Justice Department cracks down on legal marijuana with rollback of Obama policy

WASHINGTON – The Justice Department cracked down on legal marijuana Thursday by rescinding an Obama administration policy to not challenge state laws that allow people to use pot for medical and recreational uses.

But federal officials could not answer whether the dramatic policy shift meant that people selling or using marijuana – in certain states where it’s considered legal – would now be at risk of prosecution.

Senior Justice officials said the previous administration’s position had provided a “de-facto safe haven” for a now thriving weed industry.

Attorney General Jeff Sessions, who has long signaled his disagreement with the previous administration’s stance on pot, is sending a one-page memo federal prosecutors across the country outlining the change, they said.

“This memo has no de-facto safe haven in it,” said the officials, who briefed reporters under condition of anonymity because the memo had not yet been circulated to U.S. attorneys across the country.

Yet the memo did not contain any new specific guidelines for how the policy change would be enforced. It only indicated that marijuana guidance issued by the previous administration – which did not challenge state laws as long as marijuana sales did not conflict with federal law enforcement policies –  was unnecessary.  “This memorandum is intended solely as a guide to the exercise of investigative and prosecutorial discretion,” Sessions said in the memo.

The Obama policy, which represented a major breakthrough by advocates for the decriminalization of marijuana use, did not change marijuana’s classification as an illegal drug. But it effectively discouraged the pursuit of non-violent marijuana users who have no links to criminal gangs or cartel operations.

The move injected fresh uncertainty into an industry that has flourished largely because federal prosecutors have maintained their hands-off approach.

The lack of detail in the administration’s new policy seemed to aimed at putting the entire industry on notice that federal authorities would not be restricted the Obama-era guidance.

Sessions’s decision should be a warning sign to institutional investors, said Kevin Sabet, director of the anti-legalization group Smart Approaches to Marijuana and a former federal drug-control expert who served in the Clinton, Bush and Obama administrations.

“It signals the end of safe harbor for major pot investors,” Sabet said. “This throws up everything in the air one thought they knew about the federal government‘s position on marijuana, which up to this date was more of a ‘see no evil, hear no evil’ policy.”

The announcement comes the same week California launched recreational marijuana sales for adults. Every state that’s approved recreational pot sales – Alaska, Oregon, Washington, California, Nevada, Colorado, Maine and Massachusetts – has done so though voter approval at the ballot box, showing strong public approval for legal pot.

Local legislators have also become legalization advocates as marijuana sales generate new tax revenues. California’s newly legal market alone could be worth as much as $5.1 billion this year, according to cannabis financial analysis firm GreenWave Advisors. And Colorado lawmakers have been pouring tens of millions worth of marijuana taxes into university scholarships, drug-treatment programs and school construction.

“This move represents a broken campaign promise by the president,” said Tom Angell of the pro-legalization group Marijuana Majority. “He clearly and repeatedly pledged that he would respect state marijuana laws if elected. With polls showing that marijuana legalization is way more popular than the president is, this will likely turn out to be a huge political disaster for the administration. Either way, it’s not going to stop even more states from modernizing their cannabis laws.”

Some Republican lawmakers were incensed by the move.

Colorado’s Republican Sen. Cory Gardner tweeted his disappointment, saying it “directly contradicts” what Sessions told him prior to being confirmed as attorney general. President Trump repeatedly said he thought states should be allowed to manage their own marijuana laws without federal interference.

“I am prepared to take all steps necessary, including holding DOJ nominees, until the attorney general lives up to the commitment he made to me prior to his confirmation,” Gardner said.

Trump “had it right, Gardner added, “this must be left up to the states.”

Cannabis analytics firm New Frontier Data downplayed the move, saying federal prosecutors had always retained the right to target the marijuana industry. Nevertheless, the small number of publicly traded marijuana stocks dropped sharply on Thursday.

“The key question is what approach the DOJ will take to enforcing the law once the memo is rescinded, and it remains to be seen whether the agency has the political support to aggressively intervene in legal states,” said John Kagia, New Frontier’s executive vice president of industry analytics.

“In the interim, this announcement will undoubtedly have an effect on publicly traded cannabis companies which have already fallen steeply since news of the announcement broke this morning,” Kagia continued. “However, for most businesses already in the industry, this news is unlikely to change the way they are operating, and we not expect cannabis business owners to flee to the hills out of fear of this announcement.”

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