boehner and Bierman’s scheduled Friday appearances at the festival are a reflection of an ongoing trend where mostly white men are profiting off a market while people of color continue to disproportionately face criminalization for marijuana offenses.
Boehner has been the subject of ongoing criticism from marijuana advocates, who point out that he failed to act on cannabis reform, and opposed certain criminal justice reform legislation, during his 24 years in Congress. While he never introduced, cosponsored or voted in favor of marijuana bills in that time, he joined one of the largest cannabis firms, Acreage Holdings, as a board member last year.
Bierman has been accused in a lawsuit filed by a former employee of making racist and homophobic remarks. His company, which was valued at $1.6 billion last year, was also a member of a New York-based medical marijuana industry association that advocated against allowing home cultivation in a memo submitted to Gov. Andrew Cuomo. (The company told Marijuana Moment that it supports the right to home cultivation, but did not answer questions about its involvement in drafting the document. It was later asked to leave the group over Bierman’s alleged remarks.) Acreage remains a member of the same association.
“Our protest at SXSW sends a bold message in support of cannabis equity, justice, and repair,” the Equity First Alliance’s Felicia Carbajal said in a press release. “We stand together, recognizing that by defending the most marginalized among us, we defend all of us. We support the advocacy and resistance movements that reflect our multiple and intersecting identities, and we call on all defenders of human rights to join us.”
Activists held protest signs over a nearby highway and at a hotel where Boehner’s speech—which covers “the likely paths to national legalization and the challenges and opportunities America’s fastest growing industry face today”—will take place on Friday. The signs condemn “big marijuana” and call for social equity policies such as community reinvestment.
— Ministry of Hemp (@MinistryofHemp) March 15, 2019
“It’s clear this market is going to expand,” Boehner told CNBC in an interview ahead of the event. “And as it does, lawmakers in Washington have to look up and realize that the federal government is way out of step. It’s time for the federal government to get out of the way.”
In the press release, Equity First Alliance listed additional reasons they’re protesting as well as policies they support.
“In protest of:
—Those profiting off of cannabis without an intentional plan to repair and make whole individuals, families, and communities that have been devastated by the War on Drugs;
—Those profiting off of cannabis who once participated in prohibition;
—And those who would profit before freeing all cannabis prisoners and vacating all cannabis convictions
And calling for:
—10% of companies’ annual revenue to be reinvested in communities disproportionately harmed by the
War on Drugs;
—A new paradigm of social responsibility in the cannabis industry;
—And public policies that create an equitable, just, and reparative industry.”
“It’s hypocritical for an Austin based company like SXSW, a company imbedded in a city that preaches diversity and inclusion, to neglect the work of committing to create an inclusive space, and instead give a keynote platform to John Boehner,” Chas Moore, executive director of the Austin Justice Coalition, said. “This is disgusting.”
— AcreageHoldings (@AcreageCannabis) March 15, 2019
Marijuana Moment reached out to Acreage for comment, but a representative did not respond by the time of publication.
Photo courtesy of Gage Skidmore.
Model Legislation Aims To Help Cities Bring People Of Color Into Marijuana Industry
In the continuing work to diversify the legal cannabis space and include communities that have been hurt the most by the war on drugs, advocates have unveiled a model local ordinance that would help more people of color enter the industry.
The Model Municipal Social Equity Ordinance, released Monday by the Minority Cannabis Business Association (MCBA), “creates a baseline framework for adopting and advancing social equity in the cannabis industry as official public policy.”
Research shows that African Americans are almost four times more likely to be arrested on marijuana-related charges than their white counterparts—even while usage rates are virtually identical. But as legalization makes its way across the country, the effects of this systemic racial bias persist: More than 80 percent of legal cannabis businesses are owned by white people, according to one survey.
In other words, the communities that have been punished the most for something as simple as marijuana possession have yet to see many of the benefits associated with legalization.
To address this disparity, MCBA’s model ordinance calls for cities to create cannabis social equity programs to provide financial and technical support to people who might not be able to otherwise own, invest or otherwise work in the cannabis industry. For example, under current policies enacted elsewhere, they may not be able to afford the high costs associated with licensing. Or they may be barred from even applying to work in the industry because of a past drug conviction.
The model ordinance is designed to even the playing field. People who were arrested on charges related to marijuana prior to legalization, who had a family member arrested on such charges and/or lived in an area with disproportionately high cannabis arrest rates would be eligible to participate in the program. It also invites people with low income—defined as those with “household income of less than 80 percent of the current fiscal year median family income for the county of residence”—to participate as well.
“The licensing structure… prioritizes folks who have been impacted by the war on drugs for ownership,” Jason Ortiz, MCBA vice president, told Marijuana Moment in a phone interview. “Those folks are often left behind, if included at all. We put them at the front of the line.”
