Marijuana and Jeff Sessions: What the Attorney General Pick Might Mean for the Industry

With the Senate confirmation hearings of Jeff Sessions (R-Ala.), president-elect Donald Trump’s nominee for Attorney General, less than a month away, advocates of marijuana legalization have pondered what his role as AG could mean for the burgeoning industry’s future—an industry that’s currently projected to hit $20.6 billion in revenue by 2020. Furthermore, with four more states (California, Maine, Massachusetts, and Nevada) passing recreational, or “adult-use,” marijuana laws in November’s election, nearly one-fifth of the country now allows the legal possession of marijuana for individuals twenty-one or older. In addition, over half the nation’s states (and Washington, D.C.) have legalized some form of medical marijuana.

Despite the trend in state legalization, however, marijuana remains a Schedule I controlled substance under the Controlled Substances Act. This means that, according to the federal government, marijuana is both highly addictive and has no known medical value. This schedule status renders it completely illegal at the federal level, regardless of its permissibility in any given state. Furthermore, the current “hands-off” approaches to state legalization from administrations such as the DEA have been based solely on advisory polices, not binding law. As a result, when Trump takes office this January, those policies could very well walk out the door with the Obama administration that implemented them.

Since 2009, the Attorneys General under President Obama have issued recommendations in the form of memoranda to federal prosecutors and law enforcement in states where marijuana is legal. The most recent, a 2013 memo by Deputy Attorney General David Cole, provides guidelines for states that have legalized the recreational use of cannabis. While the memos repeatedly assert that marijuana remains illegal federally, the rationale behind them has been instructive: they serve to delineate how prosecutors and law enforcement should utilize their limited resources when it comes to enforcing federal marijuana laws. For example, one mentioned prerogative is preventing the diversion of marijuana out of state; another is ensuring that marijuana stores aren’t close to schools. In short, the memos have provided states guidance on what not to do if they want the federal government stay out of legalization.

However, these memos are not law; they’re merely advisory recommendations. As a result, they can easily be replaced or even entirely revoked at any time—which is exactly what many have wondered if Sessions will do.

Where contemplating a Trump/Sessions marijuana stance is concerned, a recent interview with Cole about his 2013 memo provides some illumination. During the interview, Cole discussed the Justice Department’s reasoning behind both the memo and the federal government’s resultant “hands-off” approach. According to Cole, the first concern was what action, if any, the government could legally take to address marijuana decriminalization itself. Specifically, the issue was whether the federal government had the right to force states to change their laws through the Constitution-based preemption doctrine. The second question was of a similar nature: could the federal government use the preemption doctrine to prevent states from regulating marijuana?

The preemption doctrine comes from the Supremacy Clause of the Constitution, which states that federal law is the supreme law of the land. In short, this means that when state laws conflict with federal ones, the federal government can require the conflicting states to cease certain actions if they interfere with the federal laws on the matter. However, preemption has certain limitations. For example, the federal government cannot “commandeer” states to do certain things. Thus, under Cole, the Department of Justice had to determine whether both the decriminalization of marijuana and the state-implemented regulatory schemes were laws that the federal government could preempt.

On the decriminalization issue, Cole said the legal research indicated that the DOJ could not preempt state legalization of marijuana:

“The conclusions that we came to were, number one, that we cannot preempt the decriminalization, because the [Controlled Substances Act] itself says the federal government is not preempting the field,” he said. “The states are free to have their own laws.”

Field preemption occurs when the federal government forbids states from establishing any laws—even ones that might be complementary—on a certain issue because the federal government “occupies the field.” For example, immigration laws are subject to field preemption. However, because the language of the Controlled Substances Act expressly says that drug enforcement is not a field preemption category, the federal government cannot force the states to “re-illegalize” marijuana, as such an action without the requisite authority constitutes “commandeering.”

However, the regulatory schemes were another matter, as the legal analysis indicated that the federal government “probably could stop” marijuana regulation. But, according to Cole, intervening on regulation without the ability to force the states to end marijuana decriminalization would simply create more problems:

“[W]e said, ‘But what’s the point of that?’” he explained. “Because all we’re going to do is cut off our nose to spite our face and help the drug cartels make lots of money.”

Thus, the conclusion from the federal government was that, while it could take action that pertained to the state-level regulation of marijuana, the fact that it could not force states to illegalize the substance meant that doing so would only create another, likely larger problem: it would remove structures that could at least offer accountability for the substance.

This information will likely be handed over to Sessions if he’s confirmed as AG. However, given his unquestionably anti-cannabis stance, there’s the possibility that he will opt to attack the states, either directly or indirectly, regardless of the previous administration’s perceived value in allowing regulation.

One possible method of doing this would be to give states official notice that they must revoke their marijuana regulatory schemes within a certain timeframe. This would likely mean that states would need to rescind all aspects of regulation, such as revoking marijuana business licenses and shutting down businesses, or face any number of consequences from the federal government if they don’t.

