Friends, let’s talk about Rohrbacher-Farr. As you likely know, this refers to a rider to annual Congressional spending bills that prohibits the Department of Justice from spending money to prevent states “from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” It first passed in 2014, and has been added to each spending bill since, although attempts to expand its coverage to adult use cannabis have failed routinely. Although the sponsors of the rider have changed over the years, it’s still referred to as “Rohbacher-Farr” out of convenience.
Law360 reported earlier this week on a federal appellate court decision considering the scope of the rider’s protection. You’re welcome to peruse the facts of the case, which I won’t detail here at length because that’s usually boring to read, but, in short, the federal government prosecuted some Maine-based medical cannabis licenseholders for cultivating and distributing cannabis in violation of the Controlled Substances Act, and the defendants asked the federal court to “enjoin” (legalese for “stop”) the prosecution because of, you guessed it, Rohrbacher-Farr.
The First Circuit Court of Appeals declined to enjoin the prosecution. What’s interesting is that the court used a standard that Rohrbacher-Farr works if the defendants can show that they were in “substantial compliance” with state medical cannabis law, a standard the First Circuit set in a 2022 case. In other words, if the defendants can show that they’re mostly trying, the court isn’t going to allow a foot fault to dampen the warm embrace of Rohrbacher-Farr. This is mellower than the Ninth Circuit’s “strict compliance” standard set in a 2016 case.
(One of the bad facts cited by the Court was “undisputed evidence of text messages” about repeated sales of cannabis to an ineligible buyer, once again demonstrating that you shouldn’t videotape your crime spree (not legal advice, but still).)
The point here is that Rorhbacher-Farr isn’t an automatic “get out of jail free” card. It’s a thing, but it only works if you’re following the law. The broader point, however, is that its usefulness is limited. There are 14 states that are currently medical-only, with 24 being medical and adult-use. Given that most retail dispensaries in that latter category are probably selling both medical and adult-use (usually, if you purchase with a medical card, you pay lower taxes, but you may be limited in product and quantity), something I haven’t fact checked but think is a reasonable guess, Rohrbacher-Farr is for all intents and purposes only useful to operators in those medical-only states.
More importantly, it’s not like the Department of Justice is cracking down on state-compliant adult use cannabis operators. If it were, we wouldn’t be here right now. But we are. Because they’re not. In other words, Rohrbacher-Farr is kind of a MacGuffin. It’s part of the narrative of the federal cannabis policy story, and it played a key part in setting the vibe early on in getting people comfortable with the industry, but it itself really doesn’t actually do that much. Sort of like the briefcase in Pulp Fiction – it’s important to the plot, but the briefcase itself doesn’t do anything.
I’d like to further argue that the Cole Memorandum is also kind of a MacGuffin in the federal cannabis policy saga. In case you’re unawares, this was a sensible Department of Justice policy statement from 2013 that it generally wouldn’t prioritize prosecuting state-compliant cannabis operations. What people still seem to forget is that the Cole Memo didn’t actually change the law (only Congress can do that). It didn’t provide any actual protection from prosecution, or any sort of safe harbor from violating the Controlled Substances Act. It was so toothless that it didn’t really make a difference when it was rescinded in 2018 by then-Attorney General Jeffrey Sessions (although, to be fair, we didn’t know at the time that it wouldn’t really matter). And yet, it helped shift the vibe for the environment in which state cannabis laws would soon develop. It made it a little easier for states to get comfortable with the idea, even though the memo itself didn’t do much of anything as a practical matter.
Which is why, when I hear folks make the outsized claim that a Cole Memo-like memo from current Attorney General Merrick Garland would be a major development for the industry, I say “feh.” First off, as we’ve discussed before, I don’t think that the Department of Justice will put out any sort of policy statement on cannabis while the Canna Provisions case is still making its way through the courts. Why would the DoJ announce lenient enforcement priorities that would contradict its defense in the case? Zei nit a nar! (“Don’t be foolish!”)
Second, and more importantly, on the chance that I’m the fool and the DoJ does actually issue a Cole Memo redux, what does that achieve? Similar to 2013, it’s not like the DoJ is stopping state-complaint cannabis from doing business today. Banks and stock exchanges didn’t get comfortable enough during the Cole Memo era to transact with cannabis, so there’s no guarantee that would change. Maybe if Cole Memo 2.0 expressly gave comfort to states on interstate cannabis (which we talked about earlier this year), we might see states start to break down their self-imposed barriers to that trade (although, given that Canna Provisions is about intrastate commerce, that’s even more reason we likely won’t see the DoJ all of a sudden publicly say they’re cool with interstate cannabis commerce). But, as a matter of law, it wouldn’t do much at all.
On the other hand, a Garland Memo would help bolster the positive sentiment trends that we’ve been seeing lately from the White House, some parts of Congress, and on the stump. Heck, who would’ve thought we’d see a major presidential candidate in our lifetime coming out in support of legalization? (Of course, it’s one thing for a candidate to support it, and a whole other thing to get sufficient support from a Congress that can’t even pass cannabis banking reform.) So much of this marathon is about changing the narrative, and while these MacGuffins may not have very much value in and of themselves, they help move the plot along.
Be seeing you.
© 2024 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín.