Jeff Sessions wants U.S. Attorneys to “Just Say No” to Marijuana Legal Reform.

Yesterday proved to be a wild day, featuring Jeff Sessions single-handedly demolishing the federal government’s former cannabis enforcement framework. Now that 24 hours have passed since the news came out, we have had a chance to refine our analysis of the Department of Justice’s move.

Reactions in the media have ranged from treating the Sessions announcement as nothing more than an attempt to frighten the cannabis industry to claiming that it was the first step in an organized crackdown of the marijuana industry that could affect cannabis businesses and users. For now, we must treat both of those possibilities as plausible futures. Trump and Sessions may be gearing up for a wave of arrests, prosecutions, and asset forfeitures related to marijuana businesses —or Sessions may just be trying to put a fright into marijuana business owners and investors. Only time will tell.

The “Sessions Memo” was short on specifics. It didn’t contain an outright directive ordering U.S. Attorneys to go after marijuana businesses. Instead, it simply withdrew the earlier marijuana-specific guidance memoranda and directed U.S. attorneys to treat marijuana sales like any other federal crime. The withdrawn memos include, among others, the August 2013 Cole Memo that has underpinned federal marijuana policy for the past four and a half years; the February 2014 Cole Memo that extended low enforcement priority status to apply to banking activities; and the 2014 Wilkinson Memo that was a sort of Cole Memo for tribal lands.

So now, U.S. attorneys have full discretion to determine to what extent they can/should enforce federal law in the context of marijuana crimes in states with legalization and medicalization. Sessions referred to the principles of enforcement in the U.S. Attorneys’ Manual, but that document reinforces the level of discretion and authority that each U.S. attorney has already. The Cole Memo was useful in providing a consistent nationwide federal policy. Under the new Sessions Memo, we are back to the days of having potentially 93 different enforcement policies — one for each U.S. Attorney. Here’s what we know already about a selection of the U.S. Attorneys that will be making these decisions:

Robert Troyer, District of Colorado: Bob Troyer issued a statement yesterday saying that his office “has already been guided by [the U.S. Attorneys’ Manual’s] principles in marijuana prosecutions.” This statement implies that Troyer doesn’t see any difference in Colorado between prior policy and today’s policy.

Annette Hayes, Western District of Washington: Annette Hayes, who has served as either the Acting U.S. Attorney or an interim U.S. Attorney since October 1, 2014, also put out at statement, but it was significantly denser than Troyer’s statement. It wasn’t overtly negative, but it also wasn’t as direct as Troyer’s regarding enforcement policies remaining the same.

Joseph Harrington, Eastern District of Washington: Joseph Harrington is another Acting U.S. Attorney that is a holdover from the Obama administration. Harrington did not issue any specific statement in response to the Sessions Memo. When media outlets asked Harrington about his position, he responded by referring media requests to the Department of Justice in Washington D.C. Harrington, for now, is something of a black box on this.

Billy Williams, District of Oregon: Billy Williams was also appointed during the Obama administration, but Trump did nominate him to stay on as U.S. Attorney in December. Williams prosecuted two Oregonians for federal cannabis crimes in 2016, but there were Cole Memo priorities implicated, including sales to minors. More recently, Williams invited Sessions to visit Oregon to discuss Oregon’s cannabis market in September 2017. In response to the Sessions Memo, Williams issued a press release saying: “We will continue working with our federal, state, local and tribal law enforcement partners to pursue shared public safety objectives, with an emphasis on stemming the overproduction of marijuana and the diversion of marijuana out of state, dismantling criminal organizations and thwarting violent crime in our communities.” Again, this statement doesn’t read too poorly, but it is sufficiently vague enough to still be worrisome.

California: California is a bit of a mess in all of this. Oregon and Colorado only have one U.S. Attorney each. Washington has two, but they are neatly separated into eastern Washington and western Washington, which often feel like two different states anyway. California, on the other hand, has four U.S. Districts.  And none of those four has or will have a U.S. Attorney with more than two months on the job.

  • Northern District: The U.S. Attorney for the Northern District of California, Brian Stretch, resigned yesterday to join a private firm. No replacement has been named.
  • Central District: The Central District is a populous jurisdiction that includes Los Angeles, Riverside, San Bernadino, Ventura, Santa Barbara, and San Luis Obispo. Two days ago, Sessions appointed a new U.S. Attorney for the Central District, Nicola Hanna. Hanna doesn’t seem to have much written history regarding his views on marijuana, but the fact that Sessions picked him and specifically called him out for “taking on drug traffickers” isn’t the most positive sign.
  • Eastern District: McGregor Scott, also a recently-named U.S. Attorney, has actually been a U.S. Attorney in the past, having prior experience in the Northern District of California. He did not earn positive marks from the cannabis community, as he did pursue aggressive marijuana prosecutions in the mid-2000s.
  • Southern District: Finally, Adam Braverman was named U.S. Attorney for the Southern District of California a couple of months ago in November. He is most well-known for international cartel work as well as other types of organized crime. Braverman made a statement in support of the Sessions Memo, saying: “The Attorney General’s memorandum today returns trust and local control to federal prosecutors in each district when it comes to enforcing the Controlled Substances Act.”

