In my capacity as general counsel for the National Indian Cannabis Coalition, I (and the rest of the industry) have been closely tracking the President-Elect’s Cabinet nominations.  Cannabis legalization is perched precariously on the two prongs of (1) states’ rights; and (2) the Department of Justice’s policy position allowing United States district attorneys to decline to enforce cannabis-related violations of the Controlled Substances Act.  Congress doubled down by passing legislation withholding funding for the prosecution of marijuana crimes when the activity is legal under state law.

Those thinking about this issue and trying to gaze into the crystal ball to see past January 19, 2017 generally think that the costs associated with infringing on a state’s right to make its own laws by federal enforcement of federal marijuana laws may be to high to be realistic.  The fact that over half the states have some form of legalized marijuana, the number of potential unhappy constituents, loss of tax revenue from a $7 billion dollar industry and number of jobs lost if the marijuana violations were prosecuted also creates a political reality that would be difficult to overcome.

However, the DOJ’s policy is just that – a policy, not a law.  It can be changed with the stroke of an Attorney General Session’s pen.  And while I believe the states’ rights argument may protect the states from federal enforcement, I am concerned that same argument might not apply to tribes.

The Wilkinson Memo allows a United States District Attorney the discretion to determine whether to expend resources prosecuting marijuana violations in Indian Country located within their district.  Indian Country is federal land.  Given his previous statements on marijuana, I can see how an Attorney General Sessions might leave the states legalization alone while taking a hard line position on enforcement and prosecution of marijuana violations on all federal land, including Indian Country.  After all, “good people do not smoke marijuana”.  

For now, we do not know whether the Senate will even confirm Sen. Sessions or if this will be an issue that the Trump Administration will care anything about.  What is clear, however, is that for there to be stability in the industry and for tribes to be able to participate in this booming economic development opportunity without fear of losing their investment or other federal funding, Congress will need to act.

“trying to see the future”

Lael

policy photoWell, the gold rush is on in Indian Country. Cannabis is being touted as the next “green buffalo” and the cure to all our economic woes. (BTW – I wish we would really stop using the “buffalo” analogy, but I digress). While I agree that there could be economic benefit to participating in the industry in some form (see my earlier post Economic Development), my swan-dive into tribal cannabis has left me scratching my head as to how tribes can participate in this pseudo-legal industry as anything more than a governmental body.

What in the world am I talking about!?

Tribes are heavily reliant on federal funding for their governments. Marijuana is illegal. None of the memos released by the Department of Justice change the law. Every contract and grant and self-governance compact that is executed with the federal government states that the recipient of federal funding will comply with federal law. Explicit or implicit in that agreement is that failure to comply with federal law could result in the loss of those funds. In other words, a tribe’s participation in the cannabis industry could result in the loss of their federal funding.

Whenever I mention that little factoid to people, their response is inevitably, “Well states are doing it, so why not tribes?” Here’s the thing – states are actually NOT doing it.

States are not participating in the cannabis industry as commercial entities. Instead, they are performing the governmental functions of licensing, regulating, enforcing and taxing. I think that tribes engaged in legalizing and then performing those governmental functions do not risk their federal funding the same way they are if they engage as an industry participant.

Is there a way around that? Well, there might be.

I was reading an article about Veterans Affairs and its interaction with veterans suffering from PTSD using marijuana and discovered VHA Directive 2011-004 “Access To Clinical Programs For Veterans Participating In State-Approved Marijuana Programs.” This Directive clearly states that the VA cannot terminate a veteran’s benefits if it is discovered that they are using medicinal marijuana in states that have legalized medicinal marijuana use.  I will repeat – a federal agency has issued a directive forbidding the termination of federal benefits to a person using “legal” medicinal marijuana.

Having worked in DC off and on my entire career, I know that the whims of politics and policy can change quickly (or slowly depending on what you are looking for).  But, I do think that tribes could use this Directive as precedent to seek a similar directive from federal agencies such as the Small Business Administration, Bureau of Indian Affairs, Health and Human Services, Department of Agriculture and so on.

This industry is still new and policy is uncertain. For clarity’s sake, those in Indian Country looking to participate in the industry need to be working Congress and the Administration for better guidance. I believe this Directive provides valuable precedent for tribes seeking guidance from federal agencies.

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances. Federal penalties for violating the federal Controlled Substances Act (the “CSA”) are serious and, depending on the quantity of marijuana involved, can include criminal penalties of up to 20 years in prison and/or a fine of up to $2,000,000. 21 U.S.C. § 841. The penalties increase if the sale or possession with intent occurs within 1,000 feet of a school, university, playground, or public housing facility. 21 U.S.C. § 860. In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. 21 U.S.C. § 881. Although the U.S. Department of Justice has noted that an effective state regulatory system, and compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of the CSA is not diminished by the passage of state laws which may permit such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.