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Trump-Gardner Pot Deal: Could Federalism Be the Fix to the Fed's Fight Against State Marijuana Industries?

In the eight states that allow recreational marijuana use, and over two dozen states that authorize medical marijuana use, state and federal law are conflicting. And even further, Congress, since 2014 has prevented the Department of Justice from interfering with state medical marijuana laws, essentially creating conflict within the federal government itself.


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And what does this mean for the marijuana industry? It means Federalism could be legal cannabis’s saving grace in the brinks of the second war on drugs and a rapidly expanding federal government.

James Madison wrote, “The powers delegated by the proposed Constitution to the federal government are few and defined.” The text of the 10th Amendment to the United States Constitution speaks to Madison: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” If one were to screen the text of the Constitution, nowhere in that document would one find a controlled substance mentioned. At the core of Federalism is the proposition that those closest to the people—largely state governments— should be the decision-makers for the people, by the people.

Uniformity of the states was not the Founder’s purpose in creating the Constitution. Colorado’s legalization of pot should be viewed completely independently from Utah’s continued ban: the United States is supposed to operate on a system where the states determine which rules best suit their citizens.

Originally reported by the Washington Post on April 13, President Trump and Colorado Senator Cory Gardner ended a standoff over the Trump administration’s push-back on state marijuana laws. Senator Gardner reported:

“I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry. Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”

Since Attorney General Jeff Sessions announced the rescission of the Cole memo in January of this year, Corey Gardner has been blocking nominations for positions within the Department of Justice. In doing so, Gardner affected around twenty positions within the Department. In response to President Trump’s offer of peace, Gardner announced he will be lifting his remaining holds on DOJ nominees. White House press secretary Sarah Sanders confirmed the accuracy of Gardner’s statements during a press briefing.

However, industry operators should err on the side of caution, as a bill has not been finalized, and there is no indication that the Department of Justice was even consulted before President Trump made his promise to Gardner. Further, President Trump’s “promise” could entail merely declining to veto any legislation Gardner helps push through to his desk. And even further, a promise is a declaration to do something, not a guarantee, and President Trump is not unfamiliar with using empty promises to pursue his personal agenda. For instance, at an open-to-the-press meeting in January with lawmakers on immigration, Democrats momentarily believed they had reached a deal with the President when Senator Feinstein asked the President his position on moving forward with a clean DACA bill now and undertaking a comprehensive immigration reform later. Trump answered, “Yeah, I would like to do that. I think a lot of people would like to see that.” But it was not long before the House Majority Leader “clarified” that the President believed a “clean” bill would include border security.

The “peace on pot” between the Colorado Senator and President Trump could be a step toward rectifying the profound secondary affects of federal drug laws, including banks and investors’ reluctance to work with industry operators for fear of violating federal law. However, the current reality is that the IRS continues to audit the industry and rigidly enforce 280e, the federal tax measure, which in effect bars cannabis businesses from qualifying for the standard tax deductions and credits that provide the groundwork for the success of small businesses in the United States. On top of that, the Securities Exchange Commission continues to actively chase securities violations regarding fund raising and investor-related matters.

Even if the feds step down, and allow the states to step up, strict compliance with state law is more important now than ever for industry operators. The states and their constituents must demonstrate state regulation of marijuana is attainable and under control. As Representative Earl Blumenauer expressed in response to the deal, “Momentum is clearly building in the states and here in DC. The tide is changing. Now is the time to redouble our efforts.”

Former DEA task force commander Charles Feldmann, marijuana business attorney, is your key to compliance. Using his unique background in both state and federal law enforcement, Mr. Feldmann helps his clients create federal risk mitigation plans, and advises on maintaining strict compliance with state-by-state marijuana regulations.