Marijuana: Medical and Retail—
Selected Legal Issues
Todd Garvey
Legislative Attorney
Charles Doyle
Senior Specialist in American Public Law
March 25, 2014
Congressional Research Service
7-5700
www.crs.gov
R43435
Marijuana: Medical and Retail—Selected Legal Issues
Summary
The federal Controlled Substances Act (CSA) outlaws the possession, cultivation, or distribution
of marijuana except for authorized research. Twenty states have regulatory schemes that allow
possession, cultivation, or distribution of marijuana for medicinal purposes. Two have revenue
regimes that allow possession, cultivation, or sale generally. The U.S. Constitution’s Supremacy
Clause preempts any state law that conflicts with federal law. Although there is some division, the
majority of state courts have concluded that the federal-state marijuana law conflict does not
require preemption of state medical marijuana laws. The legal consequences of a CSA violation,
however, remain in place. Nevertheless, current federal criminal enforcement guidelines counsel
confining investigations and prosecutions to the most egregious affront to federal interests.
Legal and ethical considerations limit the extent to which an attorney may advise and assist a
client intent on participating in his or her state’s medical or recreational marijuana system. Bar
associations differ on the precise boundaries of those limitations.
State medical marijuana laws grant registered patients, their doctors, and providers immunity
from the consequences of state law. The Washington and Colorado retail marijuana regimes
authorize the commercial exploitation of the marijuana market in small taxable doses.
The present and potential consequences of a CSA violation can be substantial. Cultivation or sale
of marijuana on all but the smallest scale invites a five-year mandatory minimum prison term.
Revenues and the property used to generate them may merely be awaiting federal collection
under federal forfeiture laws. Federal tax laws deny marijuana entrepreneurs the benefits
available to other businesses. Banks may afford marijuana merchants financial services only if the
bank files a suspicious activity report (SAR) for every marijuana-related transaction, and only if it
conducts a level of due diligence into its customers’ activities sufficient to unearth any affront to
federal interests.
Marijuana users may not possess a firearm or ammunition. They may not hold federal security
clearances. They may not operate commercial trucks, buses, trains, or planes. Federal contractors
and private employers may be free to refuse to hire them and to fire them. If fired, they may be
ineligible for unemployment compensation. They may be denied federally assisted housing.
At the heart of the federal-state conflict lies a disagreement over dangers and benefits inherent in
marijuana use. The CSA authorizes research on controlled substances, including those in
Schedule I such as marijuana, that may address those questions. Members have introduced a
number of bills in the 113th Congress that speak to the conflict. Only the proposals found in the
farm bill (P.L. 113-79 (H.R. 2642)) have been enacted thus far.
This report is available in an abridged form, without footnotes or citations to authority, as CRS
Report R43437, Marijuana: Medical and Retail—An Abbreviated View of Selected Legal Issues,
by Todd Garvey and Charles Doyle. Portions of this report have been borrowed from CRS Report
R43034, State Legalization of Recreational Marijuana: Selected Legal Issues, by Todd Garvey
and Brian T. Yeh.
Congressional Research Service
Marijuana: Medical and Retail—Selected Legal Issues
Contents
Introduction ...................................................................................................................................... 1
Background ...................................................................................................................................... 1
Controlled Substances Act Today .............................................................................................. 3
Penalties .............................................................................................................................. 5
Forfeiture ............................................................................................................................. 5
Developments in the States ........................................................................................................ 7
Medical Marijuana Laws ..................................................................................................... 8
Retail Marijuana ................................................................................................................ 10
Justice Department Memoranda .............................................................................................. 14
The 2009 Ogden Memorandum ........................................................................................ 14
The 2011 Cole Memorandum ............................................................................................ 15
The 2013 Cole Memorandum ........................................................................................... 16
The 2014 Cole Memorandum ........................................................................................... 18
Preemption ..................................................................................................................................... 18
Other Constitutional Considerations .............................................................................................. 21
Banking .......................................................................................................................................... 24
Other Federal Law Consequences ................................................................................................. 28
Employment ............................................................................................................................ 28
Government ....................................................................................................................... 29
Private ............................................................................................................................... 30
Taxation ................................................................................................................................... 31
Possession of Firearms ............................................................................................................ 32
Federally Assisted Housing ..................................................................................................... 32
Ethical Considerations ................................................................................................................... 33
Marijuana Research Under Federal Law ....................................................................................... 36
Congressional Response in the 113th Congress .............................................................................. 37
Contacts
Author Contact Information........................................................................................................... 40
Congressional Research Service
Marijuana: Medical and Retail—Selected Legal Issues
Introduction
Federal law classifies marijuana as a Schedule I Controlled Substance.1 As a result, it is a federal
crime to grow, sell, or merely possess the drug. In addition to facing the prospect of a federal
criminal prosecution, those who violate the federal Controlled Substances Act (CSA) may suffer a
number of additional adverse consequences under federal law. For example, federal authorities
may confiscate any property used to grow marijuana or facilitate its sale or use; marijuana users
may lose their jobs, their homes, or their right to possess a firearm or ammunition; and sellers of
marijuana may lose the tax benefits and banking services that other merchants enjoy, and
ultimately their businesses.
Nevertheless, without federal statutory sanction, 20 states have established medical marijuana
regulatory regimes. Two have gone further and “legalized” marijuana under state recreational
marijuana laws.2 State officials lack the constitutional authority necessary to trump conflicting
federal law. Federal officials, however, lack the unlimited resources necessary to trump the
impact of conflicting state law.
The following is an analysis of some of the legal issues the situation has generated and some of
the proposals to resolve them.
Background
Federal regulation of the drugs, chemicals, and plants now considered controlled substances
began with the Harrison Narcotics Act of 1914.3 Relying upon its constitutional power to tax,
commerce power, and power to implement the nation’s treaty obligations,4 Congress used the
legislation to establish a system under which it taxed lawful medicinal use and proscribed abuse.5
1 Section 202(c) of the Controlled Substances Act (21 U.S.C. §812(c), Sch.I(c)(10)).
2 The terms “recreational marijuana laws” and “retail marijuana laws” are used interchangeably in this report. Some
legislators, advocates, and commentators refer to the laws alternatively as “recreational marijuana laws,” “retail
marijuana laws,” “adult social marijuana laws,” or “states’ rights marijuana laws.” E.g., Malanie, Reid, The Quagmire
that Nobody in the Federal Government Wants to Talk About: Marijuana, 44 N.MEX. L.REV. 169, 171 (2014)
(“Colorado and Washington have legalized marijuana use for recreational purposes”); Sam Kamin & Eli Wald,
Marijuana Lawyers: Outlaws or Crusaders, 91 ORE. L. REV. 869, 878 n.35 (2013)(“Many in the marijuana law reform
movement dislike the term ‘recreational use’ and prefer the phrase ‘adult use.’ ... ‘I don’t use the term recreational, I
prefer adult social use’”); H.R. 964 (Respect States’ and Citizens’ Rights Act of 2013); Colorado Retail Marijuana
Code, COLO. REV. STAT. ANN. §§12-43.4-101 et seq.
3 38 Stat. 785 (1914).
4 U.S. Const. Art. I, §8, cls. 1, 3, 18; Art. II, §2, cl.2.
5 H.Rept. 63-23, at 1 (1913)(“... [T]he obligations by which [the United States] is bound by virtue of the international
opium convention signed at the Hague January 23, 1912, should be sufficient evidence of the necessity for the passage
of Federal legislation to control our foreign and interstate traffic in opium, coca leaves, their salts, derivatives, and
preparations.... But there is a real and, one might say, even desperate need of Federal legislation to control our foreign
and interstate traffic in habit-forming drugs, and to aid both directly and indirectly the States more effectually to
enforce their police laws designed to restrict narcotics to legitimate medical channels”), quoted in accord, S.Rept. 63-
258, at 3 (1914).
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Little more than two decades later, Congress supplemented the Harrison Act with the Marihuana
Tax Act of 1937,6 explicitly noting reliance on its tax, commerce, and territorial powers.7 The
Marihuana Act replicated the Harrison Act’s procedures in large measure8 and adopted by cross-
reference the Harrison Act’s penalty structure.9 It became apparent over time, however, that the
Marihuana Act served no real revenue purpose and in fact had “become, in effect, solely a
criminal law imposing sanctions upon persons who [sold], acquire[d], or possess[ed]
marihuana.”10
This proved problematic when the Supreme Court pointed out the Fifth Amendment difficulties
inherent in a tax-based enforcement structure like that of the Harrison and Marihuana Tax Acts.
The Court in Marchetti observed that a gambler’s “obligations to register and to pay the [federal]
occupational tax created ... real and appreciable ... hazards of self-incrimination” under federal
and state anti-gambling laws.11 The same day, in Haynes, it held that by the same token “the
constitutional privilege against self-incrimination provides a full defense to prosecutions either
for failure to register a firearm ... or for possession of an unregistered firearm” under the tax-
based structure of the National Firearms Act.12 Finally, in Leahy, it struck closer to home. There,
it held that the Fifth Amendment privilege against self-incrimination provided a full defense to a
charge of transporting marijuana acquired without paying the Marihuana Tax Act transfer tax.13
Within months, the Senate Judiciary Committee reported out a Commerce Clause/treaty-based
controlled substances proposal that featured most of the components ultimately found in the
Controlled Substances Act.14 It classified marijuana with the most tightly regulated substances in
6 50 Stat. 551 (1937).
7 H.Rept. 75-792. at 1-3. (1937)(“The purpose of H.R. 6906 is to employ the Federal taxing power to raise revenue
from the marihuana drug traffic and to discourage the widespread use of the drug by smokers and drug addicts.... This
bill is modeled upon both the Harrison Narcotics Act and the National Firearms Act, which were designed to
accomplish these same general objectives with respect to opium and coca leaves, and firearms, respectively.... Your
committee has examined the constitutionality of this bill and is satisfied that it is a valid revenue measure. The law is
well settled that a revenue measure will not be held invalid as an attempt to regulate, under the guise of the taxing
power, a subject matter reserved to the States under the tenth amendment, if it appears on its face to be a revenue
measure and contains no regulatory provisions except those reasonably related to the collection of the revenue.... In
addition, certain provisions of the bill may be sustained under the power of Congress to regulate commerce and the
power of Congress over the District of Columbia and Territories and possessions of the United States”); see also,
S.Rept. 75-900, at 2-3 (1937)(“The purpose of H.R. 6906 is to employ the Federal taxing power to raise revenue from
the marihuana drug traffic and to discourage the widespread use of the drug by smokers an drug addicts.... This bill is
modeled upon both the Harrison Narcotics Act and the National Firearms Act, which were designed to accomplish
these same general objectives with respect to opium and coca leaves, and firearms, respectively”)(but including no
other explicit reference to constitutional authority).
8 Marihuana Tax Act, §§2-14, 50 Stat. 551-56 (1937).
9 Id. at §7(e), 50 Stat. 555 (1937)(“All provisions of law (including penalties) applicable in respect of the taxes imposed
by the Act of December 17, 1914 (38 Stat. 785; U.S.C. 1934 ed. title 26, §§1040-1061, 1383-1391), as amended, shall,
insofar as not inconsistent with this Act, be applicable in respect of the taxes imposed by this Act”).
10 The President’s Commission on Law Enforcement and Administration of Justice: Task Force on Narcotics and Drug
Abuse, Task Force Report: Narcotics and Drug Abuse, 12 (1967).
11 Marchetti v. United States, 390 U.S. 39, 48 (1968); see also, Grosso v. United States, 390 U.S. 62, 64-6 (1968).
12 Haynes v. United States, 390 U.S. 85, 100 (1968).
13 Leahy v. United States, 395 U.S. 6, 29 (1969).
14 S.Rept. 91-613 (1969). In Gonzales v. Raich, the U.S. Supreme Court ruled that Congress had the constitutional
authority under the Commerce Clause to prohibit the wholly intrastate cultivation or possession of marijuana for
medical purposes, despite state laws that permit such activity. 545 U.S. 1, 32-3 (2005); for more information about this
decision, see CRS Report RL32844, The Power to Regulate Commerce: Limits on Congressional Power, by Kenneth
R. Thomas.
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Schedule I, but punished its abuse less severely, explaining in its critique of an earlier proposal
that
[T]o impose the same high mandatory minimum penalties for marihuana-related
offenses as for LSD and heroin offenses is inequitable in the face of a considerable amount
of evidence that marihuana is significantly less harmful and dangerous than LSD or heroin.
It had also become apparent that the severity of penalties including the length of
sentences does not affect the extent of drug abuse and other drug-related violations. The
basic consideration here was that the increasingly longer sentences that had been legislated in
the past had not shown the expected overall reduction in drug law violations. The opposite
had been true notably in the case of marihuana. Under Federal law and under many States
laws marihuana violations carry the same strict penalties that are applicable to hard narcotics,
yet marijuana violations have almost doubled in the last 2 years alone.
In addition, the severe drug laws specifically as applied to marihuana have helped create
a serious clash between segments of the youth generation and the Government. These youths
consider the marihuana laws hypocritical and unjust. Because of these laws the marihuana
issue has contributed to the broader problem of alienation of youth from the general society
and to a general feeling of disrespect for the law and judicial process.15
Consistent with this view, it called for the establishment of a study commission to examine and
make recommendations on the troubling marijuana-related issues.16 The Commission’s final
report recommended the legalization of possession of marijuana for private personal use, but that
the Controlled Substance Act otherwise remain unchanged.17
Controlled Substances Act Today
Congress enacted the Controlled Substances Act (CSA)18 as Title II of the Comprehensive Drug
Abuse Prevention and Control Act of 1970.19 The purpose of the CSA is to regulate and facilitate
the manufacture, distribution, and use of controlled substances for legitimate medical, scientific,
research, and industrial purposes, and to prevent these substances from being diverted for illegal
purposes. The CSA places various plants, drugs, and chemicals (such as narcotics, stimulants,
depressants, hallucinogens, and anabolic steroids) into one of five schedules based on the
substance’s medical use, potential for abuse, and safety or dependence liability.20
Schedule I substances are deemed to have no currently accepted medical use in treatment and can
be used only in very limited circumstances, whereas substances classified in Schedules II, III, IV,
15 S.Rept. 91-613 at 1-2.
16 Id. at 10 (“The study shall include, but need not be limited to, the following matters: 1. Identification of existing gaps
in our knowledge of marihuana. 2. An intensive examination of the important medical and social aspects of marihuana
use. 3. Surveys of the extent and nature of marijuana use. 4. Studies of the pharmacology and effects of marihuana. 5.
Studies of the relation of marihuana use to crime and juvenile delinquency. 6. Studies of the relation between
marihuana and the use of other drugs”).
17 National Commission on Marihuana and Drug Abuse, Drug Use in America: Problem in Prospective, 458, 466 (2d
Rep. 1973).
18 21 U.S.C. §§801 et seq.
19 P.L. 91-513, 84 Stat. 1236 (1970).
20 21 U.S.C. §§811-812.
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and V have recognized medical uses and may be manufactured, distributed, and used in
accordance with the CSA. The CSA requires persons who handle controlled substances (such as
drug manufacturers, wholesale distributors, doctors, hospitals, pharmacies, and scientific
researchers) to register with the Drug Enforcement Administration (DEA) in the U.S. Department
of Justice, the federal agency that administers and enforces the CSA.21 Such registrants are
subject to strict requirements regarding drug security, recordkeeping, reporting, and maintaining
production quotas, in order to minimize theft and diversion.22
Because controlled substances classified as Schedule I drugs have “a high potential for abuse”
with “no currently accepted medical use in treatment in the United States” and lack “accepted
safety for use of the drug [] under medical supervisions,”23 they may not be dispensed under a
prescription, and such substances may be used only for bona fide, federal government-approved
research studies.24 Under the CSA, only doctors licensed by the Drug Enforcement
Administration (DEA) are allowed to prescribe controlled substances listed in Schedules II-V to
patients.25 Federal regulations stipulate that a lawful prescription for a controlled substance may
be issued only “for a legitimate medical purpose by an individual practitioner acting in the usual
course of his professional practice.”26
The CSA establishes an administrative mechanism for substances to be controlled (added to a
schedule); decontrolled (removed from the scheduling framework altogether); and rescheduled or
transferred from one schedule to another.27 Federal rulemaking proceedings to add, delete, or
change the schedule of a drug or substance may be initiated by the DEA, the U.S. Department of
Health and Human Services (HHS), or by petition by any interested person.28 Petitions for
rescheduling marijuana have been largely unsuccessful.29 Congress may also change the
scheduling status of a drug or substance through legislation.
21 The Attorney General delegated his authority under the CSA to the DEA Administrator pursuant to 21 U.S.C.
§871(a); 28 C.F.R. §0.100(b).
22 For more information about these requirements, see CRS Report RL34635, The Controlled Substances Act:
Regulatory Requirements, by Brian T. Yeh.
23 21 U.S.C. §812(b)(1).
24 21 U.S.C. §823(f).
25 See 21 C.F.R. §1306.03 (persons entitled to issue prescriptions).
26 21 C.F.R. §1306.04; United States v. Moore, 4223 U.S. 122 (1975).
27 The procedures for these actions are found at 21 U.S.C. §811.
28 21 U.S.C. §811(a).