If we are reading the tea leaves to see what is going to happen next (and they are indeed tea leaves), Colorado appears to be in the safest position, but California could turn into a real mess with different enforcement standards in different counties depending on which judicial district a business is in. Banking will be a major unknown for some time as well. FinCEN’s 2014 Guidance heavily referenced the Cole Memo, which is now rescinded. If FinCEN withdraws that guidance, what kind of ripple effect will it have on other bank regulators?

It also remains unclear how all of this policy will work out. Cory Gardner, a republican senator from Colorado, appeared furious when he responded to the initial announcement of the Sessions Memo (video below). He went so far as to threaten to hold up DOJ nominations, which would include those newly appointed California U.S. Attorneys. Sessions’s actions, as well as those of the U.S. Attorneys, are not yet set in stone. Ultimately, political pressure from Congress may still have an effect on the final outcome.

  • Beedogz

    The growing backlash against Sessions decision will lead to a fix at Congressional level – probably contained within the upcoming budget bill.

  • Mitchell E. Sahn

    I appreciate Mr. McVay’s taking the time to develop a more granular analysis of both the track records and the most recent statements from a few of the key USA’s in the Western States.

    1. Change in Verbiage

    I have added key Hemp and Cannabis language changes contained in the FY 2018 TITLE V GENERAL PROVISIONS containing U.S. Department of Justice Comments. The full document can be viewed at https://www.justice.gov/jmd/page/file/968406/download

    Below is an excerpt from Table 4 which displays substantive changes to Title V general provisions for the Department of Justice, using the FY 2016 enacted budget (Title V, P.L. 114-113) as the starting point.

    An explanation is also provided.

    New language is italicized and underlined, and language proposed for deletion is [bracketed].

    FY 2018 PROPOSED TITLE V GENERAL PROVISIONS

    542 [None of the funds made available in this Act to the Department of Justice may be used, with respect to any of the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming, or with respect to the District of Columbia, Guam, or Puerto Rico, to prevent any of them from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.] This has been deleted

    543 [None of the funds made available by this Act may be used in contravention of section7606 (“Legitimacy of Industrial Hemp Research”) of the Agricultural Act of 2014 (PublicLaw 113-79) by the Department of Justice or the Drug Enforcement Administration.] This has been deleted (the amendment is up for reauthorization this year)

    EXPLANATION of Original Language: The Department (including DEA) does not and will not act in contravention of Section 7606 of the Agricultural Act of 2014, Public Law 113-7

    This change was made in spite of legal opinions by the 9th Circuit and the 10th Circuit as well as the Appeals Courts of several States.

    Additionally, the Congress also reauthorized the Rohrabacher-Blumenauer amendment barring the use of Justice Department funds to go after medical marijuana in states where it is legal through January 19 when the temporary funding bill expires.

    2. Financial Analysis

    What has been missing in the going forward DEA Strategy is not the policy analysis or political environment, but one of capabilities vs. priorities.

    Both drivers are extremely favorable to the defacto operational framework set out by Cole.

    What is written as a priority in the budget requests and memorandums is more for external audiences. Having prepared budgets and the companying narratives, I can attest to the varying degrees of correlation between the two.

    3. DEA 2018 priorities

    DIVERSION CONTROL FEE ACCOUNT (DCFA) Diversion Investigators and Tactical Diversion Squads: $9.4 million and 0 positions

    Resources will support the disruption and dismantlement of the individuals and organizations responsible for the illicit manufacture and distribution of pharmaceutical controlled substances in violation of the Controlled Substances Act (CSA) and would provide support for outreach to the growing registrant population. FY 2018 current services for this program are1,597 positions and $388 million.

    Opioid Enhancement: Training, Enforcement, and Drug Disposal: $20.0 million and 0 positions Resources will be used in support of actions against individuals and organizations operating outside the law. Additionally, long-term education and training engagements with pharmaceutical drug manufacturers, wholesalers, pharmacies, and practitioners will be conducted and additional support for prescription drug take back events would be provided.

