The Recorder: “A regional IRS executive told a gathering of cannabis lawyers on Friday that the agency is not out to target them, despite their work with clients whose marijuana businesses remain illegal under federal law. Matthew Houtsma, associate area counsel for the IRS Office of Chief Counsel, said the tax agency’s Office of Professional Responsibility has held that “to the extent [a lawyer] is representing someone in the industry, that is not sanctionable.”
PJ Media: “Facing a Justice Department seeking to crack down on medical marijuana jurisdictions, Sens. Cory Booker (D-N.J.), Rand Paul (R-Ky.) and a group of bipartisan lawmakers on Thursday reintroduced legislation that would allow states to set their own medical marijuana policies free from the threat of federal prosecution. Attorney General Jeff Sessions in May asked that Congress eliminate protections for medical marijuana users and proprietors in legal states, so that the department could crack down on illegal activity and combat dangerous drug traffickers in the midst of a historic drug epidemic. Sessions in his May 1 letter to leaders in both chambers asked lawmakers to remove the Rohrabacher-Farr amendment, which bars DOJ from spending appropriated funds to prosecute medical marijuana users and proprietors in legal states.”
CNN: “Thirty-eight days into the job, the new director of the US Secret Service, Randolph Alles, is getting to know his agency. Alles told reporters Thursday that he’s working to grow the Secret Service, including by relaxing the agency’s drug policy on marijuana. Instead of a policy that would disqualify an applicant who has used the drug more than a certain number of times, the agency will now use a ‘whole-person concept’ to measure marijuana use, potentially allowing candidates who admit to marijuana use based on the last age at which they used the drug and the amount of time between then and their application to the agency.”
Republican Congressman Justin Amash, three other Republicans and three Democrats introduced House bill H.R.1227, Ending Federal Marijuana Prohibition Act of 2017. The bill states:
“Prohibition On Certain Shipping Or Transportation.—This Act shall not apply to marihuana . . . .
Removed from schedule of controlled substances.—Subsection (c) of Schedule I of section 202(c) of the Controlled Substances Act (21 U.S.C. 812(c)) is amended—
(1) by striking “marihuana”; and
(2) by striking “tetrahydrocannabinols”
NM Political Report: “A letter from the U.S. Department of Justice to organizers of a cannabis festival in Nevada could signal how the Trump administration plans to enforce marijuana laws. Nevada’s U.S. District Attorney sent a letter last week to Duke Rodriguez, CEO of the New Mexico and Arizona based Ultra Health, with concerns that cannabis will be present at the High Times Cannabis Cup. . . . Bogden also addresses Obama-era guidance from the Department of Justice to U.S. district attorneys. In 2013 Deputy Attorney General James Cole issued a memo stating the Department of Justice would not prioritize arrests for possession of small amounts or use of cannabis. . . . ‘The memoranda are not laws or regulations, and they do not create any rights that may be relied upon by any person,’ Bogden wrote. ‘Marijuana remains illegal under federal law’.”
National Law Review: “The incoming Trump Administration may usher in a more hostile climate to state efforts to legalize the sale and distribution of marijuana and products that contain the drug. . . . Below we examine the positions taken by President-elect Trump and his nominee for Attorney General, Senator Jeff Sessions, on (1) medical and recreational marijuana, (2) states’ rights, (3) attitudes toward marijuana use, and (4) enforcement of federal drug laws. President-elect Trump has made it clear that he supports medical marijuana.”
Phoenix New Times: “Recreational marijuana might face ‘greater enforcement’ by federal authorities, White House Press Secretary Sean Spicer said on Thursday. Spicer’s statements at a White House news conference seemed to foreshadow a crackdown on state-legal marijuana operations, while drawing a distinction between medicinal- and adult-use programs. President Donald Trump has said previously he believes in medical marijuana “100 percent” and in states’ rights.”
National Law Review: “Earlier this year, when the U.S. Drug Enforcement Agency (DEA) indicated it would have an announcement regarding a now five-year-old petition to reschedule cannabis, numerous industries on the “outside looking in” were eagerly watching from the sidelines. Leaders in banking, insurance, pharmaceuticals – and just about the entire investing world – were all hoping that marijuana would lose the stigma of a Schedule I drug, a label that meant it had no accepted medical use in the eyes of the federal government. . . . These investors and insurers held dreams of unbridled access to enormous growth potential and revenue streams. When news came in early August 2016 that the DEA would not reschedule, those dreams were dashed. But was the decision bad news? The answer is, ‘Not really‘.”