29 At one point an administrative law judge did recommend rescheduling, but that represents the high water mark for
the petition efforts; see, generally, Americans for Safe Access v. DEA, 706 F.3d 438 (D.C. Cir. 2013); and Alliance for
Cannabis Therapeutics v. DEA, 15 F.3d 1131, 1133 (D.C. 1994), citing, National Organization for the Reform of
Marijuana Laws v. Ingersoll, 497 F.2d 654 (D.C. Cir. 1974); National Organization for the Reform of Marijuana Laws
v. Drug Enforcement Administration, 559 F.2d 735 (D.C. Cir. 1977); National Organization for the Reform of
Marijuana Laws v. Department of Health, Education and Welfare, No. 79-1660 (D.C. Cir. Oct. 16, 1980); Alliance for
Cannabis Therapeutics v. DEA, 930 F.2d 936 (D.C. Cir. 1991).
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Penalties
Federal civil and criminal penalties are available for anyone who manufactures, distributes,
imports, or possesses controlled substances in violation of the CSA (both “regulatory” offenses as
well as illicit drug trafficking and possession).30
When Congress enacted the CSA in 1970, marijuana was classified as a Schedule I drug.31 Today,
marijuana is still categorized as a Schedule I controlled substance and is therefore subject to the
most severe restrictions contained within the CSA. Pursuant to the CSA, the unauthorized
cultivation, distribution, or possession of marijuana is a federal crime.32 Although various factors
contribute to the ultimate sentence received, the mere possession of marijuana generally
constitutes a misdemeanor subject to up to one year imprisonment and a minimum fine of
$1,000.33 A violation of the federal “simple possession” statute that occurs after a single prior
conviction under any federal or state drug law triggers a mandatory minimum fine of $2,500 and
a minimum imprisonment term of 15 days (up to a maximum of two years); if the defendant has
multiple prior drug offense convictions at the time of his or her federal simple possession offense,
the sentencing court must impose a mandatory minimum fine of $5,000 and a mandatory
minimum imprisonment term of 90 days (up to a maximum term of three years).34 On the other
hand, the cultivation or distribution of marijuana, or the possession of marijuana with the intent to
distribute, is subject to more severe penalties, ranging from imprisonment for five years to
imprisonment for life.35 Moreover, property associated with the offense may be confiscated
without or with any prior or accompanying criminal conviction.36
Forfeiture
Either in addition to, or in lieu of, bringing criminal prosecutions, the Department of Justice
(DOJ) may choose to rely more heavily on the civil forfeiture provisions of the CSA in order to
disrupt the operation of marijuana dispensaries and production facilities. Forfeiture is a penalty
associated with a particular crime in which property is confiscated or otherwise divested from the
30 For a detailed description of the CSA’s civil and criminal provisions, see CRS Report RL30722, Drug Offenses:
Maximum Fines and Terms of Imprisonment for Violation of the Federal Controlled Substances Act and Related Laws,
by Brian T. Yeh.
31 21 U.S.C. §812(c).
32 Very narrow exceptions to the federal prohibition do exist. For example, one may legally use marijuana if
participating in an FDA-approved study or participate in the Compassionate Investigational New Drug program.
33 21 U.S.C. §844(a).
34 21 U.S.C. §844(a).
35 The escalating terms of imprisonment for possession of various amounts of marijuana are as follows: (1) Less than
50 kilograms (110lbs.)/fewer than 50 plants: imprisonment for not more than 5 years, 21 U.S.C. §841(b)(1)(D); (2)
Less than 100 kilograms (220lbs) or less than 100 plants: imprisonment for not more than 20 years, 21 U.S.C.
§841(b)(1)(C); (3) 100 kilograms (220lbs) or more /100 plants or more: imprisonment for not less than 5 years or more
40 years, 21 U.S.C. §841(b)(1)(B); (4) 1000 kilograms or more/1000 plants or more: imprisonment for not less than 10
years or more than life, 21 U.S.C. §841(b)(1)(A); (5) Drug kingpin (over 5 or more others & substantial income):
imprisonment for not less than 20 years or more than life, 21 U.S.C. §848(a), (c); and (6) Drug kingpin involving (a)
30,000 kilograms or more/30,000 plants or more, or (b) $10 million or more in annual gross receipts: imprisonment
for life, 21 U.S.C. §848(b)(2).
36 21 U.S.C. §853 (criminal forfeiture of the proceeds and property derived from a violation as well as property used to
facilitate violation); 21 U.S.C. §881 (civil/administrative forfeiture of conveyances and real property used in a violation
and the proceeds of a violation and property traceable to the proceeds of a violation).
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owner and forfeited to the government, in accordance with constitutionally required due process
procedures.37
Property forfeiture is used both to enforce criminal laws and to deter crime. Forfeitures are
classified as civil or criminal depending on the nature of the judicial procedure which ends in
confiscation. Civil forfeiture is ordinarily the product of a civil, in rem (against the property)
proceeding in which the property is treated as the offender. No criminal charges are necessary
against the owner, landlord, or mortgage holder because the guilt or innocence of the property
owner, landlord, mortgage holder, or anyone else with a secured interest in the property is
irrelevant; it is enough that the property was involved in, or otherwise connected to, an illegal
activity (in which forfeiture is authorized).38 Criminal forfeiture proceedings, on the other hand,
are in personam (against the person) actions, and confiscation is possible only upon the
conviction of the owner of the property and only to the extent of the defendant’s interest in the
property.39 Property that is subject to forfeiture includes both the direct and indirect proceeds of
illegal activities as well as any property used, or intended to be used, to facilitate that crime.40
Section 511 of the CSA (21 U.S.C. §881) makes a wide array of property associated with
violations of the CSA subject to seizure by the Attorney General and forfeiture to the United
States. Property subject to the CSA’s civil forfeiture provision includes any controlled substance
that has been manufactured, distributed, dispensed, acquired, or possessed in violation of federal
law, as well as any equipment, firearm, money, mode of transportation, or real property used or
intended to be used to facilitate a violation of the CSA.41 In order to seize the covered property,
the government need only show that the property is subject to forfeiture by a preponderance of
the evidence.42 Once forfeited, the Attorney General may destroy the controlled substances
seized, and sell the other property at public auction.43 After expenses of the forfeiture proceeding
are recouped, excess funds are forwarded to the DOJ Asset Forfeiture Fund.44
Forfeiture proceedings are generally less resource intensive than a criminal prosecution and have
been used in the past against medical marijuana dispensaries.45 In practice, DOJ would be able to
seize and liquidate property, both real and personal, associated with marijuana production,
37 U.S. CONST. amend. V (“No person shall ... be deprived of ... property, without due process of law ...”).
38 Calero-Toledo v. Pearson Yacht Leasing Co, 416 U.S. 663, 683-90 (1974)(confiscation of a yacht upon which those
to whom it was leased smoke marijuana, because the owners failed to show that they had done all they possibly could
to avoid the illegal use of their property). In controlled substances cases, there is a limited statutory innocent owner
defense if the owner of an interest in the property can show by a preponderance of the evidence that either he “(i) did
not know of the conduct giving rise to the forfeiture; or (ii) upon learning of the conduct giving rise to the forfeiture,
did all that reasonably could be expected under the circumstances to terminate such use of the property,” 18 U.S.C.
§983(d).
39 For a more extensive discussion of forfeiture generally, see CRS Report 97-139, Crime and Forfeiture, by Charles
Doyle.
40 See, e.g., 21 U.S.C. §881(a)(6) (proceeds), and 21 U.S.C. §881(a)(2) (products and equipment used to facilitate the
offense).
41 21 U.S.C. §881(a) (emphasis added).
42 18 U.S.C. §981(b).
43 21 U.S.C. §881(e).
44 21 U.S.C. §881(e).
45 See, e.g., U.S. Dep’t of Justice, Press Release: Federal Authorities Take Enforcement Actions Against Commercial
Marijuana Stores in Orange County Cities of Anaheim and La Habra, August 21, 2012, available at
http://www.justice.gov/usao/cac/Pressroom/2012/111.html.
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distribution, or retail sale facilities, without bringing any criminal action. As explained above, a
civil asset forfeiture proceeding is a civil proceeding against the property in question. Although
an interested party may object to the seizure, given that such facilities are in clear violation of
federal law, so long as the property is indeed being used for marijuana-related activities, it would
appear unlikely that many successful challenges to these actions could be waged.46
Developments in the States
Most of the states have legislation modeled after the federal Controlled Substances Act.47 Over
the years, some have reduced possession of small amounts of marijuana to a civil offense under
state law.48 Several have also created a state law exception for medical marijuana.49 Colorado and
46 See David Downs, City of Oakland Loses Lawsuit Against Department of Justice; Harborside Forfeiture Case
Proceeds, February 15, 2013, EAST BAY EXPRESS, available at http://www.eastbayexpress.com/LegalizationNation/
archives/2013/02/15/city-of-oakland-loses-lawsuit-against-department-of-justice-harborside-forfeiture-case-proceeds
(describing how a federal magistrate judge dismissed the City of Oakland’s lawsuit against Attorney General Eric
Holder and U.S. Attorney Melinda Haag, which sought to prevent Haag from seizing the building leased by Harborside
Health Center, one of the world’s largest medical marijuana dispensaries. The judge held that only the dispensary and
its landlords have legal standing to challenge the U.S. government’s attempted seizure of the property.).
47 ALA. CODE §§20-2-1 to 20-2-190; ALASKA STAT. §§11.71.010 to 11.71.900, 17.30.010 to 17.30.900; ARIZ. REV.
STAT. ANN. §§36-2501 to 36-2553; ARK. CODE ANN. §§5-64-101 to 5-64-608; CAL. HEALTH & SAFETY CODE §§11000
to 11657; COLO. REV. STAT. ANN. §§18-18-101 to 18-18-605; CONN. GEN. STAT. ANN. §§21a-240 to 21a-283; Del.
Code Ann. tit.16 §§4701 to 47696; FLA. STAT. ANN. §§893.01 to 893.165; GA. CODE §§16-13-20 to 16-13-65; HAWAII
REV. STAT. §§329-1 to 329-128; IDAHO CODE §§37-2701 to 37-2751; 720 ILL. COMP. STAT. ANN. §§570/100 to
570/603; IND. CODE ANN. §§35-48-1-1 to 35-48-7-15; IOWA CODE ANN. §§124.101 to 124.602; KAN. STAT. ANN. §§65-
41-1 to 65-4166; KY. REV. STAT. ANN. §§218A.010 to 218A.993; LA. REV. STAT. ANN. §§40:961 to 40:995; ME. REV.
STAT. ANN. tit.17-A §§1101 to 1118; MD. CODE ANN. Crim. Law §§5-101 to 5-1101; MASS. GEN. LAWS ANN. ch. 94C
§§1 to 48; Mich. Comp. Laws Ann. §§333.7101 to 333.7545; MINN. STAT. ANN. §§152.01 to 152.20; MISS. CODE ANN.
§§41-29-101 to 41-29-185; MO. ANN. STAT. §§195.010 to 195.320; MONT. CODE ANN. §§50-32-101 to 50-32-405;
NEB. REV. STAT. §§28-401 to 28-457; NEV. REV. STAT. §§453.011 to 453.740; N.H. REV. STAT. ANN. §§318-B:1 to
318-E:1; N.J. STAT. ANN. §§2C:35-1 to 2C:35-24, 2c:36-1 to 2C:36-10, 24:21-1 to 24-21-54; N.MEX. STAT. ANN. §§30-
31-1 to 30-31-41; N.Y. PUBLIC HEALTH LAW §§3300 to 3396; N.C. GEN. STAT. §§90-86 to 90-113.8; N.D. CENT. CODE
§§19-03.1-01to 19-03.1-46; OHIO REV. CODE ANN. §§3719.01 to 3719.99; OKLA. STAT. ANN. tit.63 §§2-101 to 2-610;
ORE. REV. STAT. §§475.005 to 475.295, 475.940 to 475.999; 35 PA. STAT. ANN. §§780-101 to780-144; R.I. GEN. LAWS
§§21-28-1.01 to 21-28-6.02; S.C. CODE ANN. §§44-53-110 to 44-53-590; S.D. COD. LAWS §§34-20B-1 to 34-20B-114;
TENN. CODE ANN. §§39-17-401 to 39-17-434, 53-11-301 to 53-11-452; TEX. HEALTH & SAFETY CODE ANN. §§481.001
to 481.005; UTAH CODE ANN. §§58-37-1 to 58-37-21; VA. CODE §§54.1-3400 to 54.1-3472; WASH. REV. CODE ANN.
§§69.50.101 to 69.50.609; W.VA. CODE ANN. §§60A-1-101 to 60A-6-605; WIS. STAT. ANN. §§961.001 to 961.62;
WYO. STAT. §§35-7-1001 to 35-7-1062. Vermont has a Regulated Drugs Act that roughly corresponds to the Controlled
Substances Act, VT. STAT. ANN. tit.18 §§4201 to 4254.
48 E.g., ALASKA STAT. §§11.71.190, 11.71.060, 12.55.135(j) (max. fine $500/less than 1 oz.); CAL. HEALTH & SAFETY
CODE §11357(b) (max. fine $100/28.5 grams or less); CONN. GEN. STAT. ANN. §21a-279a (max. fine $150/ less than .5
oz.); ME. REV. STAT. ANN. tit. 22 §2383[1][A](max. fine $600/1.25 oz. or less); MASS. GEN. LAWS ANN. ch. 94C §32L
(max. fine $100/1 oz. or less); MINN. STAT. ANN. §§152.027[subd.4(a)], 152.01 [subd. 16] (max fine $200/42.5 grams
or less); MISS. CODE ANN. §41-29-139(c)(2)(A); NEB. REV. STAT. §28-416(13)(a) (max. fine $300/1 oz. or less); NEV.
REV. STAT. §453.336[4](max. fine $600/1 oz. or less); N.Y. PENAL LAW §130.35; N.C. GEN. STAT. §§90-95(d)(4)(maxs.
$200 fine—10 days imprisonment/.5 oz. or less); OHIO REV. CODE ANN. §§2925.11(C)(3), 2929.28(A)(2)(a)(v)(max.
fine $150/100 grams or less); ORE. REV. STAT. §475.864(3)(max. fine $650/1 oz. or less); R.I. GEN. LAWS §21-28-
4.01(c)(2)(iii)(max. fine $150/1 oz. or less); VT. STAT. ANN. tit.18 §4230a (max. fine $200/1 oz. or less).
49 ALASKA STAT. §§17.37.010 to 17.37.080; ARIZ. REV. STAT. ANN. §§36-2801 to 36-2819; CAL. HEALTH & SAFETY
CODE §§11362.5 to 11362.9; CONN. GEN. STAT. ANN. §§21a-408 to 21a-408q; COLO. REV. STAT. ANN. §§12-43.3-101
to 12-43.3-1102; DEL. CODE ANN. tit.16 §§4901A to 4926A; D.C. CODE §§7-1671.01 to 7-1671.13; HAWAII REV. STAT.
§329-121 to 329-128; 410 ILL. COMP. STAT. ANN. §§130/10 to 130/140; ME. REV. STAT. ANN. tit. 22 §§2421 to 2430-B;
MASS. GEN. LAWS ANN. ch. 94C App. §§1-1 to 1-17; MICH. COMP. LAWS ANN. §§333.26421 to 333.26430; MONT.
CODE ANN. §50-46-301 to 50-46-344; NEV. REV. STAT. §§453A.010 to 453A.810; N.H. REV. STAT. ANN. §§126-X:1 to
126-X:11; N.J. STAT. ANN. §§24:61-1 to 24:61-16; N.MEX. STAT. ANN. §§26-2B-1 to 26-2B-7; ORE. REV. STAT.
(continued...)
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Washington have enacted legislation authorizing the growth, sale, and possession of marijuana
under state law.50
Medical Marijuana Laws
State medical marijuana laws follow a general pattern, although most have some individual
characteristics and the manner in which they are enforced can differ considerably. Some of their
features are attributable to the CSA and a case from the United States Court of Appeals for the
Ninth Circuit, Conant v. Walters.51
Conant, a California physician, sought to enjoin the federal government from revoking his
authority to prescribe controlled substances at all in retaliation for his recommending marijuana
to some of his patients.52 Then, as now, the CSA permits the Attorney General, acting through the
Drug Enforcement Administration (DEA), to withdraw a physician’s authority to prescribe
controlled substances upon a failure to comply with the demands of the CSA.53
The Ninth Circuit acknowledged the prospect of criminal liability if the doctor were doing more
than engaging in an abstract discussion with his patient: “A doctor would aid and abet by acting
with the specific intent to provide a patient with the means to acquire marijuana. Similarly, a
conspiracy would require that a doctor have knowledge that a patient intends to acquire
marijuana, agree to help the patient acquire marijuana, and intend to help the patient acquire
marijuana.”54 Yet, “[h]olding doctors responsible for whatever conduct the doctor could anticipate
a patient might engage in after leaving the doctor’s office is simply beyond the scope of either
conspiracy or aiding and abetting.”55 On the other hand, such doctor-patient discussions do
implicate First Amendment free speech principles. The Ninth Circuit therefore affirmed the
district court’s order which had enjoined any DEA enforcement action.56
As a consequence of the CSA and the Conant decision, the state medical marijuana laws are
predicated upon a doctor’s recommendation, rather than a prescription and the medicine is
dispensed other than through a pharmacy.57 In addition, the laws afford registered patients, care
givers, cultivators, and distributors immunity from the consequences of state criminal laws.58
(...continued)
§§475.300 to 475.346; R.I. GEN. LAWS §21-28.6-1 to 21-28.6-13; VT. STAT. ANN. tit.18 §§4471 to 4474l; WASH. REV.