A less-direct option would be to order DEA raids on certain (likely large-scale) marijuana facilities in the hopes of “chilling” the industry. While this approach might work in a “scare-tactic” sense, it wouldn’t be effective as an overall, permanent enforcement mechanism: the federal government has historically relied on state officers to enforce its drug laws, and the DEA simply doesn’t have the resources to raid each and every marijuana business in a single state—much less in the entire country.

Regardless, though, both strategies would nearly guarantee the result Cole and the DOJ had considered in 2013: a significant increase in black-market marijuana. Moreover, eliminating regulation would create various other negatives, such as substantial losses in both state and federal tax revenue (despite its illegality at the federal level, marijuana business owners are still required to pay federal taxes on their businesses), increased exposure to youth, and an increase in funds for cartels and other illegal actors. Finally, given that the AG cannot “re-illegalize” marijuana, a consideration for both proponents and opponents of legalization is that such attacks on state regulation wouldn’t actually make marijuana illegal in the state; rather, they’d result in fewer rules on how, when, and where marijuana would be allowed.

The Department of Justice is not the only venue through which marijuana legalization could be addressed, though. For example, Congress could block federal enforcement by prohibiting expenditures for marijuana prosecutions, or even through direct legislation. In addition, federal courts share some control over how and when the government can enforce its laws.

One example of both legislative and judicial action on marijuana legalization is the Rohrabacher-Farr Act, which was passed by Congress in 2014. Renewed in 2015, the act prohibits the Justice Department from spending funds to interfere with state medical marijuana laws. However, because the act’s language addressed money spent on state prosecutions (rather than prosecution against individuals), in a 2016 case before the Ninth Circuit the federal government argued that the act’s protection did not apply to individuals; rather, it only applied to the states themselves. The court disagreed, flatly rejecting the government’s stance: as long as individuals in states where marijuana is legal were in compliance with their state’s laws, it ruled, Rohrabacher-Farr applied to them, and the Justice Department could not use its funds to prosecute them.

However, one detriment to legislation such as Rohrabacher-Farr is that it requires annual renewal. Thus, should the funds prohibition not be renewed in 2016, the DOJ will again be able to spend money at its own discretion to pursue marijuana-related charges against individuals, regardless of whether or not cannabis is legal in that person’s state. Given the importance of annual renewals, one action that proponents of marijuana legalization can take is informing their legislators that they are in favor of renewing the Rohrabacher-Farr Act or creating other similar measures.

Another option for Congress would be to address marijuana’s Schedule I status directly. While the DEA generally handles drug scheduling, the Controlled Substances Act allows for some scheduling determinations to be made by statute, i.e. through Congressional legislation. Despite the availability of this alternative, though, the likelihood of radical or sweeping statutory action from Congress appears slim: marijuana decriminalization, much less legalization, from the federal government would violate several international treaties, such as the Single Convention, to which the United States is party. Thus, not only would Congress (or any federal government actor, for that matter, including the president himself) have to answer to their voters; they’d also have to answer to the international community.

The new DOJ administration could simply rescind the Cole memos. Without further explanation, such a move would have an effective chilling effect on the marijuana industry, new states looking at regulating marijuana and would in effect be a notification to the marijuana states, companies and individuals engaged in the industry that federal law enforcement action could be forth coming (a return to the decade of 2000-2010).

The new Attorney General could direct the DEA and Food and Drug Administration to take action themselves, either through changing marijuana’s Schedule I status under the Controlled Substances Act or deregulating it entirely. Numerous rumors currently fill the marketplace with whispers that the new Attorney General will reschedule marijuana to a Schedule II Controlled substance and will drive state programs into a Schedule II pharmaceutical system, creating widespread chaos for the states that do not regulate marijuana under a Schedule II system. For the State of Louisiana, such a move by the new Attorney General could be a boon for their state industry, since their medical marijuana program is the closest to a Schedule II type system currently in existence. Do the big pharmaceutical companies have influence into the new Administration? Time will tell.

Overall, should Sessions be successfully confirmed, (there is a movement to directly confront these issues during his confirmation hearings) it’s feasible that his role as Attorney General will result in some drastic changes for the marijuana industry. However, even if the “new DOJ” replaces or rescinds the Cole memo with aggressive federal policies, other branches of government may become be increasingly viable options for protection, or possibly even intervention – especially if the number of voters favoring legalization continues to rise.

Despite the myriad of possible outcomes, however, one crucial fact remains the same, regardless of the new administration’s position: under the U.S. Constitution, the federal government cannot force states to make marijuana illegal. And that rule applies – even to Jeff Sessions and his outdated and unfavorable views regarding cannabis.

For assistance with your marijuana business matter, please contact a marijuana business lawyer at Feldmann Nagel Margulis.