Findlaw: “The Legalize It crowd got a bit of a boost last week, as news outlets published a letter from the Drug Enforcement Administration to Sen. Elizabeth Warren. In it, the DEA said it will review marijuana’s status as a Schedule 1 banned substance, sometime before the middle of this year. The DEA has performed these reviews before, but never in a climate so conducive to reclassification, with major newspapers calling for the agency to move pot to a “less restrictive category that better reflects both its danger and the undeniable facts on the ground — that nearly half the states in the nation allow the use of cannabis for medical purposes, and several allow it to be used recreationally.” So is the DEA about to decriminalize weed?
myway.com: “The District of Columbia defied threats from Congress and moved forward Thursday with legalizing possession of marijuana after a voter-approved initiative. Despite last-minute maneuvers by Republican leaders in Congress and threats that city leaders could face prison time, D.C. Mayor Muriel Bowser said the city was implementing marijuana legalization as approved by voters. The new law took effect at 12:01 a.m.”
Washington Post: “The District of Columbia could soon earn a new nickname: the Wild West of marijuana. In 10 days, a voter-approved initiative to legalize marijuana will take effect, D.C. officials say. Residents and visitors old enough to drink a beer will be able to possess enough pot to roll 100 joints. They will be able to carry it, share it, smoke it and grow it. But it’s entirely unclear how anyone will obtain it. Unlike the four states where voters have approved recreational pot use, the District government has been barred from establishing rules governing how marijuana will be sold. It was prohibited from doing so by Congress, which has jurisdiction over the city.”
Phoenix New Times: “News broke last week that the Justice Department is advising federal prosecutors not to stop tribes from growing or selling marijuana on their lands, even in states where marijuana remains illegal. According to the Justice Department memo, some tribes had requested guidance on how federal drug laws would be enforced in regards to marijuana, although it didn’t say exactly which tribes were curious. We checked with a couple of Phoenix-area Native American communities, and they’re staying mum on the issue.”
Los Angeles Times: “Opening the door for what could be a lucrative and controversial new industry on some Native American reservations, the Justice Department on Thursday will tell U.S. attorneys to not prevent tribes from growing or selling marijuana on the sovereign lands, even in states that ban the practice. The new guidance, released in a memorandum, will be implemented on a case-by-case basis and tribes must still follow federal guidelines, said Timothy Purdon, the U.S. attorney for North Dakota and the chairman of the Attorney General’s Subcommittee on Native American Issues.”
The Daily Beast: “In a historic move Thursday night, Congress voted to pass a bill that will end federal raids on medical marijuana. The first major marijuana reform to pass, it’s a sign of a new day rising in the war on drugs. In an unprecedented move Thursday night, the House of Representatives voted to pass a bill that prevents the Drug Enforcement Administration from raiding state-legal medical marijuana dispensaries.”
Associated Press: “Libertarian-minded and moderate Republicans joined forces early Friday morning with Democrats in an early morning House vote to block the federal government from interfering with states that permit the use of medical marijuana. The unusual coalition produced a surprising 219-189 vote in the GOP-controlled House that reflects more permissive public attitudes toward medical pot use.”
McClatchy DC: “Delivering a major blow to state-licensed pot growers in Washington state and Colorado, the U.S. Bureau of Reclamation said today it will not allow any federally-controlled water to be used on marijuana crops. ‘As a federal agency, Reclamation is obligated to adhere to federal law in the conduct of its responsibilities to the American people,’ said Dan DuBray, the agency’s chief of public affairs. The decision could hit particularly hard in Washington state, with the federal agency controlling the water supply for two-thirds of Washington state’s irrigated land.”
Yahoo News: “The green-cross storefronts of medical marijuana dispensaries are common in much of Washington, and the state is plowing ahead with licensing people to grow and sell recreational pot to adults. But a federal trial scheduled to begin in the coming weeks for five people in Spokane suggests not all is OK with weed in the state. Larry Harvey, a 70-year-old medical marijuana patient with no criminal history, three of his relatives and a family friend each face mandatory minimum sentences of at least 10 years in prison after they were caught growing about 70 pot plants on their rural, mountainous property.”