CODE ANN. §69-51A.005 to 69-51A.903. The Supreme Court in Oakland Cannabis Buyers’ Cooperative held that the
federal Controlled Substances Act does not contain an implicit medical marijuana exception, United States v. Oakland
Cannabis Buyers’ Cooperative, 532 U.S. 483, 495 (2001).
50 COLO. REV. STAT. ANN. §§12-43.3-101 to 12-43.3-1102; WASH. REV. CODE ANN. §§69-50.325 to 69-50.369.
51 309 F.3d 629 (9th Cir. 2002).
52 Id. at 632.
53 21 §823(f)(“The Attorney General shall register practitioners (including pharmacies ... ) to dispense ... controlled
substances.... The Attorney General may deny an application for such registration ... [in] the public interest. In
determining the public interest, the following factors shall be considered: ... (4) Compliance with applicable State,
Federal, or local laws relating to controlled substances....”).
54 Id. at 636 (internal citations omitted).
55 Id. (emphasis in the original).
56 Id. at 636-39.
57 ALASKA STAT. §§17.37.010 to 17.37.080; ARIZ. REV. STAT. ANN. §§36-2801 to 36-2819; CAL. HEALTH & SAFETY
CODE §§11362.5 to 11362.9; CONN. GEN. STAT. ANN. §§21a-408 to 21a-408q; COLO. REV. STAT. ANN. §§12-43.3-101
(continued...)
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Patients
Physicians may recommend medical marijuana only for patients suffering from one or more
statutorily defined “debilitating,” or “qualifying” medical conditions. The typical list would
include the following:
“Debilitating medical condition” means one or more of the following:
(a) Cancer, glaucoma, positive status for human immunodeficiency virus, acquired
immune deficiency syndrome, hepatitis c, amyotrophic lateral sclerosis, crohn’s disease,
agitation of alzheimer’s disease or the treatment of these conditions.
(b) A chronic or debilitating disease or medical condition or its treatment that produces
one or more of the following: cachexia or wasting syndrome; severe and chronic pain; severe
nausea; seizures, including those characteristic of epilepsy; or severe and persistent muscle
spasms, including those characteristic of multiple sclerosis.
(c) Any other medical condition or its treatment added by the department pursuant to
section 36-2801.01.59
The list usually includes a condition such as “severe pain,” or “chronic pain,” or “severe and
chronic pain” that is easy to claim, difficult to diagnose, and grounds for potential abuse. Some
states seek to limit the scope of the term by statute or by regulation.60 In many jurisdictions, a
qualified patient must be a resident of the jurisdiction.61 Most states and the District of Columbia
restrict the amount of marijuana a patient may possess for medical purposes. The limit is usually
an amount less than three ounces.62 Medical marijuana statutes ordinarily do not allow patients to
use marijuana in public.63
(...continued)
to 12-43.3-1102; DEL. CODE ANN. tit.16 §§4901A to 4926A; D.C. CODE §§7-1671.01 to 7-1671.13; HAWAII REV. STAT.
§§329-121 to 329-128; 410 ILL. COMP. STAT. ANN. §§130/10 to 130/140; ME. REV. STAT. ANN. tit. 22 §§2421 to 2430-
B; MASS. GEN. LAWS ANN. ch. 94C App. §§1-1 to 1-17; MICH. COMP. LAWS ANN. §§333.26421 to 333.26430; MONT.
CODE ANN. §§50-46-301 to 50-46-344; NEV. REV. STAT. §§453A.010 to 453A.810; N.H. REV. STAT. ANN. §§126-X:1
to 126-X:11; N.J. STAT. ANN. §§24:6I-1 to 24:6I-16; N.MEX. STAT. ANN. §§26-2B-1 to 26-2B-7; ORE. REV. STAT.
§§475.300 to 475.346; R.I. GEN. LAWS §§21-28.6-1 to 21-28.6-13; VT. STAT. ANN. tit.18 §§4471 to 4474l; WASH. REV.
CODE ANN. §§69-51A.005 to 69-51A.903.
58 ALASKA STAT. §17.37.030; ARIZ. REV. STAT. ANN. §36-2811; CAL. HEALTH & SAFETY CODE §§11362.71(e),
11362.765, 11362.775; CONN. GEN. STAT. ANN. §§21a-408a to 21a-408c; DEL. CODE ANN. tit.16 §4903A; D.C. CODE
§7-1671.02; HAWAII REV. STAT. §329-122; 410 ILL. COMP. STAT. ANN. §130/25; ME. REV. STAT. ANN. tit. 22 §§2423-A
to 2423-D; MASS. GEN. LAWS ANN. ch. 94C App. §§1-4, 1-5; MICH. COMP. LAWS ANN. §333.26424; MONT. CODE ANN.
§50-46-319; NEV. REV. STAT. §453A.310; N.H. REV. STAT. ANN. §126-X:2; N.J. STAT. ANN. §24:6I-6; N.MEX. STAT.
ANN. §26-2B-4; ORE. REV. STAT. §§475.316, 475.319; R.I. GEN. LAWS §21-28.6-8; VT. STAT. ANN. tit.18 §4474b;
WASH. REV. CODE ANN. §69-51A.030.
59 ARIZ. REV. STAT. ANN. §36-2801[3].
60 E.g., DEL. CODE ANN. tit. 16 §4902A(3)[b](“... severe, debilitating pain, that has not responded to previously
prescribed medication or surgical measures for more than 3 months or for which other treatment options produced
serious side effects....”).
61 E.g., CONN. GEN. STAT. ANN. §21a-408(10); D.C. CODE §7-1671.01(19); MICH. COMP. LAWS ANN.
§333.264246(a)(6); MONT. CODE ANN. §50-46-307(1)(d); N.H. REV. STAT. ANN. §126-X:1[X], [XVI]; N.J. STAT. ANN.
§24:6I-3; N.MEX. STAT. ANN. §26-2B-3 [G]; R.I. GEN. LAWS §21-28.6-3(10); VT. STAT. ANN. tit.18 §4472(12); but see
NEV. REV. STAT. §453A.364 (recognition of nonresident cards).
62 E.g., ALASKA STAT. §17.37.040(a)(4)(1 oz.); DEL. CODE ANN. tit.16 §4903A(a)(6 oz.); D.C. CODE §7-1671.03(a)(2
oz.); 410 ILL. COMP. STAT. ANN. §130/10(a)(1), 130/25(a)(2.5 oz.); ME. REV. STAT. ANN. tit. 22 §§2423-A[1][A](2.5
(continued...)
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Caregivers
Caregivers must register and have been designated by one or more registered medical marijuana
patients.64 Medical marijuana laws afford caregivers the same immunity and impose the same
limitations upon them as apply to patients.65
Dispensaries
Some state medical marijuana laws contemplate cultivation exclusively by the patient or his or
her caregiver.66 Most, however, establish a regulatory scheme for dispensaries.67
Retail Marijuana
Two states, Washington and Colorado, have established retail marijuana regimes. Both regulate
the distribution of marijuana without a necessary medical nexus, but raise many of the same
federal-state conflict issues found in the medical marijuana statutes.
Washington
Approved by a majority of Washington voters in November 2012, Washington Initiative 502
legalizes marijuana possession by amending state law to provide that the possession of small
amounts of marijuana “is not a violation of this section, this chapter, or any other provision of
Washington law.”68 Under the Initiative, individuals over the age of 21 may possess up to one
(...continued)
oz.); MICH. COMP. LAWS ANN. §333.26424(2.5 oz.); MONT. CODE ANN. §50-46-319 (1 oz.); NEV. REV. STAT.
§453A.200 (1 oz.); N.H. REV. STAT. ANN. §126-X:2[I](2 oz.); ORE. REV. STAT. §475.320 (24 oz.); R.I. GEN. LAWS §21-
28.6-4 (2.5 oz.).
63 E.g., ALASKA STAT. §17.37.040(a)(2); CONN. GEN. STAT. ANN. §21a-408a(b)(2); DEL. CODE ANN. tit.16 §4904A(3);
D.C. CODE §7-1671.03; 410 ILL. COMP. STAT. ANN. §130/30(3)(F); MICH. COMP. LAWS ANN. §333.26427(b)(3)(B);
N.H. REV. STAT. ANN. §126-X:3[II](c); N.MEX. STAT. ANN. §26-2B-5[A](3)(d); ORE. REV. STAT. §§475.316(1)(b).
64 E.g., ALASKA STAT. §17.37.010(e); ARIZ. REV. STAT. ANN. §36-2804.02; CONN. GEN. STAT. ANN. §21a-408b; DEL.
CODE ANN. tit.16 §4909A; 410 ILL. COMP. STAT. ANN. §130/55; ME. REV. STAT. ANN. tit. 22 §§2425; MASS. GEN.
LAWS ANN. ch. 94C App. §1-1; MONT. CODE ANN. §50-46-308; NEV. REV. STAT. §453A.210; N.H. REV. STAT. ANN.
§126-X:4; N.J. STAT. ANN. §24:6I-4; N.MEX. STAT. ANN. §26-2B-7; ORE. REV. STAT. §§475.309, 475.312; R.I. GEN.
LAWS §21-28.6-4; VT. STAT. ANN. tit.18 §4474.
65 E.g., ARIZ. REV. STAT. ANN. §36-2811; CAL. HEALTH & SAFETY CODE §§11362.77, 11362.775; CONN. GEN. STAT.
ANN. §21a-408b; DEL. CODE ANN. tit.16 §4903A; 410 ILL. COMP. STAT. ANN. §130/25; MASS. GEN. LAWS ANN. ch. 94C
App. §§1-4, 1-5; MICH. COMP. LAWS ANN. §333.26424; MONT. CODE ANN. §50-46-319; NEV. REV. STAT. §453A.200;
N.H. REV. STAT. ANN. §126-X:2; N.J. STAT. ANN. §24:6I-6; N.MEX. STAT. ANN. §26-2B-4; ORE. REV. STAT.
§§475.316, 475.319; R.I. GEN. LAWS §21-28.6-8; VT. STAT. ANN. tit.18 §4474b.
66 E.g., ALASKA STAT. §17.37.030; HAWAII REV. STAT. §329-122; MICH. COMP. LAWS ANN. §333.26424; ORE. REV.
STAT. §§475.316, 475.319; R.I. GEN. LAWS §21-28.6-8.
67 E.g., ARIZ. REV. STAT. ANN. §36-2804; CAL. HEALTH & SAFETY CODE §11362.8; CONN. GEN. STAT. ANN. §21a-408h;
DEL. CODE ANN. tit.16 §4914A; D.C. CODE §7-1671.06; HAWAII REV. STAT. §329-122; 410 ILL. COMP. STAT. ANN.
§§130/85 to 130/130; ME. REV. STAT. ANN. tit. 22 §2428; MASS. GEN. LAWS ANN. ch. 94C App. §§1-9; MONT. CODE
ANN. §§50-46-308, 5-46-309; NEV. REV. STAT. §§453A.320 to 453A.344; N.H. REV. STAT. ANN. §126-X:8; N.J. STAT.
ANN. §24:6I-7; N.MEX. STAT. ANN. §26-2B-7; ORE. REV. STAT. §475.304; VT. STAT. ANN. tit.18 §4474g.
68 Washington Initiative 502 at §20, amending RCW 69.50.4013 and 2003 c 53 s 334, available at http://sos.wa.gov/
_assets/elections/initiatives/i502.pdf.
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ounce of dried marijuana, 16 ounces of marijuana infused product in solid form, or 72 ounces of
marijuana infused product in liquid form.69 However, marijuana must be used in private, as it is
unlawful to “open a package containing marijuana ... or consume marijuana ... in view of the
general public.”70
In addition to legalizing possession, the Initiative provides that the “possession, delivery,
distribution, and sale” by a validly licensed producer, processor, or retailer, in accordance with the
newly established regulatory scheme administered by the state Liquor Control Board (LCB),
“shall not be a criminal or civil offense under Washington state law.”71 The Initiative establishes a
three-tiered production, processing, and retail licensing system that permits the state to retain
regulatory control over the commercial life cycle of marijuana. Qualified individuals must obtain
a producer’s license to grow or cultivate marijuana, a processor’s license to process, package, and
label the drug, or a retail license to sell marijuana to the general public.72
The Initiative establishes various restrictions and requirements for obtaining the proper license
and directs the state LCB to adopt procedures for the issuance of such licenses. On October 16,
2013,73 the LCB adopted detailed rules for implementing Initiative 502. These rules describe the
marijuana license qualifications and application process, application fees, marijuana packaging
and labeling restrictions, recordkeeping and security requirements for marijuana facilities, and
reasonable time, place, and manner advertising restrictions.74
According to the adopted rules, Washington will impose an excise tax of 25% of the selling price
on each marijuana sale within the established distribution system.75 The state excise tax will,
therefore, be imposed on three separate transactions: the sale of marijuana from producer to
processor, from processor to retailer, and from retailer to consumer. All collected taxes are
deposited into the Dedicated Marijuana Fund and distributed, mostly to social and health services,
as outlined in the Initiative.76
The Initiative also specifically provides that operation of a motor vehicle while under the
influence of marijuana remains a crime.77
As of the date of this report, recreational marijuana retail stores have yet to open in Washington
under the Initiative,78 although the LCB has received well over 3,000 applications to grow,
process, or sell marijuana.79 The LCB estimated that the application review process may take
69 Id. at §15.
70 Id. at §21.
71 Id. at §4.
72 Id.
73 Joel Millman, Washington State Sets Pot-Sales Rules, WALL ST. JOURNAL, October 16, 2013.
74 Washington State Liquor Control Board, Marijuana Licenses, Application Process, Requirements, and Reporting, at
https://lcb.app.box.com/adopted-rules.
75 Id. at 20-21.
76 Washington Initiative 502 at §26.
77 Id. §31.
78 Steve Elliot, Toke Signals: Washington Waits While Colorado Buys, SEATTLE WEEKLY, December 30, 2013.
79 See Bob Young, In Washington, Pot Business Applications Surpass 3,000, SEATTLE TIMES, December 24, 2013
(noting that “[s]tate investigators plan to evaluate growing licenses first, so crops can be started as soon as possible in
hopes of supplying retail stores by May [2014]”.).
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approximately 90 days to complete and that the state might begin issuing licenses by the end of
February 2014.80
Colorado
Unlike the relatively specific Washington Initiative 502, Colorado Amendment 64 provides only a
general framework for the legalization, regulation, and taxation of marijuana in Colorado—
leaving regulatory implementation to the Colorado Department of Revenue.
In November 2012, Colorado voters approved an amendment to the Colorado Constitution to
ensure that it “shall not be an offense under Colorado law or the law of any locality within
Colorado” for an individual 21 years of age or older to possess, use, display, purchase, consume,
or transport one ounce of marijuana; or possess, grow, process, or transport up to six marijuana
plants.81 Unlike Initiative 502, which permits only state-licensed facilities to grow marijuana,
Amendment 64 allows any individual over the age of 21 to grow small amounts of marijuana (up
to six plants) for personal use.82 Marijuana may not, however, be consumed “openly and publicly
or in a manner that endangers others.”83
In addition, the amendment also provides that it shall not be unlawful for a marijuana-related
facility to purchase, manufacture, cultivate, process, transport, or sell larger quantities of
marijuana so long as the facility obtains a current and valid state-issued license.84 However, the
amendment expressly permits local governments within Colorado to regulate or prohibit the
operation of such facilities.85 By comparison, Washington’s Initiative 502 does not expressly
allow Washington cities to ban marijuana stores from opening within their borders, and there is
uncertainty about the degree to which such local prohibitions or moratoriums on the operation of
recreational marijuana businesses may be enforced.86
Amendment 64 appears to envision a three-tier distribution and regulatory system, similar to that
established in Washington, involving the licensing of marijuana cultivation facilities, marijuana
product manufacturing facilities, and retail marijuana stores.87 In December 2012, Governor John
80 Jake Ellison, Where Legal Marijuana Stands on the Brink of the New Year, SEATTLE POST INTELLIGENCER, December
30, 2013, at http://blog.seattlepi.com/marijuana/2013/12/30/where-legal-marijuana-stands-on-the-brink-of-the-new-
year/#14194101=0; see also Jack Healy, Up Early and in Line for a Marijuana Milestone in Colorado, N.Y. TIMES,
January 1, 2014 (“While Colorado has incorporated the existing medical marijuana system, Washington is starting from
scratch, with all production and sale of legal recreational marijuana linked to a new system of licenses, which will not
be issued until late February or early March.”).
81 Colorado Amendment 64, Amending Colo. Const. Art. XVIII §16(3), available at http://www.colorado.gov/cs/
Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=
1251834064719&ssbinary=true.
82 Id.
83 Id.
84 Id. at §16(4).
85 Id. at §16(5)(f). See also Dan Frosch, Colorado Localities Make Own Rules Before Final Decision on Marijuana
Sales, N.Y. TIMES, June 12, 2013; John Ingold, Colorado Marijuana Stores Likely to be Concentrated in Few Cities,
THE DENVER POST, July 25, 2013.
86 See Jake Ellison, City/County Bans, Moratoriums, and Zoning Approvals for Marijuana Businesses in Washington,
SEATTLE POST INTELLIGENCER, December 12, 2013, at http://blog.seattlepi.com/marijuana/2013/12/12/bans-
moratoriums-and-zoning-approvals-for-marijuana-businesses-as-far-as-we-know/#18853101=0&18413103=0; Gene
Johnson, No Welcome Yet for Pot Shops in Many Wash. Cities, SEATTLE POST INTELLIGENCER, January 1, 2014.
