While cannabis businesses in states such as California, where the drug has been legalized, have some protections from federal prosecution, the rules aren't airtight.
In 2013, a memorandum was issued by then-Attorney General James M. Cole to all U.S. attorneys, which was published by the Department of Justice. Dubbed the "Cole Memo," it set expectations for the federal government, state governments and law enforcement in states that had voted for, and implemented, legal adult-use cannabis programs.
The Cole Memo states: If you implement a strict regulatory framework and employ a seed-to-sale tracking system to monitor the growth, distribution and sale of regulated cannabis and create a transparent, accountable market, the federal government will leave it alone, according to the website BiotrackTHC.
“However, that’s not 100-percent airtight, because the feds have done raids and continue to do raids,” said Elizabeth Ashford, cannabis consultant and founder of Ceress Strategy, based in Los Angeles.
Ashford said that the only time the federal government will step in, however, is when cannabis production and consumption begins to largely affect public health and safety, a threshold that has yet to be determined.
The Rohrabacher-Blumenauer amendment, introduced in 2003, (formerly known as the Rohrabacher-Farr amendment) keeps the U.S. Department of Justice from using tax money to go after legal medical cannabis businesses. The amendment does not apply to recreational cannabis, however.
Even with the federal memorandums and amendments in place to protect the cannabis industry, areas such as federally funded housing, employment, banking, health care and research will remain in limbo until the federal government changes the drug's classification.
Federal employees and military veterans who use marijuana either recreationally or medically are also subject to fallout from the federal classification of cannabis.
One of the areas that requires federal decriminalization of marijuana for state law to take affect is employment — employers can penalize or refuse to hire workers who fail drug tests prior to being hired.
“Drug testing in the workplace hasn’t really changed, and business employers have the discretion on how to discipline their employees," said attorney Christoff Hickok, of the Shevin Law Group, which specializes in cannabis law and consultation. “There’s nothing in the law that protects workers' rights to ingest cannabis, so if your boss feels you’re high on the job, they can fire you well within their rights.”
Think of it this way — legally, if you’re 21 years old, you can drink but you can’t show up to work drunk, or drive drunk, Hickok said. It’s the same situation for pot. Additionally, federal employees such as those who work for the U.S. Post Office can’t use marijuana.
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Cannabis users who receive federal housing assistance, such as those who qualify for Section 8, may run into trouble finding housing. Landlords often justify kicking renters out for possessing “illegal drugs” under the federal Controlled Substances Act, Hickok said. Most landlords don’t want to risk breaking federal law, or losing funding.
“Essentially, you’re living in a state/city where it’s legal to smoke, but it’s still illegal to do so in your apartment,” Hickok said.
According to Ashford, after Jan. 1 landlords won’t be able to evict people for possessing the amount of cannabis that's legal under state law.
"They’re going to want to make smoking (anything) illegal under terms of a lease inside a house, so I can see them working the same thing for cannabis,” Ashford said. “However, since it’ll be legal for adults over 21 to possess a certain amount of marijuana, any prohibitions a landlord wants to issue must align with the law.”
That means, Ashford said, that because marijuana is legal landlords cannot arbitrarily tell renters that they can’t have marijuana on the premises.
“They can say, if tenants want to rent from their building, they aren’t allowed to smoke it in the building, or anywhere on the property,” Ashford said. “That’s ... the power that they’ll have.”
Banking has proven to be difficult for cannabis businesses because banks are federally insured, and there is no policy for handling money generated by the industry. The result is that many are sitting on top of cash, Ashford said.
Many major banks are insured by the Federal Deposit Insurance Corporation (FDIC), which means most “can’t work with cannabis businesses,” Ashford said. Cannabis business owners seeking to open bank accounts will be turned away. Additionally, they can't write checks from accounts that hold money generated by cannabis, “so all the basic things most regular businesses use bank accounts for aren’t as available for them,” Ashford said.
“That means, people are literally sitting on piles of cash,” she added. There are so many challenges in the banking industry alone because cannabis is a Schedule 1 drug, she said. "It’s not just an issue of paying rent, it’s like for employers who need to do payroll, or pay taxes."
Additionally, there are a lot of practical concerns for cannabis business owners who have a high volume of cash lying around — everything from counting it, to shipping it, and avoiding theft.
Very few banks in the state will do banking with cannabis businesses, because those who agree to do so “are risking their FDIC insurance,” Ashford explained.
Ashford said many stakeholders in the cannabis industry hope the state will develop options to deal with revenue, whether it’s to develop a cash transport system, or charter a bank to keep a level playing field for marijuana businesses.
“Obviously, there are things the state can do, but until marijuana is rescheduled by the feds, these conflicts are still going to exist,” Ashford said.
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