Despite AG Sessions’s directive, it’s business as usual for local pot dispensaries
January 9, 2018
GRANBY – U.S. Attorney General Jeff Sessions, a longtime opponent of the legalization of marijuana, rescinded last week an Obama-era policy of non-interference in states where the drug has been legalized. While the decision has drawn criticisms from across the political spectrum, including from Colorado Gov. John Hickenlooper and Sen. Cory Gardner, experts maintain that the decision will have little to no effect on the cannabis industry in Colorado.
The decision, sent in the form of a memo from Sessions to all of the 94 U.S. Attorneys, reinforces the federal government's stance that marijuana is a dangerous drug, and directs U.S. Attorneys to use previously established principles. The memo supersedes the 2013 "Cole Memo," a set of guidelines written by then Deputy Attorney General James Cole, which directs U.S. Attorneys presiding over decriminalized states to focus on preventing more serious crimes like the distribution of the drug to minors, preventing the funding of criminal enterprises, and stopping the drug from crossing state lines among others.
While the new policy may be troublesome to those in the cannabis industry, the memo essentially puts an end to specific guidance, and puts the onus on the U.S. Attorneys to determine what is worthy or prosecution.
"It's always been prosecutorial discretion in each district," said Dan Garfield, founding attorney at McAllister Garfield, P.C., a Denver law firm specializing in cannabis counsel. "I suspect that every U.S. Attorney in states that it's legal is going to recognize that. They're not going to be able to be able to find a jury that will convict.
"So nothing's really changed in terms of facts from the ground. All we've got is a different memo from the Department of Justice as to what they're supposed to consider."
Colorado U.S. Attorney Bob Troyer came out with a statement on Jan. 4, saying that he won't alter his department's approach to marijuana enforcement.
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Gardner took things a step further, offering on Twitter that the move by Sessions "trampled on the will of the voters in (Colorado) and other states," and even threatened to withhold support for Department of Justice nominees.
a local perspective
Local dispensaries have largely reacted with a business as usual approach, undeterred in part because of the already strenuous regulations they adhere to. So, without changing policies for those already integrated into the marijuana industry, bigger concerns are being raised for banks and potential investors. The former is where opinions tend to vary, in part due to the already skittish nature of banks in the cannabis industry.
"I had some initial concern, but after speaking to my contacts in the banking industry as well as our bank I'm not concerned," said David Michel, general counsel for Igadi, LTD. "Banks have taken this very seriously and put extraordinary measures in place to audit and know their clients. We have quarterly audits from our bank. Those audits not only look at our financials, but also at our products, how they're flowing through and making sure everything is being sold in the normal course of business and through the state's inventory tracking system. They also make sure our facilities are in compliance.
Michel said he wasn't concerned that there would be any change because "they do know us." "They can tell we're not laundering money or engaging in any activities that are not within the regulatory regime that the state has set for us," he added.
Others aren't so certain.
Dan Volpe, owner of Serene Wellness in Winter Park, said banking has been a major issue since he joined the industry, and he fears it will get worse.
"This is just going to increase apprehension for all the ancillary industries," said Volpe. "As it is for me, that aspect is probably the single most difficult part of what I've done. Not being able to have bank accounts, having your bank accounts closed down, not being able to get construction loans or mortgages. That's crippling to not just the business owner, but for a family man like me. My daughter's savings account got closed down because I'm the custodian on it. That kind of stuff is ridiculous, and this new policy is really disheartening.
"We need more support, that's all I can say. And I'm glad to hear that the state is sounding like they're going to be giving their support. So that's encouraging at least."
Hickenlooper reiterated Volpe's concerns in an interview with CNN's Michael Smerconish. "Banks are as skittish as a young colt," he said. "I'm afraid they're going to spook some of these banks out of the business completely and then we're in an all-cash business. That's a way to get more cartels and underworld activity."
While it remains to be seen how banks will handle the new policy, investors are already noticeably spooked, and the market is paying the price.
Canada's Canopy Growth Corp., the biggest marijuana company based on market value, dropped 17 percent on Jan 4., according to a Bloomberg report. Other major players in the marijuana industry such as Aphria Inc., Scotts Miracle-Gro Co. and ETFMG Alternative Harvest ETF all saw considerable drops, as well.
"All of the publicly traded stocks fell about 10 to 20 percent," said Garfield. "So there was a lot of destruction of value right there. A lot of new money has been coming into the industry the last year or two from traditional types of sources, and those kinds of people are going to be spooked for some period of time.
"In my experience that's what happened in late 2016 when Sessions was going to be nominated to be Attorney General."
While outside investors may decide to sit on the bench for the time being, those already ingrained within the industry are moving forward with a relative status quo.
"We just put in an application to open our fifth store," said Michel of Igadi's future plans. "We thought a second about it, but we're committed to this industry, this space and growing our company."
"I'd say that we're going to make sure that we're running our tightest ships possible, said Volpe. "So that at a local and state level there would be no reason for us to have any infractions. Besides that, I have no choice but to say that it's going to be business as usual."
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