87 The licensing and regulatory systems envisioned by both Colorado and Washington are modeled on similar state
(continued...)
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Hickenlooper established the Amendment 64 Implementation Task Force (Task Force) to
“identify the legal, policy and procedural issues that need to be resolved, and to offer suggestions
and proposals ... that need to be taken” to effectively implement Amendment 64.88 The Task Force
issued a final report on March 13, 2013, consisting of 58 recommendations. Of those
recommendations, the most significant include establishing a “vertical integration” model in
which “cultivation, processing and manufacturing, and retail sales must be a common enterprise
under common ownership”;89 imposing the required 15% excise tax while preserving the option
for a future marijuana sales tax;90 restricting commercial licenses to grow, process, or sell
marijuana to state residents only;91 and permitting both residents and nonresidents to purchase
marijuana, but imposing more restrictive limits on the quantity of marijuana that may be
purchased by out-of-state consumers (a quarter ounce versus an ounce for individuals with a
Colorado state-issued identification card).92
To implement Amendment 64, the Colorado General Assembly passed three bills that were signed
into law by Governor Hickenlooper on May 28, 2013.93 On September 9, 2013, the Colorado
Department of Revenue and State Licensing Authority adopted regulations to implement
licensing qualifications and procedures for retail marijuana facilities.94 The regulations establish
procedures for the issuance, renewal, suspension, and revocation of licenses; provide a schedule
of licensing and renewal fees; and specify requirements for licensees to follow regarding physical
security, video surveillance, labeling, health and safety precautions, and product advertising.95
On November 5, 2013, Colorado voters approved a 25% tax on retail marijuana transactions (a
15% excise tax that would raise revenues to be used for public school capital construction, and an
additional 10% sales tax that would generate revenues to fund the enforcement of the retail
marijuana regulations).96 On December 23, 2013, the Colorado Marijuana Enforcement Division
issued its first recreational marijuana licenses to 348 businesses (136 retail stores, 31 product
companies, 178 growing facilities, and 3 testing laboratories).97 While these businesses have been
(...continued)
alcohol distribution schemes found across the country.
88 Task Force Report on the Implementation of Amendment 64, March 13, 2013 at 9, available at
http://www.colorado.gov/cms/forms/dor-tax/A64TaskForceFinalReport.pdf.
89 Id. at 16-19.
90 Id. at 28-31.
91 Id. at 33.
92 Id. at 49-51.
93 See Colorado Dep’t of Revenue, Permanent Rules Related to the Colorado Retail Marijuana Code, September 9,
2013, available at http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&
blobheadername2=Content-Type&blobheadervalue1=
inline%3B+filename%3D%22Retail+Marijuana+Rules%2C+Adopted+090913%2C+Effective+101513.pdf%22&
blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251888487553&ssbinary=
true.
94 Id.
95 Id.
96 Colorado Legislative Council Staff, Fiscal Impact Statement: Proposition AA, Retail Marijuana Taxes, September
24, 2013, available at http://www.leg.state.co.us/LCS/Initiative%20Referendum/1314initrefr.nsf/
b74b3fc5d676cdc987257ad8005bce6a/e3e37fa33a36873887257b6c0077ac93/$FILE/
Retail%20Marijuana%20Taxes_FN.pdf.
97 John Ingold, Colorado Issues First Licenses for Recreational Marijuana Businesses, DENVER POST, December 23,
2013.
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granted state approval to produce and sell marijuana, they may also have to gain the licensing
approval from local governments prior to their operation.98 On January 1, 2014, 40 licensed retail
marijuana stores opened their doors to sell marijuana to anyone 21 years of age or over.99
Justice Department Memoranda
The Department of Justice is not required, and realistically lacks the resources, to prosecute every
single violation of the CSA. Indeed, pursuant to the doctrine of “prosecutorial discretion,” federal
law enforcement officials have “broad discretion” as to when, whom, and whether to prosecute
for violations of the CSA.100 Courts have recognized that the “decision to prosecute is particularly
ill-suited to judicial review,” as it involves the consideration of factors, such as the strength of
evidence, deterrence value, and existing enforcement priorities, “not readily susceptible to the
kind of analysis the courts are competent to undertake.”101
Through the exercise of prosecutorial discretion, DOJ is able to develop a policy outlining what
marijuana-related activities will receive the most attention from federal authorities. Indeed, DOJ
has issued four memoranda since 2009 that explain the Obama Administration’s position
regarding state-authorized marijuana activities, as described in the following sections.
The 2009 Ogden Memorandum
In 2009, Deputy Attorney General David W. Ogden provided guidance to federal prosecutors in
states that have authorized the use of medical marijuana.102 Citing a desire to make “efficient and
rational use of its limited investigative and prosecutorial resources,” the memorandum stated that
while the “prosecution of significant traffickers of illegal drugs, including marijuana … continues
to be a core priority,” federal prosecutors “should not focus federal resources [] on individuals
whose actions are in clear and unambiguous compliance with existing state laws providing for the
medical use of marijuana.”103 The memorandum made clear, however, that “this guidance [does
not] preclude investigation or prosecution, even where there is clear and unambiguous
compliance with existing state law, in particular circumstances where investigation or prosecution
otherwise serves important federal interests.”104 Nevertheless, the Ogden Memorandum was
widely considered an assurance that DOJ would not prosecute any marijuana cultivation,
distribution, or possession, as long as those activities complied with state law.105
98 Id.
99 Jack Healy, Up Early and in Line for a Marijuana Milestone in Colorado, N.Y. TIMES, January 1, 2014.
100 United States v. Goodwin, 457 U.S. 368, 380 (1982).
101 Wayte v. United States, 470 U.S. 598, 607 (1985).
102 Memorandum for selected U.S. Attorneys from David W. Ogden, Deputy Attorney General, Investigations and
Prosecutions in States Authorizing the Medical Use of Marijuana, October 19, 2009 (hereinafter Ogden Memorandum)
available at http://www.justice.gov/opa/documents/medical-marijuana.pdf.
103 Id. at 1-2.
104 Id. at 3.
105 Todd Grabarsky, Conflicting Federal and State Medical Marijuana Policies: A Threat to Cooperative Federalism,
116 W.VA. L. REV. 1, 3 (2013)(“While the Ogden Memo reaffirmed the illegality of all forms of medical marijuana at
the federal level, it made clear that the federal executive policy with regards to medical marijuana permissible at the
state level would be for the most part hands-off.”); Karen O’Keefe, State Medical Marijuana Implementation and
Federal Policy, 16 J. HEALTH CARE L & POL’Y 39, 51 (2013)(“On October 19, 2009, Deputy Attorney General David
(continued...)
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At about the same time, it became apparent the state medical marijuana programs had
consequences that were perhaps unintended. In some states, the affliction most easily claimed and
most difficult to diagnose—chronic pain—accounted for 90% of all physicians’
recommendations.106 It was said that Los Angeles alone had somewhere between 500 and 1000
medical marijuana dispensaries.107 No one knew how many for sure, but all agreed there were
more dispensaries than there were Starbucks coffee shops.108 Rather than the old and infirm,
“[r]emarkably the age distribution of medical marijuana users seem[ed] to mimic that of
recreational users in its concentration of young persons.”109 “After Colorado legalized medical
marijuana, the state went from the healthiest in the nation to one with thousands of mostly young
adults in need of medical treatment.”110
The 2011 Cole Memorandum
DOJ reiterated and clarified its position in a subsequent memorandum in 2011 drawing a clear
distinction between the potential prosecutions of individual patients who require marijuana in the
course of medical treatment and “commercial” dispensaries.111 After noting that several
jurisdictions had recently “enacted legislation to authorize multiple large-scale, privately operated
industrial marijuana cultivation centers,” DOJ stated that
The Ogden memorandum was never intended to shield such activities from federal
enforcement action and prosecution, even where those activities purport to comply with state
law. Persons who are in the business of cultivating, selling or distributing marijuana, and
those who knowingly facilitate such activities, are in violation of the [CSA] regardless of
state law. Consistent with resource constraints and the discretion you may exercise in your
(...continued)
Ogden issued a memorandum memorializing the new federal policy.... This memo was widely interpreted as meaning
that the federal government would not be targeting medical marijuana providers.”); Sam Kamin & Eli Wald, Marijuana
Lawyers: Outlaws or Crusaders? 91 ORE. L. REV. 869, 881 (2013)(“In states that had adopted [Medical Marijuana]
provisions, the memo was seen as a green light to the open sale of marijuana.”); Alex Kreit, Reflections on Medical
Marijuana Prosecutions and the Duty to Seek Justice, 89 DENV. U. L. REV. 1027, 1037 (2012)(“The New York Times
ran a front-page article about the memo under the headline U.S. Won’t Prosecute in States That Allow Medical
Marijuana reporting that ‘[p]eople who use marijuana for medical purposes and those who distribute it to them should
not face federal prosecution, provided they act according to state law, the Justice Department said Monday in a
directive with far-reaching political and legal implications.’”).
106 Gerald Caplan, Medical Marijuana: A Study of Unintended Consequences, 43 MCGEORGE L. REV. 127, 130, 136-37
(2012)(“Statewide, more than 70% of doctors recommendations were written by fewer than 15 physicians in Colorado,
and severe or chronic pain, a catchall category, accounted for ninety-four percent of all reported conditions.... [In]
Oregon, fewer than ten percent of the roughly 35,000 patients holding cards suffered from cancer, multiple sclerosis,
glaucoma, or the o0ther specific debilitating conditions cited in the legislation. Ninety percent of registered cardholders
cited chronic pain as their qualifying debilitating disease. Nevada’s percentages are nearly identical. Montana’s are
slightly lower, with seventy-one percent of all medical marijuana users suffering from chronic pain.”).
107 Alex Kreit, The Federal Response to State Marijuana Legalization: Room for Compromise, 91 ORE. L. REV. 1029,
1036 n.33 (2013).
108 Id.
109 Id. at 135.
110 Michael Vitiello, Joints or the Joint: Colorado and Washington Square Off Against the United States, 91 ORE.
L.REV. 1009, 1015 (2013).
111 Memorandum for U.S. Attorneys from James M. Cole, Deputy Attorney General, Guidance Regarding the Ogden
Memo in Jurisdictions Seeking to Authorize Marijuana for Medical Use, June 29, 2011 (hereinafter Cole 2011
Memorandum), available at http://www.justice.gov/oip/docs/dag-guidance-2011-for-medical-marijuana-use.pdf.
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district, such persons are subject to federal enforcement action, including potential
prosecution.112
The surge in enforcement activity proximate to the release of the 2011 Cole Memorandum113
caught unawares many of those who considered the Ogden Memorandum a green light for
marijuana entrepreneurship.114
The 2013 Cole Memorandum
The Obama Administration’s official response to the Colorado and Washington initiatives was
provided on August 29, 2013, when Deputy Attorney General James M. Cole sent a memorandum
to all U.S. Attorneys intended to guide the “exercise of investigative and prosecutorial discretion”
when it comes to civil and criminal enforcement of the federal Controlled Substances Act within
all states, including those that have legalized marijuana for medicinal or recreational use.115 The
memorandum expresses DOJ’s position that, although marijuana is a dangerous drug that remains
illegal under federal law, the federal government will not pursue legal challenges against
jurisdictions that authorize marijuana in some fashion, assuming those state and local
governments maintain strict regulatory and enforcement controls on marijuana cultivation,
distribution, sale, and possession that limit the risks to “public safety, public health, and other law
enforcement interests.” This DOJ decision has received both praise116 and criticism.117
The memorandum instructs federal prosecutors to prioritize their “limited investigative and
prosecutorial resources to address the most significant [marijuana-related] threats” and identified
the following eight activities as those that the federal government wants most to prevent: (1)
distributing marijuana to children; (2) revenue from the sale of marijuana going to criminal
112 Id. at 2.
113 Sam Kamin & Eli Wald, Marijuana Lawyers: Outlaws or Crusaders? 91 ORE. L. REV. 869, 881-83 (2013)(“In the
fall of 2011, California’s four Untied States Attorneys announced that a federal grand jury had returned indictments
against several marijuana cooperative owners throughout the state, charging them with violations of the CSA. In
addition, the United States Attorneys sent cease and desist letters to both dispensary owners and their landlords, giving
them forty-five days to move their operations or else face arrest. In addition to the clear threat of criminal prosecution,
this action made clear that the threat of civil enforcement—explicit in the Cole memo—was not an empty one. For a
federal government with limited enforcement resources, the specter of civil forfeiture is an incredibly powerful tool.
Similar crackdowns have since taken place in Washington state, Colorado, and Montana.”).
114 See e.g., Montana Caregivers Association, LLC v. United States, 841 F.Supp.2d 1147, 1148 (D.Mont. 2012)(“The
plaintiffs describe themselves as ‘caregivers: growers and distributors of medical marijuana to qualified patients within
the State of Montana.’ They filed their complaint after federal authorities raided their facilities in March 2011 and
seized live marijuana plants, dried marijuana, and related equipment. The plaintiffs claim the raids were unlawful
because (1) Montana law allowed them to grow and produce marijuana for medical consumption and (2) the United
States Department of Justice represented that they would not actively prosecute medical marijuana caregivers.”);
United States v. Washington, 887 F.Supp.2d 1077, 1090-91 (D. Mont. 2012)(“All of the pending motions to dismiss on
estoppel grounds rely on the common underlying principle that the federal government, having stated several times that
it would not initiate federal drug prosecutions of sellers or users of medical marijuana acting in compliance with the
laws of their respective states, should now be estopped from pursuing this federal prosecution in contradiction of those
statements. The most prominent of the federal government’s various pronouncements on the topic of medical marijuana
is what has become known as the ‘Ogden memo.’”).
115 Memorandum for U.S. Attorneys from James M. Cole, Deputy Attorney General, Guidance Regarding Marijuana
Enforcement, August 29, 2013 (hereinafter Cole 2013 Memorandum), available at http://www.justice.gov/iso/opa/
resources/3052013829132756857467.pdf.
116 See, e.g., New York Times Editorial, A Saner Approach on Drug Laws, N.Y. TIMES, September 1, 2013.
117 See, e.g., Wall Street Journal Editorial, The Beltway Choom Gang, WALL ST. J., September 5, 2013.
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enterprises, gangs, and cartels; (3) diverting marijuana from states that have legalized its
possession to other states that prohibit it; (4) using state-authorized marijuana activity as a pretext
for the trafficking of other illegal drugs; (5) using firearms or violent behavior in the cultivation
and distribution of marijuana; (6) exacerbating adverse public health and safety consequences due
to marijuana use, including driving while under the influence of marijuana; (7) growing
marijuana on the nation’s public lands; and (8) possessing or using marijuana on federal
property.118 The memorandum advises U.S. Attorneys and federal law enforcement to devote their
resources and efforts toward any individual or organization involved in any of these activities,
regardless of state law. Furthermore, the memorandum recommends that jurisdictions that have
legalized some form of marijuana activity “provide the necessary resources and demonstrate the
willingness to enforce their laws and regulations in a manner that ensures they do not undermine
federal enforcement priorities.”119 However, the memorandum cautions that, to the extent that
state enforcement efforts fail to sufficiently protect against the eight harms listed above, the
federal government retains the right to challenge those states’ marijuana laws.
Two additional points made in the memorandum are worth highlighting. First, the memorandum
acknowledges a change in Administration policy with respect to “large scale, for-profit
commercial enterprises” that may ease the concerns of potential state-licensed marijuana
distributors and retailers in Colorado and Washington.120 In previous guidance issued to U.S.
Attorneys in states with medical marijuana laws, DOJ had suggested that large-scale marijuana
enterprises were more likely to be involved in marijuana trafficking, and thus could be
appropriate targets for federal enforcement actions.121 In the guidance, DOJ directs prosecutors
“not to consider the size or commercial nature of a marijuana operation alone as a proxy for
assessing whether marijuana trafficking implicates the Department’s enforcement priorities ...”122
The memorandum suggests that a state with a robust regulatory system for the control of
recreational marijuana “is less likely to threaten [] federal priorities ...” than a state that lacks such
controls. This statement may inform the long-running debate over the extent to which state
marijuana regulatory and licensing laws (as opposed to mere penalty exemptions) conflict with
federal law. Some courts have suggested, for example, that whereas a state is generally free to
remove state penalties for marijuana use, the more robust a state’s licensing and regulatory
program, the more likely the law is to be preempted by federal law.123 The Oregon Supreme
Court, for instance, has suggested that states may not “affirmatively authorize” an individual to
participate in conduct prohibited by federal law.124
The memorandum makes no statements with regard to the application of various federal money
laundering and banking laws that have hampered the ability of commercial marijuana
establishments to obtain the necessary financing and financial services to establish and grow their
businesses.125
118 Cole 2013 Memorandum, at 1-2.
119 Id. at 2-3.
120 Id. at 3.
121 Cole 2011 Memorandum, at 1-2.
122 Cole 2013 Memorandum, at 3.
123 See discussion supra pp. 14-19.
124 Emerald Steel Fabricators, Inc., v. Bureau of Labor and Industries, 348 Ore. 159, 230 P.3d 518 (2010).
125 For more information about this topic, see CRS Report WSLG682, Banking Difficulties for State-Legalized
(continued...)
