Cannabis I MARCH 24, 2016

Medical Marijuana Businesses Breathe Sigh of Relief

Lit match with smoke flowing off of head

Attorneys advising medical marijuana businesses can breathe a sigh of relief.  The convoluted field of opposing state and federal laws just had a very large wrinkle ironed out.

On August 16, 2016, the 9th Circuit Court of Appeals handed down an opinion that effectively legalized medical marijuana operations in any state, or territory that permits it by their own laws.  The case of United States v. McIntosh disposed of ten interlocutory appeals for defendants indicted for violation of the Controlled Substances Act.

One of the indictments alleged a defendant had over 30,000 marijuana plants.  Many of the defendants faced charges for manufacturing more than 1000 marijuana plants, which is the most egregious violation of the CSA. 21 U.S.C. §§ 841(a)(1), 846.

The 9th Circuit remanded all ten cases back to the district courts.  If the Department of Justice (DOJ) prosecutors wished to continue their cases, the 9th Circuit held that the defendants are entitled to evidentiary hearings to determine if their conduct complied with state medical marijuana laws.  If the defendants complied with state medical marijuana laws, the DOJ is prohibited from spending any federal funds on the prosecution.  If the defendants operated outside the bounds of state medical marijuana laws, then the DOJ may spend federal funds on the prosecution of the cases.

As a result of the 9th Circuit’s holding in the McIntosh case, anyone acting in compliance with their state medical marijuana law faces no federal liability. What that means for recent bankruptcy cases prohibiting marijuana business from seeking protection remains to be seen. The McIntosh opinion states that Congress legalized state medical marijuana laws by defunding the DOJ.

Since 2015, Congress has prohibited the DOJ from using any funds “to prevent Medical Marijuana States from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”  Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, § 542, 129 Stat. 2242, 2332–33 (2015) (“Section 542”). The term “Medical Marijuana States” has been updated to include the states that have recently legalized medical marijuana, and territories like Puerto Rico and the nation’s capitol.

In crafting Section 542, Congress used its exclusive power under the Constitution’s Appropriations Clause to prevent any federal money from being spent to enforce its own marijuana laws.  See U.S. Const. art. I, § 9, cl. 7 (“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . . .”).  Section 542 entirely short circuits the CSA, at least when it comes to businesses in compliance with their state medical marijuana laws.

As a result of the McIntosh case, attorneys advising medical marijuana businesses can give simple advice to their clients.  Make sure you always follow the state medical marijuana laws.  If you follow the state laws, there is no federal money to prosecute you.  At least, there is no federal money for prosecutions until Section 542 expires on September 30, 2016.  Section 542 has already been continued with each passing budget extension.  So the medical marijuana practitioner should regularly monitor its status.