Roll Call: “As states and cities move to liberalize marijuana laws, the administration looks at changes to federal policy and the No. 2 House Democrat reverses course on decriminalization, Attorney General Eric H. Holder Jr. found himself in a charged congressional hearing on Tuesday. Pressed by members from both sides of the aisle to defend Justice Department practices in states that have legalized marijuana for recreational purposes, Holder insisted the Obama administration has not ‘retreated.’ Holder also said the DOJ won’t scale back marijuana punishments by rescheduling the drug, as House Democrats have been pushing President Barack Obama to do, saying he was ‘satisfied’ with what the department is doing. ‘The notion that somehow we have retreated from our enforcement of the Controlled Substances Act with regard to marijuana is not accurate,’ Holder told the House Judiciary Committee. He reiterated a DOJ memo laying out eight areas of priority for pot prosecutions, including marketing to minors, driving under the influence and criminal cartels.”
U.S. Department of Justice
Office of the Deputy Attorney General
The Deputy Attorney General Washington, D.C. 20530
February 14, 2014
MEMORANDUM FOR ALL UNITED STATES ATTORNEYS
FROM: James M. Cole, Deputy Attorney General
SUBJECT : Guidance Regarding Marijuana Related Federal Crimes
On August 29, 2013, the Department issued guidance (August 29 guidance) to federal prosecutors concerning marijuana enforcement under the Controlled Substances Act (CSA). The August 29 guidance reiterated the Department’s commitment to enforcing the CSA consistent with Congress’ determination that marijuana is a dangerous drug that serves as a significant source of revenue to large-scale criminal enterprises, gangs, and cartels. In furtherance of that commitment, the August 29 guidance instructed Department attorneys and law enforcement to focus on the following eight priorities in enforcing the CSA against marijuana-related conduct:
- Preventing the distribution of marijuana to minors;
- Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
- Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
- Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
- Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
- Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
- Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
- Preventing marijuana possession or use on federal property.
Under the August 29 guidance, whether marijuana-related conduct implicates one or more of these enforcement priorities should be the primary question in considering prosecution under the CSA. Although the August 29 guidance was issued in response to recent marijuana legalization initiatives in certain states, it applies to all Department marijuana enforcement nationwide. The guidance, however, did not specifically address what, if any, impact it would have on certain financial crimes for which marijuana-related conduct is a predicate.
The provisions of the money laundering statutes, the unlicensed money remitter statute, and the Bank Secrecy Act (BSA) remain in effect with respect to marijuana-related conduct. Financial transactions involving proceeds generated by marijuana-related conduct can form the basis for prosecution under the money laundering statutes (18 U.S.C. §§ 1956 and 1957), the unlicensed money transmitter statute (18 U.S.C. § 1960), and the BSA. Sections 1956 and 1957 of Title 18 make it a criminal offense to engage in certain financial and monetary transactions with the proceeds of a “specified unlawful activity,” including proceeds from marijuana-related violations of the CSA. Transactions by or through a money transmitting business involving funds “derived from” marijuana-related conduct can also serve as a predicate for prosecution under 18 U.S.C. § 1960. Additionally, financial institutions that conduct transactions with money generated by marijuana-related conduct could face criminal liability under the BSA for, among other things, failing to identify or report financial transactions that involved the proceeds of marijuana-related violations of the CSA. See, e.g., 31 U.S.C. § 5318(g). Notably for these purposes, prosecution under these offenses based on transactions involving marijuana proceeds does not require an underlying marijuana-related conviction under federal or state law.
As noted in the August 29 guidance, the Department is committed to using its limited investigative and prosecutorial resources to address the most significant marijuana-related cases in an effective and consistent way. Investigations and prosecutions of the offenses enumerated above based upon marijuana-related activity should be subject to the same consideration and prioritization. Therefore, in determining whether to charge individuals or institutions with any of these offenses based on marijuana-related violations of the CSA, prosecutors should apply the eight enforcement priorities described in the August 29 guidance and reiterated above. Footnote 1. For example, if a financial institution or individual provides banking services to a marijuana-related business knowing that the business is diverting marijuana from a state where marijuana sales are regulated to ones where such sales are illegal under state law, or is being used by a criminal organization to conduct financial transactions for its criminal goals, such as the concealment of funds derived from other illegal activity or the use of marijuana proceeds to support other illegal activity, prosecution for violations of 18 U.S.C. §§ 1956, 1957, 1960 or the BSA might be appropriate. Similarly, if the financial institution or individual is willfully blind to such activity by, for example, failing to conduct appropriate due diligence of the customers’ activities, such prosecution might be appropriate. Conversely, if a financial institution or individual offers services to a marijuana-related business whose activities do not implicate any of the eight priority factors, prosecution for these offenses may not be appropriate.