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The 2014 Cole Memorandum
The 2014 Cole memorandum, however, did address banking and money laundering laws.126 It
recited eight priority points listed in the 2013 memorandum and explained that the same
considerations should guide the allocation of investigation and prosecution resources to
marijuana-related offenses involving financial transactions—money laundering, money transfers,
and Bank Secrecy Act transgressions, discussed later in this report.
Preemption
To what extent does the CSA trump or preempt state medical and recreational marijuana laws?
The preemption doctrine stands at the threshold of the federal-state marijuana debate. The
preemption doctrine is grounded in the Supremacy Clause of Article VI, cl. 2, which states that
“[t]he Constitution, and the Laws of the United States which shall be made in Pursuance thereof;
and all Treaties made ... under the Authority of the United States, shall be the supreme Law of the
Land.”127 The Supremacy Clause, therefore, “elevates” the U.S. Constitution, federal statutes,
federal regulations, and treaties128 above the laws of the states.129 As a result, where federal and
state law are in conflict, the state law is generally preempted, leaving it void and without effect.130
Preemption is a matter of Congress’s choice when it operates within its constitutionally
enumerated powers. In some instances, Congress has exercised its authority so pervasively as to
preclude the possibility of state activity within the same legislative field.131 On other hand, where
Congress prefers the co-existence of state and federal law, state law must give way only when it
conflicts with federal law in either of two ways: (1) if it is “physically impossible” to comply
with both the state and federal law (“impossibility preemption”); or (2) if the state law “stands as
an obstacle to the accomplishment and execution of the full purposes and objectives of Congress”
(“obstacle preemption”).132
(...continued)
Marijuana Dispensaries, by M. Maureen Murphy; see also Reuters, Easier Pot Policy Won’t Relieve Dispensaries’
Banking Woes, CNBC.com, September 5, 2013, at http://www.cnbc.com/id/101011966; Serge F. Kovaleski, Banks Say
No to Marijuana Money, Legal or Not, N.Y. TIMES, January 11, 2014.
126 Memorandum for U.S. Attorneys from James M. Cole, Deputy Attorney General, Guidance Regarding Marijuana
Related Financial Crimes, February 14, 2014 (hereinafter Cole 2014 Memorandum), available at
http://www.justice.gov/usao/wae/news/2014/2014-02-14-FinCin.html.
127 U.S. CONST., Art. VI, cl. 2.
128 See discussion of preemptive effect of treaties infra.
129 Northern States Power Co. v. Minnesota, 447 F.2d 1143, 1145 (8th Cir. 1971).
130 See, e.g., Mutual Pharmaceutical Co., Inc. v. Bartlett, 133 S.Ct. 2466, 2473 (2013)(“Under the Supremacy Clause,
from which our pre-emption doctrine is derived, any state law, however clearly within a State’s acknowledged power,
which interferes with or is contrary to federal law, must yield.”).
131 Arizona v. United States, 132 S.Ct. 2492, 2501 (2012)(“[T]he States are precluded from regulating conduct in a
field that Congress, acting within its proper authority, has determined must be regulated by its exclusive governance.
The intent may be inferred from a framework of regulation so pervasive ... that Congress has left no room for the states
to supplement it or where there is a federal interest ... so dominant that the federal system will be assumed to preclude
enforcement of state laws on the same subject.”).
132 Hillman v. Maretta, 133 S.Ct. 1943, 1950 (2013).
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What constitutes an obstacle for preemption purposes is a matter “to be informed by examining
the federal statute as a whole and identifying its purpose and intended effects.”133 When Congress
acts within an area traditionally within the purview of the states, it will be assumed not to have
intended to give its words preemptive force unless a contrary purpose is manifestly clear.134
The Controlled Substances Act contains an explicit statement of the extent of Congress’s
preemptive intent. Section 903 provides that
No provision of this subchapter shall be construed as indicating an intent on the part of the
Congress to occupy the field in which that provision operates, including criminal penalties,
to the exclusion of any State law on the same subject matter which would otherwise be
within the authority of the State, unless there is a positive conflict between that provision of
this subchapter and that State law so that the two cannot consistently stand together.135
Several state courts have addressed the preemption challenges to state medical marijuana laws
with mixed results. Appellate courts in Colorado, California, and Michigan have concluded that at
least some aspects of the medical marijuana laws in those states survive both impossibility and
obstacle preemption analysis. In two instances, they have held that the language in Section 903
evidences an intent to preempt state laws only under impossibility preemption and not under
obstacle preemption.136
The Colorado case, People v. Crouse, arose when a defendant, acquitted of cultivation charges on
the basis of immunity under the state medical marijuana law, petitioned the trial court to order
police to return of the marijuana plants they had seized in connection with his prosecution.137 The
state questioned whether the CSA precluded such as action. The Court of Appeals of Colorado
determined that a state marijuana law is only in “positive conflict” with the CSA when it is
“physically impossible” to simultaneously comply with the state and federal law. It held that in
order to preempt the CSA Section 903 “demands more than that the state law ‘stands as an
obstacle to the accomplishment and execution’ of the federal law.’”138 Thus, the language of the
CSA “cannot be used to preempt a state law under the obstacle preemption doctrine.”139 The
decision in Crouse adopted140 the reasoning of County of San Diego v. San Diego NORML, a
California state court decision that also determined that obstacle preemption should not be
applied in determining whether a state marijuana law is preempted by the CSA.141
In both instances, however, the court supplied an alternative, obstacle preemption explanation. In
Crouse, the court noted Section 885(d) of the CSA “carves out a specific exemption for
distribution of controlled substances by law enforcement officers.”142 Thus, if the officers
133 Arizona v. United States, 132 S.Ct. at 2501.
134 Hillman v. Maretta, 133 S.Ct. 1943, 1950 (2013).
135 Section 708 of the Controlled Substances Act (21 U.S.C. §903).
136 See, e.g., County of San Diego v. San Diego NORML, 165 Cal.App. 4th 798 (2008)(holding that a state law conflicts
with the CSA only where it is impossible to comply with both the state and federal law).
137 2013 Colo.App. LEXIS 1971 (December 19, 2013).
138 Id. at *4.
139 Id. at *11.
140 Id. at *4 (“We consider County of San Diego well-reasoned and follow it here.”)
141 County of San Diego v. San Diego NORML, 165 Cal.App. 4th 798 (2008).
142 2013 Colo.App. LEXIS 1971 at *4.
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returned (“distributed”) the marijuana to Crouse they would not be not obstructing the CSA but
acting in a manner which it authorized.143
In San Diego NORML, the California law required local governments to issue medical marijuana
cards to qualified applicants.144 In the eyes of the California appellate court, the medical
marijuana statute posed no obstacle to the CSA, because “[t]he purpose of the CSA is to combat
recreational drug use, not to regulate a state’s medical practices.”145
The Michigan case, Beek v. City of Wyoming, involved a Wyoming City property owner and
medical marijuana registrant who sought a declarative judgment against a city ordinance which
proscribed the use of his property in a manner contrary to federal law including the CSA.146 Beek
argued that the Michigan Medical Marihuana Act (MMMA), which immunized an individual’s
cultivation of marijuana for medical purposes, invalidated the city ordinance. The City argued
that the CSA preempted the MMMA. The Michigan Supreme Court held that the CSA did not
preempt the MMMA, but also that ordinance must yield to the MMMA.147 As understood by the
court, the MMMA escaped impossibility preemption because it was permissive and therefore did
not command the performance of an act prohibited by federal law: “impossibility results when
state law requires what federal law forbids, or vice versa.”148 The MMMA escaped obstacle
preemption because it merely conveyed immunity from the consequences of state law: “the
MMMA’s limited state-law immunity for [medical marijuana] use does not frustrate the CSA’s
operation nor refuse its provisions their nature effect, such that its purpose cannot otherwise be
accomplished.... [T]his immunity does not purport to alter the CSA’s federal criminalization of
marijuana, or to interfere with or undermine federal enforcement of that prohibition.”149
The Oregon Supreme Court understood obstacle preemption a little differently in Emerald
Steel.150 State regulators had charged Emerald Steel with disability discrimination for firing an
employee for medical marijuana use. The Oregon court concluded, based on its interpretation of
U.S. Supreme Court precedent, that “[a]ffirmatively authorizing a use that federal law prohibits
stands as an obstacle to the implementation and execution of the full purposes and objectives of
the Controlled Substances Act.”151 Thus, “[t]o the extent that [the Oregon statute] affirmatively
143 Id. at *5.
144 County of San Diego v. San Diego NORML, 165 Cal.App.4th at 808.
145 Id. at 826. The court also found that the California law was not vulnerable to impossibility preemption since the
CSA did not outlaw the issuance of the medical marijuana cards that the California law required. Thus, it was not
impossible for an individual to honor both the CSA and the California card law. Id. at 819-21.
146 2014 Mich. LEXIS 194, at *2-*4 (Mich. 2014).
147 Id. at *23.
148 Id. at *11-*12.
149 Id. at *17.
150 Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, 230 P.3d 518 (2010).
151 Id. at 529 (“To be sure, state law does not prevent the federal government from enforcing its marijuana laws against
medical marijuana users in Oregon if the federal government chooses to do so. But the state law at issue in Michigan
Canners did not prevent the federal government from seeking injunctive and other relief to enforce the federal
prohibition in that case. Rather, state law stood as an obstacle to the enforcement of federal law in Michigan Canners
because state law affirmatively authorized the very conduct that federal law prohibited, as it does in this case”), citing,
Michigan Canners & Freezers Association v. Agricultural Marketing and Bargaining Bd., 467 U.S. 461 478 (1984).
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authorizes the use of medical marijuana, federal law preempts that subsection leaving it without
effect.”152
The continued viability of Emerald Steel may be open to question. While the Oregon Supreme
Court has not overturned its earlier decision, it has observed in Willis that Emerald Steel’s
“affirmative authorization” obstacle preemption test may have been an overgeneralization:
“Emerald Steel should not be construed as announcing a stand-alone rule that any state law that
can be viewed as ‘affirmatively authorizing’ what federal law prohibits is preempted. Rather it
reflects this court’s attempt to apply the federal rule and the logic of the most relevant federal
cases to the particular preemption problem that was before it. And particularly where, as here, the
issue of whether the statute contains an affirmative authorization is not straightforward, the
analysis in Emerald Steel cannot operate as a simple stand-in for the more general federal rule.”153
Finally, in what is one of the few reported statements by a federal court relating to preemption of
state marijuana laws, in In re: Rent-Rite Super Kegs West LTD,154 a bankruptcy court noted (in
what was clearly dicta) that “conflict preemption is not an issue here. Colorado constitutional
amendments for both medical marijuana, and the more recent amendment legalizing marijuana
possession and usage generally, both make it clear that their provisions apply to state law only.
Absent from either enactment is any effort to impede the enforcement of federal law.”155
Other Constitutional Considerations
Other colorable constitutional issues involving the CSA and state medical or recreational
marijuana statutes have arisen on a number of occasions. The Supreme Court resolved one of
them when it found that Congress’s constitutional authority to regulate interstate and foreign
commerce enabled it to craft the CSA so as to categorically outlaw the cultivation and possession
of marijuana.156
152 Id. at 529.
153 Willis v. Winters, 253 P.3d 1058, 1064 n.6 (2011). In Willis, the court held that the federal statute that outlawed
firearm possession by a user of controlled substances did not preempt the Oregon statute that authorizes sheriffs to
issue “concealed carry” permits to otherwise qualified applications who were users of medical marijuana. Id. at 1065-
66.
154 In re: Rent-Rite Super Kegs West Ltd., 484 B.R. 799 (Dec 19, 2012). Whether the debtor was engaged in criminal
activity was an issue in the case because “a federal court cannot be asked to enforce the protections of the Bankruptcy
Code in aid of a Debtor whose activities constitute a continuing federal crime.” Id. at 805.
155 Id. at 805 (“The fact that there is a difference in legislative philosophy creates no conflict that requires an analysis of
federal preemption under the Supremacy Clause.”). Part of the confusion over the proper application of obstacle
preemption to state marijuana laws may stem from an apparent disagreement over the nature of the obstacle that is
required to trigger preemption. As previously noted, the Supreme Court has held that a state law is preempted when it
“stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Most
courts that have rejected preemption challenges to state medical marijuana laws have interpreted “the full purposes and
objectives of Congress” in relation to the federal government’s ability to enforce federal law. As such, these courts
have generally held that because the state law does not create a shield or otherwise immunize state residents from
federal criminal prosecutions, the law does not constitute an obstacle to “the enforcement of federal law.” To the
contrary, the Oregon Supreme Court reasoned that the fact that the state law in no way inhibited federal prosecutions
did not mean that the law did not otherwise create an obstacle to the Congress’s chief objective in enacting the CSA;
that of curtailing drug use.
156 Gonzales v. Raich, 545 U.S. 1, 5, 22 (2005)(The question presented in this case is whether the power vested in
Congress by Article I, §8, of the Constitution, ‘[t]o make all Laws which shall be necessary and proper for carrying into
(continued...)
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Congress’s Commerce Clause authority, however, does not include the power to compel a state
legislature to act at its bidding or a state official to enforce its will.157 From time to time, medical
marijuana litigants have invoked this limitation in an effort to shield themselves from the CSA.
Because the CSA makes no demands of state legislatures or officials, those efforts have been to
no avail.158 The related Tenth Amendment argument that the CSA intrudes upon those police
powers reserved to the states has enjoyed no greater success.159 Of course, the purported exercise
of an explicit constitutional power such as the Commerce Clause will be defeated, if the exercise
is beyond the scope of the asserted power or is contrary to some other explicit or implicit
constitutional limitation.
In the case of the fundamental rights of the people, the Tenth Amendment, the Ninth Amendment,
and the substantive due process components of the Fifth and Fourteenth Amendments all impose
limits on the federal or state legislative powers.160 Here too, litigants have been generally unable
to convince the courts that the limitations entitle them to relief. Tenth Amendment reservations
with respect to the rights of the people disappear once it is established that the Constitution has
expressly delegated a power to United States, as in the case of the Necessary and Proper Clause
and the CSA.161 A limitation on intrusion upon the rights of the people, however, may flow from
the Ninth Amendment and the Due Process Clauses’ implicit prohibition on governmental
encroachment on a fundamental right.
Fundamental rights are those “deeply rooted in this Nation’s history and tradition, and implicit in
the concept of ordered liberty, such that neither liberty nor justice would exist if they were
(...continued)
Execution’ its authority to ‘regulate Commerce with foreign Nations, and among the several States’ includes the power
to prohibit the local cultivation and use of marijuana in compliance with California law.... Given the enforcement
difficulties that attend distinguishing between marijuana cultivated locally and marijuana grown elsewhere, ... we have
no difficulty concluding that Congress had a rational basis for believing that failure to regulate the intrastate
manufacture and possession marijuana would leave a gaping hole in the CSA. Thus, as in Wickard, ... Congress was
acting well within its authority to ‘make all Laws which shall be necessary and proper’ to ‘regulate Commerce ...
among the several States.’”).
157 New York v. United States, 505 U.S. 144, 161 (1981)(“Congress may not commandeer the legislative process of the
States by directly compelling them to enact and enforce a regulatory program.”). Printz v. United States 521 U.S. 898,
935 (1997)(“The Federal Government may [not] ... command the States’ officers, or those of their political
subdivisions, to administer or enforce a federal regulatory program.”).
158 United States v. Washington, 887 F.Supp.2d 1077, 1101 (D.Mont. 2012); United States v. Stacy, 696 F.Supp.2d
1141, 1145 (S.D.Cal. 2010); Raich v. Gonzales, 500 F.3d 850, 867 n.17 (9th Cir. 2007).
159 Sacramento Nonprofit Collective v. Holder, 855 F.Supp.2d 1100, (E.D.Cal. 2012)(“[I]s is well established under
United States Supreme Court authority that if a power is delegated to Congress in the Constitution, the Tenth
Amendment expressly disclaims any reservation of that power to the States. Since the power to regulate the intrastate
possession, manufacturing, and distribution of marijuana is delegated to Congress through the Commerce Clause,
Raich I, 545 U.S. at 15, [the] allegation that the power to regulate marijuana in California was reserved to California
through the Tenth Amendment is foreclosed by United States Supreme Court precedent.” ). Montana Caregivers
Association, LLC v. United States, 841 F.Supp.2d 1147, 1149-150 (D.Mont. 2012)(to the same effect).
160 U.S. Const. amend. X (emphasis added)(“The powers not delegated to the United States by the Constitution, nor
prohibited by it to the States, are reserved to the States respectively, or to the people.”). Amend. IX (“The enumeration
in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”).
Amend. V (“No person shall ... be deprived of life, liberty, or property without due process of law....”). Amend. XIV,
§1 (“... No State shall ... deprive any person of life, liberty, or property without due process of law....”).
161 Cf., Raich v. Gonzales, 500 F.3d 850, (9th Cir. 2007)(“The Supreme Court held in Gonzales v. Raich that Congress
acted within the bounds of its Commerce Clause authority when it criminalized the purely intrastate manufacture,
distribution, or possession of marijuana in the Controlled Substances Act, See 125 S.Ct. at 2215. Thus, after Gonzales
v. Raich, it would seem that there can be no Tenth Amendment violation in this case.”).
