Anyone who reads this column was probably surprised last Thursday when the headline blared that “the feds are dithering” at the very time the Justice Department was announcing the first significant changes in its cannabis policies in 40 years. That’s the reality of covering a volatile, shifting-sand subject like cannabis in a weekly column — you can easily look like a fool!
As everybody knows by now, Attorney General Eric Holder told the governors of Colorado and Washington that, under certain conditions, the Justice Department would not interfere with regulation of cannabis businesses. As long as they “operate within state laws and don’t violate other federal law enforcement priorities,” Justice will consider the marijuana industries in those states legal, as laid out in a memo, “Guidance Regarding Marijuana Enforcement.”
Those conditions involve both businesses — being a cover for a criminal organization or diversion of product out-of-state — and the state governments — enforcing drugged driving laws, preventing distribution to minors and cannabis cultivation or use on public lands — and they still leave Justice nominally in charge, with the legal ability to step in if it sees fit.
This is a major change of position, and in line with Holder’s recent memo about prison sentencing, which suggested greater leniency for small-time criminals, many of them marijuana users or their suppliers. But these are all things that, with certain exceptions, Justice has not interfered with in states that allow medical marijuana.
More important, from a business perspective, is Holder’s suggestion that Justice is “actively considering” giving cannabis businesses access to the American banking system if they otherwise comply with the law.
Since no other legal business I know of has to operate this way, it’s hard to imagine how difficult it is to run a cash business in 2013 — especially when the state says your company is legal and the federal government says it’s not. Did you know that cannabis businesses aren’t even allowed to have bank accounts? How do they pay employees and rent, buy supplies, deal with emergencies or pay taxes? The city of Boulder collected $700,000 in taxes from medical marijuana businesses last year — all of it in cash.
Besides not making a cannabis businessperson or employee a constant target for thieves and criminals, this would allow banks, which had otherwise been hesitant to make loans or even allow pot companies a checking account, to work with cannabis businesses like they do with anyone else, which in itself could change the business atmosphere dramatically.
The memo begs a larger question, though, one that Justice hints at in the memo. “Congress has determined that marijuana is an illegal drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs and cartels.” In effect, Justice, which administers laws, is saying that until Congress brings federal laws into compliance with state ones, it will have an increasingly difficult time enforcing cannabis under several different sets of laws.
Colorado lawmakers already get this point more than most. Rep. Jared Polis, who has already introduced legislation to move cannabis out of the Justice Department and into Agriculture, where it belongs, and allow bank access to cannabis businesses, told The Denver Post, “We still need to change the law ... so it’s not at the whim of the attorney general.”
Rep. Ed Perlmutter is introducing HR 2652, which would allow banks, credit unions and lenders to provide banking services to cannabis businesses. Rep. Diane DeGette has promised to promote legislation that would require the federal government to respect states’ laws.
Holder’s actions should at least arouse the curiosity of other lawmakers, many of whom represent states that have already allowed medical cannabis or have noticed that a growing majority of their constituents see the drug war as a failure, to at least re-examine the discrepancies between federal and state cannabis regulation and the problems they perpetuate. This is generally a non-partisan issue — Libertarians and some Republicans already support at least decriminalization — but whether Congress has the will to take it up is debatable.
Locally, Boulder County DA Stan Garnett said that he’s glad the federal government is allowing states to implement their voter-approved policies. But many national law enforcement organizations and anti-drug lobbying groups have already lined up against Justice the way they usually do. None of them will accept responsibility for their own failures in the drug war, but they make the usual pronouncements about how legalization will lead to widespread drug abuse among children and the general breakdown of society.
There is little evidence to back up their claims, but on one point, the law enforcement groups are absolutely correct: “The failure of the federal government to act in this matter is an open invitation to other states to legalize marijuana in defiance of federal law,” they warn.
You know, that’s the beauty of our system. Almost half the states have already defied federal law in this regard, and many more will be adding ballot proposals for decriminalization and/or legalization in 2014 and 2016. Some of those will pass, too. And that’s why Congress needs to step in and change federal law — and soon.
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