The August 29 guidance rested on the expectation that states that have enacted laws authorizing marijuana-related conduct will implement clear, strong and effective regulatory and enforcement systems in order to minimize the threat posed to federal enforcement priorities. Consequently, financial institutions and individuals choosing to service marijuana-related businesses that are not compliant with such state regulatory and enforcement systems, or that operate in states lacking a clear and robust regulatory scheme, are more likely to risk entanglement with conduct that implicates the eight federal enforcement priorities. Footnote 2. In addition, because financial institutions are in a position to facilitate transactions by marijuana-related businesses that could implicate one or more of the priority factors, financial institutions must continue to apply appropriate risk-based anti-money laundering policies, procedures, and controls sufficient to address the risks posed by these customers, including by conducting customer due diligence designed to identify conduct that relates to any of the eight priority factors. Moreover, as the Department’s and FinCEN’s guidance are designed to complement each other, it is essential that financial institutions adhere to FinCEN’s guidance. Footnote 3. Prosecutors should continue to review marijuana-related prosecutions on a case-by-case basis and weigh all available information and evidence in determining whether particular conduct falls within the identified priorities.
As with the Department’s previous statements on this subject, this memorandum is intended solely as a guide to the exercise of investigative and prosecutorial discretion. This memorandum does not alter in any way the Department’s authority to enforce federal law, including federal laws relating to marijuana, regardless of state law. Neither the guidance herein nor any state or local law provides a legal defense to a violation of federal law, including any civil or criminal violation of the CSA, the money laundering and unlicensed money transmitter statutes, or the BSA, including the obligation of financial institutions to conduct customer due diligence. Even in jurisdictions with strong and effective regulatory systems, evidence that particular conduct of a person or entity threatens federal priorities will subject that person or entity to federal enforcement action, based on the circumstances. This memorandum is not intended, does not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any matter civil or criminal. It applies prospectively to the exercise of prosecutorial discretion in future cases and does not provide defendants or subjects of enforcement action with a basis for reconsideration of any pending civil action or criminal prosecution. Finally, nothing herein precludes investigation or prosecution, even in the absence of any one of the factors listed above, in particular circumstances where investigation and prosecution otherwise serves an important federal interest.
1. The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is issuing concurrent guidance to clarify BSA expectations for financial institutions seeking to provide services to marijuana-related businesses. The FinCEN guidance addresses the filing of Suspicious Activity Reports (SAR) with respect to marijuana-related businesses, and in particular the importance of considering the eight federal enforcement priorities mentioned above, as well as state law. As discussed in FinCEN’s guidance, a financial institution providing financial services to a marijuana-related business that it reasonably believes, based on its customer due diligence, does not implicate one of the federal enforcement priorities or violate state law, would file a “Marijuana Limited” SAR, which would include streamlined information. Conversely, a financial institution filing a SAR on a marijuana-related business it reasonably believes, based on its customer due diligence, implicates one of the federal priorities or violates state law, would be label the SAR “Marijuana Priority,” and the content of the SAR would include comprehensive details in accordance with existing regulations and guidance.
2. For example, financial institutions should recognize that a marijuana-related business operating in a state that has not legalized marijuana would likely result in the proceeds going to a criminal organization.
3. Under FinCEN’s guidance, for instance, a marijuana-related business that is not appropriately licensed or is operating in violation of state law presents red flags that would justify the filing of a Marijuana Priority SAR.
FoxNews: “The Obama administration took the unprecedented step Friday of clearing the way for banks to do limited business with marijuana sellers, releasing guidelines for how financial institutions can work with pot shops in states where it’s legal. The move immediately was greeted with relief from the budding marijuana industry. Before the guidance, banks largely had avoided the new pot shops in Colorado for fear of federal prosecution — leaving marijuana sellers running cash-only operations. . . . It’s unclear, though, to what extent banks will engage those businesses. One industry group, the Consumer Bankers Association, voiced legal concerns despite the new guidelines and urged Congress to get involved.”
USA Today: “An ongoing federal investigation is raising questions about the Colorado marijuana industry’s ties to illegal drug operations. Widespread raids on Nov. 21 targeted more than a dozen dispensaries, warehouses, homes and grow operations. Agents are gathering evidence to prove Colombian drug cartels are coming to the state and are using the front of legal marijuana to make money illegally.”