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sacrificed.”162 The courts have thus far declined to find such a fundamental right in the
possession, use, or cultivation of marijuana, even for medicinal purposes.163
Due process and equal protection challenges have surfaced both in cases questioning the CSA and
those contesting application of the various state marijuana laws. At the federal level, several
courts have rejected the suggestion that the government is estopped from enforcing the CSA by
virtue of misleading or inconsistent statements in the Ogden Memorandum and elsewhere.164
Some of these same cases have rejected the contention that placement of marijuana in Schedule I
of the CSA is irrational and consequently constitutes a violation of equal protection.165
Municipal zoning or land use ordinances set the stage for most of the state marijuana-related due
process cases. State laws vary as to whether municipalities may ban or restrict marijuana-related
activities within their jurisdictions.166 Where they may do so, the regulatory scheme must comply
with due process requirements.167
162 Washington v. Glucksberg, 521 U.S. 702, 721 (1997)(internal citations omitted).
163 Raich v. Gonzales, 500 F.3d at 861-66; United States v. Fry, 787 F.2d 903, 905 (4th Cir. 1986); United States v.
Fogarty, 692 F.2d 542, 547 (8th Cir. 1982); Marin Alliance for Medical Marijuana v. Holder, 866 F.Supp.2d 1142,
1156-157 (N.D.Cal. 2011); Kuromiya v. United States, 37 F.Supp.2d 717, 725-27 (E.D.Pa. 1999).
164 United States v. Washington, 887 F.Supp.2d 1077, (D.Mont. 2012)(“Estoppel by official misleading statement ...
applies where the defendant had a reasonable belief that his conduct was sanctioned by the government. [It] requires
the accused to show that (1) an authorized government official, empowered to render the claimed erroneous advice, (2)
who has been made aware of all the relevant historical facts, (3) affirmatively told him the proscribed conduct was
permissible, (4) that he relied on the false information, and (5) that his reliance was reasonable. The Defendants assert
the defense of estoppel by official misleading statement based on the Ogden memo; statements made to the press or to
Congress by then-presidential-candidate Barack Obama, his campaign spokesman, his White House spokesman, and
United States Attorney General Eric Holder; the characterizations of those statements in news media; the government’s
entry into the stipulation in Santa Cruz; and statements made to at least one Defendant by Flathead Tribal Police drug
investigator Arlen Auld. None of these statements justifies dismissal on a theory of estoppel by official misleading
statement.”); Marin Alliance for Medical Marijuana v. Holder, 866 F.Supp.2d at 1155-156; Sacramento Nonprofit
Collective v. Holder, 855 F.Supp.2d 1100, 1111-112 (E.D.Cal. 2012); United States v. Stacy, 696 F.Supp.2d 1141,
1146-148 (S.D.Cal. 2012); United States v. Schafer, 625 F.3d 629, 637-38 (9th Cir. 2010).
The Second Circuit has rejected the contention that the Ogden memo constituted a rescheduling of marijuana, United
States v. Canori, 737 F.3d 181, 184-85 (2d Cir. 2013).
165 United States v. Washington, 887 F.Supp.2d at 1102-103 (“The Ninth Circuit squarely rejected a rational basis
challenge to the classification of marijuana as a schedule I substance in United States v. Miroyan, 5577 F.2d 489, 495
(9th Cir. 1978). Although Fleming argues that since Miroyan, additional studies and changes in state law have called
into question the rationality of Congress’ policy, there remains sufficient debate regarding the public benefits and
potential for harmful consequences of marijuana use to find a rational basis to uphold the continued classification of
marijuana as a schedule I controlled substance.”); Marin Alliance for Medical Marijuana v. Holder, 866 F.Supp.2d at
1146-147 (“There is no right under the Constitution to have a law go unenforced against you, even if you are the first
person against whom it is enforced, and even if you think (or can prove) you are not as culpable as some others who
have gone unpunished. The law does not need to be enforced everywhere to be legitimately enforced
somewhere”)(responding to plaintiffs’ equal protection challenge that prosecutors’ threatened to take legal action
against them as the landlords of marijuana dispensaries’ but visited so similar threats upon the landlords of Colorado
dispensaries); Sacramento Nonprofit Collective v. Holder, 855 F.Supp.2d at 1109-110 (same equal protection
challenge; same result).
166 Beek v. City of Wyoming, 2014 Mich. LEXIS 194 (Mich. 2014)(Michigan Medical Marihuana Act precludes any
absolute municipal ban on cultivating marijuana within city limits); City of Riverside v. Inland Empire Patients Health
and Wellness Center, Inc., 300 P.3d 494, 499 (Cal. 2013)(City may use its municipal powers to ban marijuana
dispensaries within the city); Giuliani v. Jefferson County Board of County Commissioners, 303 P.3d 131, 135
(Colo.App. 2012)(municipal officials may ban the cultivation or sale of marijuana within the county).
167 Santa Barbara Patients’ Collective Health Cooperative v. City of Santa Barbara, 911 F.Supp. 884, 892-93 (C.D.Cal.
2012)(pre-ordinance permit holder enjoyed a vested right to operate a marijuana dispensary that could not be curtailed
(continued...)
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Banking
The federal banking laws are designed to shield financial institutions from individuals and entities
that deal in controlled substances. In fact, Congress has crafted several of them to enlist financial
institutions in the investigation and prosecution of those who violate the CSA. As a consequence,
medical marijuana providers have experienced difficulty securing banking services.168 On
February 14, 2014, the Department of Justice and the Treasury Department’s Financial Crimes
Enforcement Network (FinCEN) issued guidance with respect to marijuana-related financial
crimes.169 FinCEN’s guidance specifically addresses the obligations to file suspicious activity
reports.
Banks must file suspicious activity reports (SARs) relating to any transaction involving $5,000 or
more that they have reason to suspect are derived from illegal activity.170 Willful failure to do so
is punishable by imprisonment for not more than five years (not more than 10 years in cases of a
substantial pattern of violations or transaction involving other illegal activity).171 Breaking up a
transaction into two or more transactions to avoid the reporting requirement subjects the offender
to the same 5/10 year maximum terms of imprisonment.172 Banks must also establish and
maintain anti-money laundering programs,173 designed to ensure that bank officers and employees
will have sufficient knowledge of the banks’ customers and of the business of those customers to
identify the circumstances under which filing SARs is appropriate.174
Suspicion aside, banks must file currency transaction reports (CTRs) relating to transactions
involving $10,000 or more in cash.175 Willful failure to do so is punishable by imprisonment for
not more than five years (not more than 10 years in cases of a substantial pattern of violations or
(...continued)
without due process of law); Conejo Wellness Center, Inc. v. City of Agoura Hills, 214 Cal.App.4th 1534, 1562 (2013)
(pre-ordinance dispensary operator had no vested liberty right requiring procedural due process to extinguish).
168 See e.g., Deirdre Fernandes, Banks Shun Fledgling Marijuana Firms in Mass, THE BOSTON GLOBE (“Elsewhere in
the country, legal marijuana businesses have run into the same problems ... Some marijuana businesses have found
ways to get a bank account by, for example, setting up separate holding companies that avoid any reference in the
names to marijuana. Even then, once banks get a whiff of where the money comes from, they close the accounts”),
available at http://www.bostonglobe.com/business/2014/01/29/medical-marijuana-firms-face-cash-economy-banks-
steer-clear/88ftUTUbcaYvZfA7fpuENN/story.htm. Legal Marijuana Market Exceeds Tax Hopes, Creating
Opportunities, MARKETWATCH (“The Denver Post reported Wednesday that banks holding commercial loans on
properties that lease to Colorado marijuana businesses say they don’t plan to refinance those loans when they come
due. Banks say property used as collateral for those loans theoretically is subject to federal drug-seizure laws, which
makes the loans a risk. Colorado’s two largest banks, Wells Fargo Bank and First Bank, say they won’t offer new loans
to landowners with preexisting leases with pot businesses. And Wells Fargo and Vestra Bank have told commercial
loan clients they either have to evict marijuana business or seek refinancing elsewhere.”), available at
http://www.marketwatch.com/story/legal-marijuana-market-exceeds-tax-hopes-creating-opportunities-2014-02-
27?/reflink=MW-news-stmp.
169 2014 Cole Memorandum; Department of the Treasury, Financial Crimes Enforcement Network, BSA Expectations
Regarding Marijuana-Related Business, FIN-2014-G001 (Feb. 14, 2014)(herein after FinCEN guidance), available at
http://www.fincen/gov/sstatutes_regs/guidance/pdf/FIN-2014-G002.pdf.
170 21 U.S.C. §5318(g); 31 C.F.R. §1020.320.
171 31 U.S.C. §5322.
172 31 U.S.C. §5324(d).
173 31 U.S.C. §5318(h); 12 U.S.C. §1818(s); 12 U.S.C. §1786(q)(1).
174 31 C.F.R. §§1020.200-1020.220.
175 31 U.S.C. §5313; 31 C.F.R. subpt.1020C; 31 C.F.R. subpt.1010 C.
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transaction involving other illegal activity).176 Again, structuring a transaction to avoid the
reporting requirement exposes the offender to the same 5/10 year maximum terms of
imprisonment.177
Banks, their officers, employees, and customers may also face criminal liability under the money
laundering statutes for marijuana-related financial transactions. Section 1957 makes it a federal
crime to deposit or withdraw $10,000 or more in proceeds derived from the distribution of
marijuana and any other controlled substances.178 Section 1956 makes it a federal crime to engage
in a financial transaction involving such proceeds conducted with an eye to promoting further
offenses, for example, by withdrawing marijuana-generated funds in order to pay the salaries of
medical marijuana dispensary employees.179
Section 1956 violations are punishable by imprisonment for not more than 20 years.180 Section
1957 violations are punishable by imprisonment for not more than 10 years.181 Conspiracy to
violate either section carries the same maximum penalties,182 as does aiding and abetting the
commission of either offense.183 Moreover, any real or personal property involved in, or traceable
to, a transaction proscribed by either statute is subject to confiscation under either civil or
criminal forfeiture.184
Federally insured state and federal banks also run the risk of losing insurance coverage, if they
engage in illegal or unsafe banking practices.185
In its recent guidance, FinCEN addressed banks’ SAR reporting requirements. FinCEN began its
guidance by emphasizing the point made in the accompanying 2014 Cole Memorandum, that the
Justice Department’s investigation and prosecution of financial crimes would be focused on
activities that conflict with any of several federal priorities:
• preventing the distribution of marijuana to minors;
• preventing revenue from the sale of marijuana from going to criminal enterprises,
gangs, and cartels;186
• preventing the diversion of marijuana from states where it is legal under state law
in some form to other states;187
176 31 U.S.C. §5322.
177 31 U.S.C. §5324(d).
178 18 U.S.C. §1957(a), (d).
179 18 U.S.C. §1956(a)(1)(A)(i).
180 18 U.S.C. §1956(a)(1).
181 18 U.S.C. §1957(a).
182 18 U.S.C. §1956(h).
183 18 U.S.C. §2. E.g., United States v. Lyons, 740 F.3d 702, 715 (1st Cir. 2014)(internal citations omitted)(“An aider
and abettor is punishable as a principal if, first, someone else actually committed the offense and, second, the aider and
abettor became associated with the endeavor and took part in it, intending to ensure its success. The central requirement
for the second element is a showing that the defendant consciously shared the principal’s knowledge of the underlying
criminal act, and intended to help the principal.”).
184 18 U.S.C. §§981(a)(1)(A), 982(a)(1).
185 12 U.S.C. §1818.
186 This presumably does not include enterprises, gangs, or cartels that possess or distribute marijuana in violation of
the CSA but in compliance with applicable state law.
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• preventing state-authorized marijuana activity from being used as a cover or
pretext for the trafficking of other illegal drugs or other illegal activity;
• preventing violence and the use of firearms in cultivation and distribution of
marijuana;188
• preventing drugged driving and the exacerbation of other adverse public health
consequences associated with marijuana use;
• preventing the growing of marijuana on public lands and attendant public safety
and environmental dangers posed by marijuana production on public lands;189
and
• preventing marijuana possession or use on federal property.190
FinCEN advised financial institutions that in providing services to a marijuana-related business
they must file one of three forms of special SARs: a marijuana limited SAR, a marijuana priority
SAR; or a marijuana termination SAR. The marijuana limited SAR is appropriate when the bank
determines, after the exercise of due diligence, that its customer is not engaged in any of the
activities that violate state law or that would implicate any of the Justice Department investigation
and prosecution priorities listed in the 2014 Cole Memorandum.191 A marijuana priority SAR
must be filed when the bank believes its customer is engaged in such activities.192 A bank files a
marijuana termination SAR when it finds it necessary to sever its relationship with a customer in
order to maintain an effective anti-money laundering program.193
FinCEN also provides examples of “red flags” that may indicate that a marijuana priority SAR is
appropriate:
• The business is unable to produce satisfactory documentation or evidence to
demonstrate that it is duly licensed and operating consistently with state law.
• The business is unable to demonstrate the legitimate source of significant outside
investments.
• A customer seeks to conceal or disguise involvement in marijuana-related
business activity. For example, the customer may be using a business with a non-
descript name (e.g., a “consulting,” “holding,” or “management” company) that
purports to engage in commercial activity unrelated to marijuana, but is
depositing cash that smells like marijuana.
(...continued)
187 This would seem to serve as a warning to interstate marijuana tourists and the businesses that serve them.
188 Given the value of the product, violence may be an inescapable attribute of marijuana cultivation and sale, see e.g.,
Benjamin B. Wagner & Jared C. Dolan, Medical Marijuana and Federal Narcotics Enforcement in the Eastern District
of California, 43 MCGEORGE L. REV. 109, 121 (2012).
189 Id. at 122 (“About seventy percent or more of marijuana eradicated in California every year comes from public
lands.”); Marijuana Crops in California Threaten Forests and Wildlife, The New York Times, available at
http://www.nytimes.com/2013/06/21/us/marijuana-crops-in-california-threaten-forests-and-wildlife.html.
190 FinCEN guidance, at 2.
191 Id. at 3-4.
192 Id. at 4.
193 Id. at 4-5.
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• Review of publicly available sources and databases about the business, its
owner(s), manager(s), or other related parties, reveal negative information, such
as a criminal record, involvement in the illegal purchase or sale of drugs,
violence, or other potential connections to illicit activity.
• The business, its owner(s), manager(s), or other related parties are, or have been,
subject to an enforcement action by the state or local authorities responsible for
administering or enforcing marijuana-related laws or regulations.
• A marijuana-related business engages in international or interstate activity,
including by receiving cash deposits from locations outside the state in which the
business operates, making or receiving frequent or large interstate transfers, or
otherwise transacting with persons or entities located in different states or
countries.
• The owner(s) or manager(s) of a marijuana-related business reside outside the
state in which the business is located.
• A marijuana-related business is located on federal property or the marijuana sold
by the business was grown on federal property.
• A marijuana-related business’s proximity to a school is not compliant with state
law.
• A marijuana-related business purporting to be a “non-profit” is engaged in
commercial activity inconsistent with that classification, or is making excessive
payments to its manager(s) or employee(s).
• A customer appears to be using a state-licensed marijuana-related business as a
front or pretext to launder money derived from other criminal activity (i.e., not
related to marijuana) or derived from marijuana-related activity not permitted
under state law. Relevant indicia could include the following:
• The business receives substantially more revenue than may reasonably be
expected given the relevant limitations imposed by the state in which it
operates.
• The business receives substantially more revenue than its local competitors
or than might be expected given the population demographics.
• The business is depositing more cash than is commensurate with the amount
of marijuana-related revenue it is reporting for federal and state tax purposes.
• The business is unable to demonstrate that its revenue is derived exclusively
from the sale of marijuana in compliance with state law, as opposed to
revenue derived from (i) the sale of other illicit drugs, (ii) the sale of
marijuana not in compliance with state law, or (iii) other illegal activity.
• The business makes cash deposits or withdrawals over a short period of time
that are excessive relative to local competitors or the expected activity of the
business.
• Deposits apparently structured to avoid Currency Transaction Report
(“CTR”) requirements.
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• Rapid movement of funds, such as cash deposits followed by immediate cash
withdrawals.
• Deposits by third parties with no apparent connection to the account holder.
• Excessive commingling of funds with the personal account of the business’s
owner(s) or manager(s), or with accounts of seemingly unrelated businesses.
• Individuals conducting transactions for the business appear to be acting on
behalf of other, undisclosed parties of interest.
• Financial statements provided by the business to the financial institution are
inconsistent with actual account activity.
• A surge in activity by third parties offering goods or services to marijuana-
related businesses, such as equipment suppliers or shipping servicers.”194
The FinCEN guidance ends with the observation that a bank is not absolved of its obligation to
file a currency transaction report for any financial transaction involving more than $10,000 in
cash, regardless of how it resolves its marijuana SAR obligations.195
Other Federal Law Consequences
Employment
The use of marijuana, medicinal or otherwise, may have adverse employment consequences.196
Both state and federal courts have upheld firing an employee for medical marijuana use.197
Employee challenges have cited in vain state medical marijuana laws as well as federal and state
anti-discrimination laws. The state medical marijuana laws ordinarily immunize medical
marijuana users from the adverse consequences of the law, but do not give them a right that can
be used affirmatively against a private entity.198 The Americans with Disabilities Act (ADA) and
similar state anti-discrimination in employment statutes are predicated upon discrimination based
on lawful activity and the CSA has consequently proven to be an insurmountable obstacle.199
194 Id. at 5-7.
195 Id. at 7.
196 See, generally, Matthew D. Macy, Employment Law and Medical Marijuana, 41 COLORADO LAWYER 57 (2012).
197 Coats v. Dish Network, LLC, 303 P.3d 147 (Colo.App. 2013); Casias v. Wal-Mart Stores, Inc., 695 F.3d 428 (6th
Cir. 2012); Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, 230 P.3d 518 (Ore. 2010); Ross v.
