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General James Cole wasn’t especially surprised when he learned earlier this year that Attorney General Jeff Sessions rescinded his 2013 landmark namesake memo that provided guidance to U.S. attorneys on marijuana enforcement priorities.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Marijuana Moment: Can you describe your reaction after hearing that Jeff Sessions rescinded your memo?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.
Trump Treasury Official Wants Congress To Fix Marijuana Businesses’ Banking Issues
Congress needs to come up with a solution for banking access by the marijuana industry, a top federal Treasury Department official said on Wednesday. And he hopes that will happen by 2020, if not sooner.
Joseph Otting, the comptroller of the currency, told reporters that lawmakers “have to act at the national level to legalize marijuana if they want those entities involved in that business to utilize the U.S. banking system,” according to PoliticoPro.
— POLITICO Pro (@POLITICOPro) January 16, 2019
Cannabis businesses acting in compliance with state law face uncertainty when dealing with federally regulated financial institutions. And banks potentially risk being penalized for servicing those businesses, leading many to avoid the industry altogether.
That said, a steadily growing number of banks are operating accounts for cannabis companies anyway, federal data shows.
“If I’m a betting person, I’m like 25-30 percent maybe next year, but I would hope by 2020 we can get this issue resolved,” said Otting, who was also recently assigned to double duty as acting director of the Federal Housing Finance Agency.
He previously called the existing situation “generally not healthy,” echoing comments made by Federal Reserve Chairman Jerome Powell, who said “it would be great if [the banking issue] could be clarified.”
Similarly, Treasury Secretary Steven Mnuchin has described the banking conflict as untenable. He said last year that his department was “reviewing the existing guidance,” referring to a 2014 Obama-era policy memo meant to provide direction for banks on how to service marijuana businesses.
“We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe,” he said.
Sen. Chuck Schumer Welcomes Major Cannabis Company To New York’s Hemp Industry
Canadian marijuana giant Canopy Growth Corporation will enter the nascent U.S. hemp industry by building a massive farming and production center in southern New York, U.S. Senate Minority Leader Chuck Schumer (D-NY) announced on Monday.
Canopy has yet to finalize its plans for an exact location—a contract could be signed as soon as Monday, Schumer said—but the company could eventually support “up to 400 jobs” in hemp cultivation, processing and product manufacturing at what would be a “first of its kind” center for the just-legalized U.S. hemp industry, the senator said.
Once a key American crop—George Washington famously grew hemp at Mount Vernon, and there was a stand of hemp plants in northern Virginia where the Pentagon now stands—the U.S. now lags far behind other countries in hemp production, a result of the country’s broad outlawing of cannabis decades ago.
Eventually, Canopy plans to invest “between $100-$150 million” into a New York State-based industrial hemp farm, Schumer said, with other companies potentially drawn to the sector by such a prominent anchor business.
“Hemp is a very valuable product and a burgeoning crop here” in southern New York, said Schumer, offering a very brief remedial education in the plant for those present at a press conference he convened. “I’m not kidding when I say this, but hemp is everywhere.”
“This is going to be a major shot in the arm” for the area, he added.
“Hemp” is more of a legal than a botanical distinction. Under U.S. law, cannabis sativa with 0.3 percent or more THC is considered “marijuana” and falls under federal drug-control laws. Cannabis with less than 0.3 percent THC is considered industrial hemp.
Hemp has been legal to import and process, but until very recently, hemp cultivation was mostly illegal in the U.S.
That prohibition that ended when President Donald Trump signed the 2018 Farm Bill into law last month. The previous 2014 version of the Farm Bill created a pilot program for states that wished to legalize small-scale hemp cultivation as part of research programs.
Based on that success and on growing support for an end to cannabis prohibition nationwide, the 2018 Farm Bill legalized cultivation of hemp outright. Almost immediately, politicians began touting the crop’s potential as a miracle product and an economic boon with enthusiasm once reserved only for acolytes of hemp evangelist Jack Herer.
Senate Majority Leader Mitch McConnell, who championed the hemp legalization provisions, signed off on the final version of the Farm Bill with a hemp pen—but for now, Schumer, his Democratic counterpart, may have stolen the top Republican’s fire.
“I’ve always believed that states should be the laboratories of democracy,” he said. “I’ve been very eager to have the hemp industry grow in New York and the Southern Tier.”
Photo courtesy of Senate Democrats.
Alcohol Sales Aren’t Impacted By Marijuana Legalization, Trade Association Finds
Marijuana legalization hasn’t hurt alcohol sales in the years since legal markets were established in Colorado, Washington State and Oregon, according to a new study from an alcohol trade association.
The Distilled Spirits Council looked at alcohol tax and shipment data before and after legalization to determine whether cannabis reform impacted sales of spirits, beer or wine in legal states.
“Simply put, the data show there has been no impact on spirits sales from recreational marijuana legalization,” the council’s chief economist, David Ozgo, said in a press release on Thursday.
“We now have four years of retail recreational marijuana sales history in Colorado and Washington state, and three years in Oregon, and each of these markets remain robust for spirits sales,” he said. “We did this study because there is a lot of misinformation circulating about the impact of recreational marijuana legalization on distilled spirits and the wider alcohol market.”
Per capita spirits sales actually increased slightly in post-legalization years, which was consistent with national trends. Sales were up 7.6 percent in Colorado, 5.4 percent in Washington and 3.6 percent in Oregon.
The trade association also analyzed beer and wine sales during the same period. For beer, sales were down marginally, with drops of 3.6 percent in Colorado, 2.3 percent in Washington and 3.6 in Oregon. But again, that’s consistent with national trends, according to the study.
Wine sales were mixed across the three states: Up 3.2 percent in Colorado, down 3.1 percent in Washington and up .7 percent in Oregon.
The Distilled Spirits Council also used their analysis as an opportunity to plug their policy recommendations to lawmakers in states considering marijuana legalization. While the association has declined to take a position on whether to legalize, it shared a list of recommendations ranging from equitable taxes on cannabis and alcohol to THC content disclosure requirements.
There is at least one major alcohol group that is willing to support states’ right to legalize, though. The Wine & Spirits Wholesalers of America (WSWA) called for the end of federal marijuana prohibition last year and, in December, went so far as to host a briefing on cannabis policy for lawmakers and congressional staffers.
Reform advocates have questioned whether legal access to marijuana would adversely impact alcohol sales, with more people opting to consume cannabis over booze. There is some research that indicates the alcohol industry is being interrupted in medical marijuana states, but more data is needed.
Photo courtesy of Pixabay.