Denver Post: “The details on the raids . . . come from an affidavit in the criminal case against Diaz and provide new context for the largest federal operation against medical-marijuana businesses ever in Colorado. Agents executed ‘approximately 15’ search warrants during the raids, the affidavit states. Sources have told The Denver Post that the raids — which a search warrant shows targeted 10 men — were part of an investigation into a single enterprise that detectives believe may have ties to Colombian drug cartels. . . . The raids focused especially on stores, cultivation warehouses and individuals connected to the VIP Cannabis dispensary in Denver.”
Denver Post: “Six weeks before the nation’s first retail marijuana shops open in Colorado, federal authorities on Thursday raided more than a dozen Denver metro area marijuana facilities and two homes. In the largest federal raid on Colorado marijuana businesses since medical marijuana became legal, federal law enforcement agents with an assist from local police officers executed search and seizure warrants at multiple dispensaries and cultivation facilities — at least a dozen in Denver alone.”
See “Fed raids on Colorado marijuana businesses seek ties to Colombian drug cartels” that says “Colorado marijuana businesses raided this week by federal agents are being investigated for a possible connection to Colombian drug cartels, sources told The Denver Post on Friday. Three sources who have knowledge of the investigation spoke on condition of anonymity because they are not authorized to discuss the case. Investigators believe the raided businesses were all “one big operation,” one source said.
See also “Feds, Local Police Raid Colorado Medical Marijuana Dispensaries” that says “Denver-based attorney and marijuana activist Rob Corry was less diplomatic. He told the Post the Justice Department was acting like a bully and targeting “mostly mom-and-pop businesses. That is true to form, the DOJ, behaving like the classic schoolyard bully picking on the little guy,’ he said. ‘The DOJ needs to explain in a logical fashion why they are picking and choosing, going after only some of these entities when every one of them selling marijuana is running afoul of the federal law’.”
OC Weekly: “The U.S. Attorney’s office has formally dropped its case against the Anaheim landlord who stood to lose his $1.5 million retirement property over a $37 pot sale in a dispensary he’d already evicted . . . . the feds also dropped similar cases against three other landlords, Dr. Mark Burcaw . . . as well as Tom Woo and . . . Walter and Diane Botsch . . . .”
NPR: “the administration’s hands-off position in Colorado and Washington will reverberate well beyond those states. And it could actually end up imposing some semblance of order in what drug law expert Mark Kleiman describes as the ‘Wild West’ of medical marijuana. ‘And that would be a potentially very, very good result,’ says Kleiman, who previously worked in the Justice Department’s criminal division and is author of Marijuana Legalization: What Everyone Needs to Know. ‘Medical marijuana is a free-for-all in many states’,”
KomoNews: “Washington state is changing its plans for where marijuana businesses can be located, after the Justice Department said that enforcing federal drug laws near schools and playgrounds remains a priority ‘and will not be compromised for convenience’. . . . the DOJ told the board that it will continue enforcing the law as it has been, and any pot business within 1,000 feet of a school or playground – as measured by a straight line – is at risk of prosecution.”
Huff Post: “Medical marijuana businesses worried that federal agents will close them down now have a roadmap to avoid prosecution, courtesy of the Justice Department’s decision to allow legal pot in Colorado and Washington state. The agency said last week that even though the drug remains illegal under federal law, it won’t intervene to block state pot laws or prosecute as long as states create strict and effective controls that follow eight conditions.”
Huff Post: “Drug abuse prevention groups asked the U.S. Justice Department on Wednesday how it will know whether its acceptance of recreational marijuana laws in Washington and Colorado affects public health. In a letter to Attorney General Eric Holder, the groups said the DOJ’s position is a mistake and they want to know how it will measure the states’ success in meeting enforcement priorities required as part of the federal acceptance.”
Huffington Post: “Attorney General Eric Holder announced on Thursday that two states will be allowed to go forward with legalizing recreational marijuana use, a major move that could reshape the federal government’s policy on pot. Colorado and Washington state forced Holder’s hand when they made all marijuana use legal in November referendums — while 20 other states have some sort of medical marijuana laws on the books — but every single joint is still illegal under federal law. Many marijuana reform advocates are hopeful, but they’ve had their hopes dashed before. . . . All along the way, every year since Obama was inaugurated in 2009, the casualties of the war on weed have kept piling up: Growers, patients and you, the American taxpayer.”