    SAUSA Pilot Program: $2.5 million and 0 positions Funds for this initiative will initiate a pilot program that would hire and pay Special Assistant United States Attorneys (SAUSA) in “hot spots” around the country to provide prosecutorial support to federal criminal and civil diversion investigations. The requested resources would ensure that criminal and related civil cases associated with the Diversion Control Fee Account (DCFA) are prosecuted in a timely manner.

    Synopsis

    These programs are targeted at diversion and manufacture of pharmaceutical compounds related to opioid’s, designer drugs and crack. They have no relation to Marijuana enforcement. In fact, there is not a single mention of Cannabis or Hemp as a priority in any of my analysis of budgetary documents.

    Money Talks

    The FY 2018 budget request for DEA totals $2,164 million, which is a 3.7% increase over the FY 2017 Continuing Resolution. Personnel: The DEA’s direct positions for FY 2018 total 6,952 positions. DEA’s FY 2018 request includes a decrease of -1,350 personnel.

    The increase in program funding can be attributed to the priorities outlined above, none of which have anything to do with Cannabis.

    Policy is meaningless without resources.

    Personnel: The DEA’s direct positions for FY 2018 total 6,952 positions. DEA’s FY 2018 request includes a decrease of -1,350 positions from the FY 2017 Continuing Resolution of 8,302 direct positions. Without manpower, the level of State and Local cooperation is compulsory. With every headcount decrease reliance on non-cooperating States increase. DEA headcount loss (18%) versus enforcement effort is not a 1:1 ratio. There is a negative synergy compatible with Sanctuary Cities limited cooperation with INS on minor (non-felony) enforcement.

    Unlike Sanctuary Cities, which are threatened with reduced federal financial support. The complexity of funding tied to the crackdown in pharmaceutical diversion, manufacture and sales is intermingled with other DOE funds (none of which target Cannabis).

    Therefore, any State and Local cuts targeted at punishing the States which refuse cooperation in targeting State Licensed and compliant businesses is not as simple as withholding funding related to immigration enforcement.

    4. US Attorney’s
    The USA’s direct positions for FY 2018 total 11,031 positions. USA’s FY 2018 request includes an increase of 300 positions from the FY 2017 Continuing Resolution of 10,731 direct position
    The FY 2018 budget request for USA totals $2,057 million, which is a 3.1% increase over the FY 2017 Continuing Resolution.

    The increase in budget and staff are targeted to the following priorities.

    Priorities

    FY 2018 Program Changes: Immigration Enforcement Prosecutors: $7.2 million and 70 positions (70 attorneys) Funding will provide for 70 Assistant United States Attorneys to address illegal immigration and border enforcement. These additional resources will be fully dedicated to the prosecution of border-related offenses.

    Violent Crime Prosecutors: $18.8 million and 230 positions (230 attorneys) Funding will provide for 230 Assistant United States Attorneys to address violent crime across the country.

    Cybercriminals can compromise national security and potentially cripple our nation’s infrastructure. In FY 2018, USA will continue to prioritize cybercrime prosecutions, protecting Americans from similar threats in the future

    Asset Forfeiture faces a number of challenges, both internal and external. For example, the total value of assets seized has declined significantly in the last 10 months. This drop in regular deposits has made the Program increasingly reliant on sporadic and unpredictable revenues from large forfeiture cases to cover normal operating expenses. To put this in perspective, five large case settlements accounted for roughly 50 percent of all asset forfeiture revenue during the past five years. This means USA’s will be focused on cases which can bring in larger revenues

    With this in mind, AFMS is working with partner agencies to align the Program’s “core” annualized program expenses to a level that can be more fully supported by predictable “normal” case receipts. The Program is evolving towards a more agile AFF budget execution model in order to make strategic reductions, and investments, that preserve the program-sustaining forfeiture revenue into the AFF.

    Synopsis

    The level of discretionary spending dedicated to the 96 USA’s is being decreased by both the targeted spending as well as an increase in financial crimes. Each new priority is measured by pre-set performance metrics, many of them including crimes related to significant financial settlements and asset forfeiture need to target larger cases which yield greater ROI than busting a grower or dispensary here or there. Especially if they are in compliance with State and Local regulations as well as within the ‘lanes’ of the Cole Amendment.

    5. Conclusion
    Based on the political and policy research conducted by Mr. McKay, and the financial analysis
    included above, I believe this change in policy is more cosmetic than a new effort to enforce the Federal Controlled Substances Act.

    Articulated priorities with set performance goals, a lack of funding, USA’s with far bigger fish to fry (and the time lag between a new USA to get the lay of the land, then absorb and reset priorities) and decrease in staffing all contribute to a sense that the Cole priorities are still the operational guidance despite of change in verbiage.

    Basically, Sessions is writing checks with his mouth which his pockets cannot afford.