RagingWire Telecommunications, Inc., 42 Cal.4th 920 (2008).
198 Casias v. Wal-Mart Stores, Inc., 695 F.3d at 435 (internal citations omitted)(emphasis in the original)(“[T]he
MMMA [Michigan Medical Marihuana Act] does not regulate private employment; [r]ather the Act provides a
potential defense to criminal prosecution or other adverse action by the state.... MMMA contains no language stating
that it repeals the general rule of at-will employment in Michigan or that it otherwise limits the range of allowable
private decisions by Michigan businesses”); Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, 230
P.3d at 169 n.7, citing, Roe v. TeleTech Customer Car Management, 152 Wash.App. 388, 216 P.3d 1055 (2009); Ross
v. RagingWire Telecommunications, 42 Cal.4th 920 (2008) (“Both the California and Washington courts have held that,
in enacting their states’ medical marijuana laws, the voters did not intend to affect an employer’s ability to take adverse
employment actions based on the use of medical marijuana.”).
199 Coats v. Dish Network, LLC, 303 P.3d at 149-53 (The Colorado Civil Rights Act (CCRA) outlaws firing employees
for “lawful” out of work activities. Use of marijuana as permitted by the Colorado medical marijuana but in violation of
(continued...)
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They differ somewhat in the case of nongovernment employees, because, among other things,
federal, state, and local government employees enjoy Fourth Amendment protections. The Fourth
Amendment, binding on government employers, does not give employees the right to use
marijuana, medical or otherwise, but it limits the likelihood that their employers will discover
their use. The Fourth Amendment’s proscription on unreasonable governmental searches means
that federal, state, or local entities must have either reasonable suspicion or a constitutionally
recognized special need in order to conduct employee drug testing.200
Government
A significant number of government employees, however, must undergo random drug testing
because the nature of their duties places them in a “special needs” category. For example, random
drug testing is a fact of life and continued condition of employment for anyone with access to
classified or similarly sensitive information.201
In the case of employees of state or local governmental entities, the “lower courts have allowed
drug testing in other safety-sensitive occupation” such as “aviation personnel, railroad safety
(...continued)
the CSA was not a lawful activity for purposes of the CCRA); Emerald Steel Fabricators, Inc. v. Bureau of Labor and
Industries, 230 P.3d at 535 (Because the employee was fired for illegal use of marijuana under the CSA, the state
employment discrimination statute, modelled after the ADA, does not apply); see also, James v. City of Lake Forest,
700 F.3d 394, 397 n.3 (9th Cir. 2012)(“[T]he ADA does not protect medical marijuana users who claim to face
discrimination on the basis of their marijuana use.”).
200 Maryland v. King, 133 S.Ct. 1958, 1969 (2013)(internal citations and quotation marks omitted)(“In giving content
to the inquiry whether an intrusion is reasonable, the Court has preferred some quantum of individualized suspicion ...
as a prerequisite to a constitutional search or seizure. But the Fourth Amendment imposes no irreducible requirement of
such suspicion. In some circumstances, such as when faced with special law enforcement needs, diminished
expectations of privacy, minimal intrusions, or the like, the Court has found that certain general, or individual
circumstances may render a warrantless search or seizure reasonable.”). See, generally, CRS Report R42326,
Constitutional Analysis of Suspicionless Drug Testing Requirements for the Receipt of Governmental Benefits, by
David H. Carpenter.
201 50 U.S.C. §3343(b)(“After January 1, 2008, the head of a Federal agency may not grant or renew a security
clearance for a covered person who is an unlawful user of a controlled substance ... ); 50 U.S.C. §3343(a)(2)(“The term
covered person means : (A) an officer or employee of a Federal Agency; (B) a member of the Army, Navy, Air Force,
or Marine Corps who is on active duty or is in an active status; and (C) an officer or employee of a contractor of a
Federal Agency”); e.g., 51 U.S.C. §31102(b)(“(1) Employees of administration.-The Administrator shall establish a
program applicable to employees of the Administration whose duties include responsibility for safety-sensitive,
security, or national security functions. Such program shall provide for preemployment, reasonable suspicion, random,
and post-accident testing for use, in violation of applicable law or Federal regulation, of alcohol or a controlled
substance.... (2) Employees of contractors.-The Administrator shall, in the interest of safety, security, and national
security, prescribe regulations. Such regulations shall establish a program that requires Administration contractors to
conduct preemployment, reasonable suspicion, random, and post-accident testing of contractor employees responsible
for safety-sensitive, security, or national security functions (as determined by the Administrator) for use, in violation of
applicable law or Federal regulation, of alcohol or a controlled substance.... (3) Suspension, disqualification, or
dismissal.-In prescribing regulations under the programs required by this subsection, the Administrator shall require, as
the Administrator considers appropriate, the suspension, disqualification, or dismissal of any employee to which
paragraph (1) or (2) applies, in accordance with the provisions of this section, in any instance where a test conducted
and confirmed under this section indicates that such employee has used, in violation of applicable law or Federal
regulation, alcohol or a controlled substance.”). See also, 49 U.S.C. §20140(Program of required preemployment,
reasonable suspicion, random, and post-accident testing of all railroad employees responsible for safety-sensitive
functions).
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inspectors, highway and motor carrier safety specialists, lock and dam operators, forklift
operators, tractor operators, engineering operators, and crane operators.”202
More generally, federal contractors may face the loss of federal funding or could be subject to
administrative fines if they do not maintain and enforce policies aimed at achieving a drug-free,
safe workplace. The federal Drug-Free Workplace Act of 1988 (DFWA)203 imposes a drug-free
workplace requirement on any entity that receives federal contracts with a value of more than
$150,000 or that receives any federal grant.204 DFWA requires these entities to make ongoing,
good faith efforts to comply with the drug-free workplace requirement in order to qualify, and
remain eligible, for federal funds.205
Private
Absent status as a federal contractor and grantee status or some other federal influence,206
employers are relatively free to establish their own drug free workplaces and to fire employees
who test positive for marijuana use, medical or otherwise.207 Although an occasional medical
marijuana statute will shield employees,208 more often the statute is silent and thought not to
202 Barrett v. Claycomb, 705 F.3d 315, 322 (8th Cir. 2013), referring to cases collected in, Kreig v. Seybold, 481 F.3d
512,518 (7th Cir. 2007).
203 41 U.S.C. §§8101 et seq.
204 41 U.S.C. §§8102, 8103; 2 C.F.R. pt.182; 48 C.F.R. §§23.500 et seq.; 48 C.F.R. §2.101 (simplified acquisition
threshold). U.S. Dept. of Labor, Drug-Free Workplace Act of 1988 Requirements, available at http://www.dol.gov/
elaws/asp/drugfree/screenr.htm.
205 41 U.S.C. §§8102, 8103. There are slightly different requirements for individuals and organizations that receive
federal contracts or grants. 41 U.S.C. §§8102, 8103. See U.S. Dept. of Labor, Drug-Free Workplace Act of 1988
Requirements for Individuals, available at http://www.dol.gov/elaws/asp/drugfree/req_ind.htm (“Any individual who
receives a contract or grant from the Federal government, regardless of dollar value, must agree not to engage in the
unlawful manufacture, distribution, dispensation, possession or use of a controlled substance in the performance of this
contract/grant.”), and U.S. Dept. of Labor, Drug-Free Workplace Act of 1988 Requirements for Organizations,
available at http://www.dol.gov/elaws/asp/drugfree/require.htm (“All organizations covered by the Drug-Free
Workplace Act of 1988 are required to provide a drug-free workplace by ... [publishing] and [giving] a policy statement
to all covered employees informing them that the unlawful manufacture, distribution, dispensation, possession or use of
a controlled substance is prohibited in the covered workplace and specifying the actions that will be taken against
employees who violate the policy).
206 Due to their potential impact on public safety, commercial pilots, truckers, bus drivers and the like are subject to
periodic drug testing which the United States Department of Transportation has recently made clear does not excuse a
positive drug test for either medical or recreational marijuana use, U.S. Department of Transportation, Fact Sheet: DOT
‘Medical” Marijuana Notice (Feb. 23, 2013), citing 49 C.F.R. 40.151, available at http://www.dot/gov/odapc/medical-
marijuana-notice (“The Department of Justice (DOJ) issued guidelines for Federal prosecutors in states that have
enacted laws authorizing the use of ‘medical marijuana.’ We have had several inquiries about whether the DOJ advice
to Federal prosecutors regarding pursing criminal case will have an impact upon the Department of Transportation’s
longstanding regulation about the use of marijuana by safety-sensitive transportation employees—pilots, school bus
drivers, truck drivers, train engineers, subway operators, aircraft maintenance personnel, transit fire-armed security
personnel, ship captains, and pipeline emergency response personnel, among others. We want to make it perfectly clear
that the DOJ guidelines will have no bearing on the Department of Transportation’s regulated drug testing program. We
will not change our regulated drug testing program based upon these guidelines to Federal prosecutors.”). DOT issued a
similar notice with regard to recreational marijuana, U.S. Department of Transportation, DOT ‘Recreational’
Marijuana Notice (Feb. 22, 2013), available at http://www.dot.gov/odapc/dot-recreational-marijuana-notice.
207 See, generally, A Cruel Choice: Patients Forced to Decide Between Medical Marijuana and Employment, 26
HOFSTRA LAB. & EMP. L.J. 619 (2008).
208 E.g., R.I. GEN. LAWS §22-28.6-4(c)(“No school, employer or landlord may refuse to enroll, employ or lease to or
otherwise penalize a person solely for his or her status as a cardholder.”); Ariz. Rev. Stat. Ann. §36-2813[B]((“Unless a
failure to do so would cause an employer to lose a monetary or licensing related benefit under federal law or
(continued...)
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cabin at will employment status, as noted earlier.209 Moreover, depending upon the factual
situation and the state unemployment statute in play, employees fired for marijuana use may also
be ineligible for unemployment benefits.210
Taxation
Income from any source is ordinarily subject to federal taxation.211 This is so even when the
activity that generates the income is unlawful.212 Marijuana merchants, however, operate under a
special federal tax disadvantage. They cannot deduct their operating expenses. Most businesses,
similarly situated, arrive at their taxable income after deducting the cost of things like employee
salaries, rent or mortgage payments, legal services, state taxes, and equipment depreciation.213
Marijuana merchants may take no such deductions:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable
year in carrying on any trade or business if such trade or business (or the activities which
comprise such trade or business) consists of trafficking in controlled substances (within the
meaning of schedule I and II of the Controlled Substances Act) which is prohibited by
Federal law or the law of any State in which such trade or business is conducted.214
Several Members of Congress asked for Internal Revenue Service (IRS) guidance in order to
allow marijuana merchants operating in a medical marijuana state to deduct their business
expenses. The IRS responded that they would be unable to do so until Congress amended either
(...continued)
regulations, an employer may not discriminate against a person in hiring, termination or imposing any term or
condition of employment or otherwise penalize a person based upon either: 1. The person’s status as a cardholder. 2. A
registered qualified patient’s positive drug test for marijuana components or metabolites, unless the patient used,
possessed or was impaired by marijuana on the premises of the place of employment or during the hours of
employment.”).
209 Casias v. Wal-Mart Stores, Inc., 695 F.3d at 435; Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries,
230 P.3d at 169 n.7, citing, Roe v. TeleTech Customer Car Management, 152 Wash.App. 388, 216 P.3d 1055 (2009);
Ross v. RagingWire Telecommunications, 42 Cal.4th 920 (2008).
210 Under some state laws, eligibility for unemployment compensation turns on proof the marijuana use occurred on the
job or had job-related consequences, Compare, Peace River Distributing, Inc. v. Florida Unemployment Appeals
Commission, 80 So.3d 461, 464 (Fla.App. 2012)(discharged employee who tested positive for marijuana use was not
entitled to unemployment compensation); Virginia Employment Commission v. Community Alternatives, Inc., 705
S.E.2d 530, (Va.App. 2011)(same); Maskerines v. Unemployment Compensation Board of Review, 13 A.3d 553, 560
(Pa.Comm. 2011)(employer need not show job nexus where discharged employee had agreed to comply with
employer’s drug free policy); Division of Employment Security v. Comer, 199 S.W.3d 915, 921 (Mo.App. 2006); with,
Johnson v. So Others Might Eat, Inc., 53 A.3d 323, (D.C.App. 2012); Cusack v. Williams, 286 S.W.3d 180, 182
(Ark.App. 2008)(employer need not show job nexus where bus driver’s off duty marijuana use made him ineligible for
the commercial driver’s license, a reasonable condition of employment). See also, Desilet v. Glass Doctor, 132 P.3d
412, 415-16 (Idaho 2006)(off-duty marijuana use is presumed job-related if the employer followed state approved
testing guidelines; otherwise the employer must show a job nexus).
211 I.R.C. §§61, 63, 26 U.S.C. §§61, 63.
212 James v. United States, 366 U.S. 213, 218-20 (1961); United States v. Renner, 648 F.3d 680, 686-87 (8th Cir. 2011);
213 I.R.C. §162, 26 U.S.C. §162.
214 I.R.C. §280E, 26 U.S.C. §280E. See also, Oliver v. Commissioner, 139 T.C. 19 (Aug. 2, 2012)(merchant may also
unable to subtract the cost of goods sold under some circumstances).
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the Internal Revenue Code or the CSA.215 Moreover, the customers of a medical marijuana
merchant may be unable to treat their purchases as deductible medical expenses.216
Possession of Firearms
It is a federal crime punishable by imprisonment for not more than 10 years for an unlawful user
of a controlled substance to possess a firearm or ammunition.217 Federal regulations define an
“unlawful user” to include “any person who is a current user of a controlled substance in a
manner other than as prescribed by a licensed physician.”218 The Bureau of Alcohol, Tobacco,
Firearms and Explosives (ATF) has made it clear that “any person who uses ... marijuana,
regardless of whether his or her State has passed legislation authorizing marijuana use for
medicinal purposes, is an unlawful user of ... a controlled substance, and is prohibited by Federal
law from possessing firearms or ammunition.”219
Moreover, those associated with a marijuana-cultivation or -sales operation may incur additional
firearm-related criminal liability. In addition to the penalties for growing or selling, anyone who
provides security for the operation and possesses a firearm in furtherance of that enterprise is
subject to a series of mandatory terms of imprisonment.220 The offender and any accomplices face
an additional five-year mandatory minimum term of imprisonment for possession of a firearm; a
seven-year mandatory term if he brandishes the firearm; and a 10-year mandatory term if
discharges it.221
Federally Assisted Housing
“Illegal drug users” are ineligible for federally assisted housing.222 Public housing agencies and
owners of federally assisted housing must establish standards that would allow the agency or
owner to prohibit admission to, or terminate the tenancy or assistance of, any applicant or tenant
who is an illegal drug user.223 An agency or an owner can take these actions if a determination is
made, pursuant to the standards established, that an individual is “illegally using a controlled
substance,” or if there is reasonable cause to believe that an individual has a “pattern of illegal
use” of a controlled substance that could “interfere with the health, safety, or right to a peaceful
215 I.R.S. Gen. Couns. Mem. 2011-0005 (Mar. 25, 2011), available at http://www.irs.gov/pub/irs-wd/11-0005.pdf.
216 Section 213 of the Internal Revenue Code allows taxpayers to deduct certain uncompensated medical expenses. The
regulations make clear, however, that they may not deduct illegal treatments, 26 C.F.R. §1.213-1(e)(ii). Although the
IRS has indicated that the uncompensated costs of herbs prescribed by a physician are deductible, it is at best unclear
whether the advice can be understood to include marijuana whose possession is unlawful under the CSA. See, I.R.S.
Gen. Couns. Mem. 2010-0080 (June 25, 2010), available at http://www.irs.gov/pub/irs-wd/10-0080.pdf.
217 18 U.S.C. §§922(g)(3), 924(a)(2).
218 27 C.F.R. §478.11.
219 See Open Letter to All Federal Firearm Licensers, September 21, 2011, available at http://www.atf.gov/files/press/
releases/2011/09/092611-atf-open-letter-to-all-ffls-marijuana-for-medicinal-purposes.pdf.
220 18 U.S.C. §924(c), 21 U.S.C. §841.
221 18 U.S.C. §§924(c)(1)(A)(i) to (iii), 2. Co-conspirators are subject to imprisonment for not more than 20 years, 18
U.S.C. §924(o).
222 42 U.S.C. §§13661-13662. See, generally, Medical Marijuana and the Effect of State Laws on Federally Subsidized
Housing, 57 WAYNE L. REV. 1437 (2011).
223 42 U.S.C. §§13661-13662.
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enjoyment of the premises by other residents.”224 Thus, any individual whom the housing
authority reasonably believes is using marijuana could be denied access to, or evicted from,
federally assisted housing.
