Financing Guidelines for Cannabis Industry

The Department of Justice – The Cole Memorandum

Disclaimer: The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

It is important to note that this memo does nothing to change the fact that under the Controlled Substances Act (“CSA”) it remains illegal under federal law to manufacture, distribute or dispense marijuana.

To download a PDF version of the full memo, click here: Cole Memo 8-29-13

Notwithstanding federal law, several states have moved to legalize certain marijuana-related activity. Twenty three states plus the District of Columbia have legalized marijuana to some capacity. Two states, Washington and Colorado, have legalized marijuana completely. The clear trend at the state level is towards legalization of marijuana businesses.

The conflict between federal law and the laws being enacted in several states presents a challenge for Justice. In light of these developments, in August 2013 Deputy Attorney General James M. Cole issued a memorandum (the “Cole Memo”), providing guidance to federal prosecutors concerning marijuana enforcement under the CSA.

Deputy AG Cole begins his memo by reiterating that “Congress has determined that marijuana is a dangerous 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. The Department of Justice is committed to enforcement of the CSA consistent with those determinations.”

From there though, the Cole Memo discusses the need for Justice to use its limited resources and prosecutorial resources to address the most serious threats in “the most effective, consistent, and rational way.”

The Cole Memo identifies eight enforcement priorities for the federal government regarding marijuana. Specifically, Justices’ priorities are to prevent:

  • The distribution of marijuana to minors;
  • Revenue from going to criminal enterprises, gangs and cartels;
  • Diversion of marijuana from states where it is legal to states where it is illegal;
  • Use of state-authorized marijuana activity as a cover for other illegal drugs or activity;
  • Violence and the use of firearms;
  • Drugged driving or other adverse public health consequences;
  • The use of public lands for marijuana production; and
  • Marijuana possession or use on federal property.

The Cole Memo makes clear that these objectives are to be interpreted broadly, and each encompasses a wide range of activity.

X