Another important part of the ordinance, Ortiz said, is that it empowers local governments to study the impact of marijuana prohibition on their communities and use that data to influence decisions on where money generated from the industry should go.
“If your community was specifically targeted for arrests, your community now has data to support why they should be the ones to receive the support that is generated,” he said.
The model ordinance also encourages cities to create a “community reinvestment fund” from tax dollars and other revenue from cannabis businesses to use for job training, re-entry services and other community-centered support.
Other provisions include the facilitation of “resentencing and expungement to restore the civil rights of prior cannabis arrestees” (such as the automated process recently instituted in San Francisco) and the end of “suspicionless drug testing,” among other considerations.
The next step, of course, is to get municipalities to actually adopt the model ordinance. That’s going to take community engagement and dialogue, Ortiz said.
“For us, the importance and relevance of this document is that it allows anyone anywhere to start to have a conversation about equity at their local and state level,” he said.
“The Model Ordinance is a statement from the communities we represent to the local lawmakers, regulators, entrepreneurs and other stakeholders who are building our nation’s cannabis industry one town at time–social equity is not only possible, it should be the industry standard moving forward,” Khurshid Khoja, co-chair of the MCBA Policy Committee, said in a press release. “Our work gives those actors the tools they need to make equity a present reality in our industry rather than a lost opportunity.”
In 2017, MCBA released a similar model bill for state legislatures championing industry-wide equity.
Photos/screen grabs from video produced by MCBA.
New Marijuana Banking Bill In Congress Has 108 Cosponsors
A bipartisan bill that would address banking issues in the marijuana industry was officially filed on Thursday.
The legislation—led by by Reps. Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-O) and Warren Davidson (R-OH)—would shield financial institutions from being penalized by federal regulators for servicing cannabis and cannabis-adjacent businesses.
The bill, titled the Secure and Fair Enforcement (SAFE) Banking Act, explicitly stipulates that proceeds from transactions conducted by marijuana companies “shall not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business or service provider.”
Nearly a quarter of the House, 108 members, has signed onto the bill as initial cosponsors, a spokesperson for Perlmutter told Marijuana Moment, and that includes nine Republicans. The last version, introduced in 2017, ended the 115th Congress with 95 cosponsors.
After the first-ever congressional hearing on #cannabis banking, I'm reintroducing the bipartisan #SAFEBanking Act to allow marijuana-related businesses access to the banking system. Congress needs to act to reduce risks for employees, businesses & communities across the country.
— Rep. Ed Perlmutter (@RepPerlmutter) March 7, 2019
Draft text of the bill was circulated last month ahead of the first marijuana hearing of the 116th Congress, which focused on how providing banking access to the cannabis industry can improve transparency and public safety.
Marijuana Moment supporters on Patreon can read the full text of the new bill as filed below:
While the prior version of the Secure and Fair Enforcement (SAFE) Banking Act didn’t advance to votes in the last Congress, advocates are optimistic about the prospect of actually passing the reform legislation this session.
“If Congress fails to act, we are discouraging responsible, regulated markets and allowing a serious public safety threat to go unaddressed,” Heck told Politico, which first reported on the bill’s formal reintroduction.
The congressman put the situation in starker terms during last month’s hearing before a House financial subcommittee, saying that the body has the power “to prevent murders and armed robberies,” referring to the fact that current policy forces many cannabis businesses to operate on a cash-only basis, which can make them targets.
“We must use it and we must use it now because we are already late,” he said.
“The SAFE Banking Act is an answer to the very real problem facing these businesses as they are forced to operate exclusively with cash. It makes them prime targets for violent robberies and money laundering schemes,” Stivers said in a press release. “This isn’t about condoning marijuana businesses, it’s about creating an auditable trail and keeping our neighborhoods safe.”
Today I introduced the SAFE Banking Act to allow the cannabis industry access to banking. The current system must be fixed to end this public safety issue. Add your name in support of the bill! https://t.co/khmr3Vjf9X
— Ed Perlmutter (@Ed4Colorado) March 8, 2019
“Government Regulators have deemed cannabis business owners to have certain reputational risks. From a civil liberties standpoint, I believe this is something we need to move away from,” Davidson added. “There are reputational risks associated with any small business, and barring legally recognized small businesses from our financial institutions threatens the very pillars of liberty and freedom our country was founded on.”
Passing marijuana banking reform could be the first in a series of more modest cannabis legislation that Congress will take up this session, with the ultimate goal of ending federal marijuana prohibition. Rep. Earl Blumenauer (D-OR) outlined a congressional blueprint to legalization last year.