Breaking: Cole Memo release may mean some volatility for U.S. players

Written By: Jen Neville
January 5, 2018

The Department of Justice had issued a memo on federal marijuana enforcement policy announcing a return to the rule of law and the rescission of previous guidance documents. Since the passage of the Controlled Substances Act (CSA) in 1970, Congress had generally prohibited the cultivation, distribution, and possession of marijuana.

In the memorandum, Attorney General Jeff Sessions directs all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities. This return to the rule of law is also a return of trust and local control to federal prosecutors who know where and how to deploy Justice Department resources most effectively to reduce violent crime, stem the tide of the drug crisis, and dismantle criminal gangs.

CannaRoyalty Corp., an active investor and operator in the legal cannabis industry, commented on the Memorandum for all United States Attorneys issued by U.S. Attorney General Mr.Jefferson B. Sessions on January 4, 2018.

The Memorandum, as its predecessors, the so-called Cole Memo of 2011, 2013 and 2014, provides guidance to U.S. prosecutors regarding the enforcement of federal cannabis laws. The Memorandum is not law nor does it alter the U.S. Justice Department’s discretion or ability to enforce federal marijuana laws. U.S. prosecutors will continue to have discretion in how they enforce federal marijuana laws, as they had under the Cole Memorandums.

Marc Lustig, CEO of CannaRoyalty commented:

No legal change has taken place here. We do not foresee the Memorandum meaningfully impacting the way that existing cannabis business is conducted within legal states. The evidence from legal states demonstrates that legalizing and regulating cannabis consumption works. It is our belief that this Memorandum has more to do with the DOJ’s desire to ensure its ability to continue to enforce federal law without specific enforcement priorities regarding cannabis, than it does to disrupting ongoing state-legal cannabis activity.

Marc Lustig added, “To enforce federal cannabis restrictions within legal states, the DOJ would be enforcing a historical federal policy that is contrary to the desire of roughly two-thirds of the U.S. population, including the majority of Republicans.

This would also be directly contrary to President Trump’s campaign assertion that marijuana policy should be left in the hands of the states and contrary to the trend toward legalization within U.S. states; the Vermont House of Representatives voted earlier today to legalize possession and home cultivation of marijuana.Legal states have built significant infrastructure to prudently handle the legal cannabis industry, they are relying on tax revenues from the industry and their citizens are relying on the private sector jobs that legalization has created. CannaRoyalty operates exclusively within state-legal U.S. jurisdictions,Puerto Rico as well as in Canada, and adheres strictly to applicable laws. While the release of the Memorandum may mean some volatility for U.S. players over the short-term, we see significant opportunity for growth over the coming year and will continue to work to drive value for our shareholders.”

The policy change will likely allow federal prosecutors to determine whether to crack down on state-approved cannabis programs and what resources, if any, to use in prosecution. According to an online report the Rohrabacher-Blumenauer amendment does prevent the feds from using federal funds to prosecute cannabis crimes in legal states; however, that protection is currently only extended to Jan. 19, included in a temporary spending bill to prevent a government shutdown.

Attorney General Jeff Sessions commented: 

It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission. Therefore, today’s memo on federal marijuana enforcement 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. 

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