Ever since Jeff Sessions, one of the most avowed pot haters in America, was given the country’s top cop post, those in the legal weed industry have been worried about a federal crackdown on cannabis. This Thursday morning, Sessions rescinded an Obama-era order called the Cole Memo that allowed legal marijuana states to flourish and opened the door to a wholesale federal crackdown on our right to grow, sell, and purchase pot.
But remember, there has long been a big divide between federal law and what happens on the ground in weed-legal states like Washington. Our state has sold over $1.8 billion in legal weed over the last four years as pot remained illegal under federal law.
So, what does Sessions’ attack actually mean for legal weed in Washington?
Why did the Cole Memo matter so much?
The Cole Memo has been the bedrock that every state-legal weed market has been built on. The memo was issued by the Obama administration in August of 2013 when Washington and Colorado were writing the world’s first weed market regulations, and it was the only piece of federal legal policy that gave any discretion to the states for legalizing and regulating weed.
The Cole Memo told states that if they met a list of priorities, including keeping legal pot out of the hands of minors, within their own state, and profits from the industry away from criminals, they could move ahead with regulating cannabis. States like Colorado and Washington, which were followed by six other states in the following years, held this memo tightly and built their regulations around it.
But the Cole Memo never actually changed any federal laws. Pot has always remained illegal. Growing it, selling it, or providing banking for it have always been committing federal felonies. The memo, which gets its name from the deputy attorney general that signed it, was only a document that told U.S. attorneys how to interpret federal law and it could be rescinded at any moment by a signature from the attorney general.
That is what just happened, so, this begs the question:
Will this mean the end of legal joints, pot brownies, and dabs?
While this announcement sent politicians and the legal weed industry into a tizzy, we aren’t likely going to see pot stores and farms in Washington shuttered anytime soon. Sessions didn’t start filing charges against these businesses on Thursday. He only gave federal attorneys across the country the discretion to start prosecuting these businesses and individuals as they see fit.
Oscar Velasco-Schmitz, one of the owners of Seattle’s Dockside Cannabis, said that he didn’t think Sessions’ actions would stop the sale of legal weed.
“I don’t think it will have a massive ramification on the day to day operations within the state,” Velasco-Schmitz said.
Annette L. Hayes, the U.S. Attorney for Western Washington, is the person that now has approval from her boss to start shutting down weed businesses in the Seattle area. Hayes has prosecuted multiple cases against people who grow or sell pot, but those charges have always been against individuals working in either the black market or our state’s old medical market. From news reports, it appears Hayes has never filed federal pot charges against any businesses or individuals working in legally pot businesses.
Even if Hayes wanted to start enforcing federal pot laws, she probably doesn’t have enough attorneys or law enforcement officers to shut the industry down. In a statement, Hayes does not sound eager to crack down on legal marijuana, and highlighted that she maintains prosecutorial discretion in her role. Her statement notes that her office has prosecuted a number of crimes related to marijuana. Going forward, she stated, her office's enforcement priorities will "focus on those who pose the greatest safety risk to the people and communities we serve."
Legalization has created a massive pot infrastructure in our state. There are more than 1,700 weed farms, processors, and retailers currently licensed by the state of Washington to deal in cannabis. There’s hundreds of thousands of pot plants growing in our state right now and our industry just harvested more than 90,000 pounds of pot in one month alone. Last year, customers purchased over $700 million in pot.
When the federal government usually files drug charges they enlist the help of local law enforcement officers to make arrests and gather evidence. Because all of these businesses are licensed under our state laws, it would be difficult or even impossible for the federal attorneys to use local law enforcement. Inslee told reporters at a press conference on Thursday that no officers from Washington State Patrol would be used in enforcing federal pot laws, and Durkan said the same for Seattle Police.
Larry Perrigo, the owner of Seattle Green Buds farm in Seattle’s Georgetown neighborhood, said he wasn’t too worried about the change.
“In my mind this is going to betide up in court for longer than Trump is in office,” Perrigo said.
What are our state and local officials doing in response?
Haye’s predecessor, Jenny Durkan, who is now the mayor of Seattle, told Buzzfeed News last year that the U.S. Attorney simply doesn’t have the manpower to shut the industry down, saying “I just don’t think they can stick the genie back in the bottle.”
During a press conference today, Durkan repeated her stance that it will be “nearly impossible” to “physically investigate and prosecute every legal shop.” In addition, she announced the she will prohibit Seattle police officers from cooperating with authorities enforcing federal marijuana laws. She offered a strong rebuke to the feds, saying, “We will not be bullied by an administration that seems obsessed with dismantling things that are actually working.”
At the same press conference, City Attorney Pete Holmes did not rule out legal action. "In some ways, we’re in a wait-and-see mode,” Holmes said. He invoked the Tenth Amendment as a potential defense, which is the one about states’ rights. Since Washington is divided into two federal court jurisdictions, it’s possible for each federal attorney’s office to interpret Sessions’ memo in different ways. Holmes said he’ll be watching the U.S. Attorneys’ offices to see how they respond.
On the state level, both Governor Jay Inslee and Attorney General Bob Ferguson committed to defending the state from federal marijuana enforcement.
This could spell trouble for the banking of the marijuana industry.
Washington’s pot industry has had one of the most active relationships with banks and banks across the country have increasingly worked with legal weed businesses. These banks are making the legal industry safer by limiting the amount of cash in stores, but federal banking regulations make it clear that accepting cash from the sale of marijuana amounts to money laundering.
It took a lot of lobbying from the state government, and separate guidance memos from the Department of Justice and the Department of the Treasury, to convince these financial intuitions to take this cash. Session’s move on Thursday is likely to make these institutions even more nervous.
Sheryl Kirchmeier, a senior vice president with Salal Credit Union, one of the most active financial institutions banking credit unions in the state, said the credit union was not immediately canceling accounts with these businesses.
“Again, we will continue to monitor the situation and will work closely with our state and federal regulators to determine impacts, if any, to banking the cannabis industry over the coming days. There are still more questions than answers,” Kirchmeier wrote in an e-mail.
Velasco-Schmitz said Dockside has had access to banking since they first opened their doors and said it would be difficult to go to an all-cash business.
“Obviously we do not want to do our employee payroll in cash, that has a whole host of issues,” Velasco-Schmitz said.
Ian Eisenberg, the owner of the Uncle Ike’s chain of pot shops, said in a text message that he is worried “about how our credit unions will react. Losing them would be devastating.”
When told that Sessions’ new memo directly references federal money laundering and banking laws, Eisenberg simply said “Fuck. You can quote me on that.”
Perrigo said even if he lost access to banks, he would keep his business going.
“It would be inconvenient. But, you know, we’ve dealt with inconvenience in the past. It’s not like we’re going to stop,” Perrigo said.
Steven Hsieh contributed reporting.