With respect to medical marijuana, the Department of Housing and Urban Development
previously concluded that public housing agencies or owners “must deny admission” to
applicants who are using medical marijuana, but “have statutorily-authorized discretion with
respect to evicting or refraining from evicting current residents on account of their use of medical
marijuana.”225
The question of whether marijuana users may be excluded from federally assisted housing is not
the same as whether applicants for such housing may be required to undergo drug testing. The
Eleventh Circuit’s Labron decision, decided in another context, would seem to preclude such
preliminary testing in the absence of some individualized suspicion.226
Ethical Considerations
Rule 1.2(d) of the American Bar Association’s Model Rules of Professional Conduct, adopted in
virtually every jurisdiction, states that “A lawyer shall not counsel a client to engage, or assist a
client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the
legal consequences of any proposed course of conduct with a client and may counsel or assist a
client to make a good-faith effort to determine the validity, scope, meaning or application of the
law.”227
Bar officials in several states—Arizona, Colorado, Connecticut, Maine, and Washington, among
them—have issued ethics opinions addressing ethical constraints arising out of the conflict
between state and federal marijuana laws.228
The Arizona State Bar concluded in Opinion 11-01that the Ogden Memorandum had created a
“safe harbor” for those that operated within the confines of the state’s medical marijuana
statute.229 In its view, Arizona lawyers may counsel and assist their clients in any activity
224 Id.
225 Memorandum from Helen R. Kanoovsky, Medical Use of Marijuana and Reasonable Accommodation in Federal
Public and Assisted Housing, January 20, 2011, available at http://www.scribd.com/doc/47657807/
HUD-policy-Memo-on-Medical-Marijuana-in-Public-Housing. See also, Assenberg v. Anacortes
Housing Authority, 268 Fed.Appx. 643 (9th Cir. 2008)(Under the Fair Housing Act, tenant in publicly assisted housing
is not entitled to medical necessity defense and termination of lease based on tenant’s drug use did not violate HUD
policy).
226 In Labron v. Secretary, Florida Department of Children and Family, 710 F.3d 1202, 1211-214 (11th Cir. 2013), the
U.S. Court of Appeals upheld, on Fourth Amendment grounds, a challenge to a state requirement that applicants for
Temporary Assistance for Needy Families (TANF) benefits submit to drug testing.
227 A second Rule, Rule 8.4(b) provides that, “it is professional misconduct for a lawyer to ... (b) commit a criminal act
that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects.” See, generally,
Sam Kamin & Eli Wald, Marijuana Lawyers: Outlaws or Crusaders? 91 OR. L. REV. 869 (2013).
228 In some states, bar association ethics opinions are a service provided to members of the bar and as a general rule are
only available to them. This and the rapidly evolving nature of the issue suggest the possibility of other opinions.
229 State Bar of Arizona Ethics Opinion 11-01 (Feb. 2011), available at http://www.azbar.org/Ethics/EthicsOpinions/
ViewEthicsOpinion?id=710.
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permitted under the Arizona medical marijuana law as long as their clients were made fully aware
of the consequences under federal law.230
In contrast, Opinion 199 of the Maine Professional Ethics Commission advised attorneys that,
absent an amendment to either the Rules of Professional Conduct or the CSA, a member of the
Maine bar “may counsel or assist a client in making good faith efforts to determine the validity,
scope, meaning or application of the law,” but “the Rule forbids attorneys from counseling a
client to engage in the [marijuana] business or to assist the a client in doing so.”231 The
Commission declined to provide more specific advice, but warned that significant risks attended
practice in the area.
The Connecticut Bar Association offered much the same advice.232 Lawyers may advise their
clients about the features of the state medical marijuana statute, but they may not assist clients in
a violation of the CSA.
While the Arizona, Maine, and Connecticut opinions are relatively general and relatively terse,
the Colorado opinion provides far more examples of its view of the permissible and
impermissible.233 It concluded that, consist with Rule 1.2(d) and the CSA, a Colorado attorney
might (1) represent and advise a client concerning the consequences of marijuana-related
activities for purposes of criminal law, family law, or labor law; (2) as a government attorney
advise a client in a matter involving the establishing, interpreting, enforcing, or amending zoning
relations, local ordinances, or legislation;234 or (3) advise a client on the tax obligations incurred
when cultivating or selling marijuana.
It concluded, on the other hand, that a Colorado attorney may not (1) draft or negotiate contracts,
leases, or other agreements to facilitate the cultivate, distribution, or consumption of marijuana;
or (2) provide tax planning assistance with an eye to violating federal law. Moreover, the Opinion
points out that providing such assistance while aware of a client’s intent is “likely to constitute
aiding and abetting the violation of or conspiracy to violate federal law.”
The Opinion contains an addendum that indicates that the Colorado Supreme Court has been
asked to amend the Rules of Professional Conduct to remove the shadow of the CSA from the
230 “• If a client or potential client requests an Arizona lawyer’s assistance to undertake the specific actions that the
[Arizona medical marijuana] Act expressly permits; and • The lawyer advises the client with respect to the potential
federal law implications and consequences thereof or, if the lawyer is not qualified to do so, advises the client to seek
other legal counsel regarding those issues and limits the scope of his or her representation; and • The client, having
received full disclosure of the risks of proceeding under the state law, wishes to proceed with a course of action
specifically authorized by the Act; then • The lawyer ethically may perform such legal acts as are necessary or desirable
to assist the client to engage in the conduct that is expressly permissible under the Act.”
231 Maine Professional Ethics Commission, Opinion #199 (July 7, 2010), available at http://www.mebaroverseers.org/
attorney_services/opinion.html?id=110134.
232 Connecticut Bar Association, Professional Ethics Committee, Informal Opinion 2013-20 (Jan. 16, 2003), available
at http://www.ctbar.org/userfiles/Comittees/ProfessionalEthics/Opinions/Informal_Opinion_2013-02.pdf.
233 Colorado Bar Association Ethics Committee, Formal Opinion 125 (Oct. 21, 2013), 42 COLO. LAWYER 19 (Dec.
2013).
234 Here, the Opinion finds support in 21 U.S.C. §885(d) which affords federal, state, and local law enforcement
officers immunity for enforcement of federal, state, and local controlled substance laws.
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application of the Rules to legal services provided within the confines of the state marijuana
laws.235
Washington State attorneys have the advantage of not one, but two bar advisories. Both take a
position similar to the Arizona opinion: attorneys transgress no ethical boundaries if their
professional conduct is consistent with state law and perhaps with federal enforcement priorities.
The Bar Association of King County (Seattle and environs) opined that an attorney who advises
and assists a client to establish and maintain a marijuana dispensary is not subject to discipline, as
long as his client’s conduct is permitted under state marijuana law and as long as he makes his
client aware of the provisions of the CSA including the Cole Memorandum.236
Moreover, in the opinion of the King County Bar Association, an attorney is likewise not subject
to discipline merely because he owns an interest in a marijuana dispensary. Although such
activity may constitute a crime under the CSA, it is not “a criminal act that reflects adversely on
the lawyer’s honesty, trustworthiness or fitness as a lawyer,” in the eyes of the County Bar
Association.
The second Washington opinion is a proposed advisory opinion which the Washington State Bar
Association submitted to the Washington Supreme Court along with a proposal to add a comment
to Rule 1.2 of the Washington Rules of Professional Conduct.237 In its proposed opinion, a lawyer
would be free to advise a client as to the nuances of state marijuana law as long as he did not do
so in furtherance of an effort to violate or mask a violation of state marijuana law. A lawyer would
also be free to advise and assist a client to establish and maintain a dispensary within the bounds
of state law at least until such time as federal enforcement policies change. Finally, under the
proposed opinion and accompanying proposed comment, a lawyer would be free to engage in a
marijuana business without offending the Rule that condemns criminal conduct that reflects
adversely on a lawyer’s fitness to practice.238
235 Rule 8.6. Counseling Clients Concerning Marijuana
“Notwithstanding any other provision of these Rules, a lawyer shall not be in violation of these rules or subject to
discipline for counseling or assisting a client to engage in conduct that, by virtue of (1) Article XVIII,
Miscellaneous, Section 14, Medical Use of Marijuana for Persons Suffering From Debilitating Medical
Conditions, or (2) Article XVII, Miscellaneous, Section 16, Personal Use and Regulation of Marijuana, the lawyer
reasonably believes to be either permitted or within an affirmative defense to prosecution under state criminal law,
and which the lawyer reasonably believes is in compliance with legislation or regulations implement such
provisions solely because that same conduct, standing alone, may violate federal criminal law.”
236 King County Bar Association, KCBA Ethics Advisory Opinion on I-502 & Rules of Professional Conduct (Oct.
2013), available at http://www.kcba.org/judicial/legislative/pdf/i502_ethics_advisory_opinion_october_2013.pdf.
237 Washington State Bar Association, Committee on Professional Ethics, Proposed Advisory Opinion 2232 (Jan. 8,
2014) The proposed comment would state, “Since the passage of I-502 by Washington voters in November 2012, both
the federal and state government have devoted considerable resources to allowing I-502 [relating to recreational
marijuana] to come into effect without regard to federal controlled substances laws, as long as certain stated federal
concerns regarding matters such as sales to minors and other unlawful conduct are addressed. See e.g., Washington
State Bar Association Advisory Opinion 2232 and sources cited. At least until there is a subsequent change of federal
enforcement policy, a lawyer who counsels or assists a client regarding conduct permitted under I-502 does not,
without more, violate RPC 1.2(d). See also Washington Comment [7] to RPC 8.4 [related criminal acts committed by
attorneys],” available at http://www.kcba.org/judicial/legislative/pdf/wsba_response_011514.pdf.
238 Proposed Advisory Opinion 2232. The proposed comment to accompany Rule 8.4 would state: “:A unique
circumstance was presented by the November 2012 passage by Washington voters of I-502, which allows for the
creation of a state-regulated system for the production and sale of marijuana for recreational purposes. At least until
there is a subsequent change of federal enforcement policy, a lawyer who engages in conduct permitted under I-502,
does not, without more, violate RPC 8.4(g), (i), (k), or (n). See also Washington Comment [18] at RPC 1.2.”
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Marijuana Research Under Federal Law
The federal government retains strict controls over the use of marijuana for research purposes.
Under the CSA, the Attorney General, as delegated to the Drug Enforcement Agency (DEA), is
authorized to register “practitioners” to “dispense, or conduct research with” controlled
substances.239 In instances where the practitioner seeks to conduct research on a schedule I drug,
such as marijuana, that application is forwarded to the Secretary of Health and Human Services
“who shall determine the qualifications and competency of each practitioner requesting
registration, as well as the merits of the research protocol.”240 The Secretary is also directed to
“consult” with the Attorney General to ensure “effective procedures to adequately safeguard
against diversion of such controlled substances from legitimate medical or scientific use.”241 As
of January 2013, the DEA has registered approximately 125 practitioners to conduct marijuana
research.242
Practitioners obtain marijuana for approved research through the National Institute on Drug
Abuse (NIDA) drug supply program. Under the CSA, the Attorney General is authorized to
register applicants to manufacture or grow marijuana “if he determines that such registration is
consistent with the public interest and with United States obligations under international treaties
...”243 Currently, the National Center for Natural Products Research (NCNPR) at the University of
Mississippi is the only organization registered to manufacture marijuana.244 The National Institute
239 21 U.S.C. §823(f).
240 Id.
241 Id.
242 See, The DEA Position on Marijuana, April 2013, available at http://www.justice.gov/dea/docs/
marijuana_position_2011.pdf. Researchers have reportedly encountered difficulties obtaining the marijuana necessary
for their research. See e.g., Gardiner Harris, Researchers Find Study of Medical Marijuana Discouraged, N.Y. Times,
January 18, 2010.
243 21 U.S.C. §823(a). In evaluating whether granting a registration is in the “public interest” the Attorney General must
consider:
(1) maintenance of effective controls against diversion of particular controlled substances and any controlled
substance in schedule I or II compounded therefrom into other than legitimate medical, scientific, research, or
industrial channels, by limiting the importation and bulk manufacture of such controlled substances to a
number of establishments which can produce an adequate and uninterrupted supply of these substances under
adequately competitive conditions for legitimate medical, scientific, research, and industrial purposes;
(2) compliance with applicable State and local law;
(3) promotion of technical advances in the art of manufacturing these substances and the development of new
substances;
(4) prior conviction record of applicant under Federal and State laws relating to the manufacture, distribution,
or dispensing of such substances;
(5) past experience in the manufacture of controlled substances, and the existence in the establishment of
effective control against diversion; and
(6) such other factors as may be relevant to and consistent with the public health and safety.
With respect to the CSA’s reference to the nation’s “obligations under international treaties,” the Single Convention on
Narcotic Drugs establishes that “any signatory nation that ‘permits the cultivation of [marijuana or opium]’ must
designate one or more agencies to: license cultivators and designate where plants may be grown; purchase and take
physical possession of each year’s crops; and have the exclusive right of importing, exporting, wholesale trading and
maintaining stocks other than those held by manufacturers of opium alkaloids, medicinal opium or opium
preparations.” Craker v. DEA, 714 F.3d 17, 20 (1st Cir. 2013).
244 Craker v. DEA, 714 F.3d 17, 20 (1st Cir. 2013).
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on Drug Abuse (NIDA) administers the federal contract with the NCNPR and therefore acts as
the “single official source” through which researchers may obtain marijuana for research
purposes.245
Congressional Response in the 113th Congress
Several proposals concerning marijuana have been introduced that reflect different approaches in
response to the state legalization initiatives.
P.L. 113-79 (H.R. 2642), Agricultural Act of 2014. This public law has two marijuana related
sections. One relates to food stamps, the other to industrial hemp. Eligibility for the receipt of
benefits under the Supplemental Nutrition Assistance Program (SNAP)(food stamps) is governed
in part by a means test. Only individuals below a certain income level are eligible. Section 4005
of P.L. 113-79 (7 U.S.C. §2014(e)(5)(C)) instructs the Secretary of Agriculture to promulgate
rules to ensure that the costs of medical marijuana are not treated as a deduction in that
calculation. Comparable provisions appeared in H.R. 3102, the Nutrition Reform and Work
Opportunity Act of 2013 (Section 106) and H.R. 1947, the Federal Agriculture Reform and
Risk Management Act of 2013 (Section 4006). Section 7606 of P.L. 113-79 authorizes
institutions of higher education and state departments of agriculture to grow and cultivate
industrial hemp for research purposes.
H.R. 499, Ending Federal Marijuana Prohibition Act of 2013. This bill would direct the
Attorney General to issue a final order, within 60 days of the bill’s enactment, that entirely
removes marijuana from any CSA schedule.246 In addition, the bill would amend the CSA by
adding a new Section 103 that declares that no provision of the CSA shall apply to marijuana,
with the following new exception: shipping or transporting marijuana from anywhere outside a
jurisdiction of the United States into such a jurisdiction where marijuana use, possession, or sale
is prohibited.247 The bill would make conforming amendments to the CSA as well as other
sections of the U.S. Code to expressly remove the word “marijuana” or “marihuana” from various
penalty, enforcement, and definition provisions.248 The bill also would amend the Federal Alcohol
Administration Act249 to create a new section entitled “Unlawful Businesses Without Marijuana
Permit.”250 This section would make it unlawful to engage in importing, shipping, or selling
marijuana in interstate or foreign commerce, or cultivating, producing, manufacturing, packaging,
or warehousing marijuana, without a permit issued by the Secretary of the Treasury. The criminal
fine for persons engaging in such activity without a permit would be not more than $1,000,
although the Secretary would be allowed to collect a payment from the violator of up to $500 in
lieu of referring the violation to the Attorney General for prosecution. The Secretary would have
to follow specific eligibility criteria set forth in the bill in selecting applicants for a marijuana
business permit and the Secretary would also be required to establish a reasonable permit fee to
cover the cost of implementing and overseeing all aspects of federal regulation of marijuana.
245 See, NIDA’s Role in Providing Marijuana for Research, http://www.drugabuse.gov/drugs-abuse/marijuana/nidas-
role-in-providing-marijuana-research.
246 H.R. 499, §101(a).
247 Id. §102.
248 Id. §103.
249 27 U.S.C. §§201 et seq.
250 Id. §201, adding new 27 U.S.C. §301.
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Finally, the bill would grant the Food and Drug Administration the same authorities with respect
to marijuana as it has with respect to alcohol,251 and would transfer all current functions of the
DEA Administrator relating to marijuana enforcement to the Director of the Bureau of Alcohol,
Tobacco, Firearms and Explosives.252
H.R. 501, Marijuana Tax Equity Act of 2013. This bill would amend the Internal Revenue
Code to impose an excise tax on the sale of marijuana by the producer or importer of the drug,
equivalent to 50% of the price for which it was sold.253 In addition, the bill would require anyone
engaged in a “marijuana enterprise”254 to pay an occupational tax in the amount of $1,000 per
year (for producers, importers, or manufacturers of marijuana), or $500 per year (for distributors,
retailers, or anyone who transports, stores, or displays marijuana products).255 The bill would
require all individuals, prior to commencing business as a marijuana enterprise, to obtain a permit
from the Secretary of the Treasury.256 Finally, the bill would impose civil and criminal penalties
for violation of the duty to pay the new taxes regarding marijuana as well as engaging in business
as a marijuana enterprise without obtaining the requisite permit.257 The bill does not amend the
CSA the provisions of which would thus remain in effect.
H.R. 689, States’ Medical Marijuana Patient Protection Act. This bill would direct the
Secretary of Health and Human Services, in cooperation with the National Academy of Sciences’
Institute of Medicine, to submit to the DEA Administrator a recommendation on the scheduling of
marijuana within the CSA, although the bill precludes the Secretary from selecting either
Schedule I or II.258 The Secretary would be required to issue such recommendation within 180
days of the enactment of the bill, and the DEA Administrator would need to issue a proposed
rulemaking for the rescheduling of marijuana in accordance with the recommendation within a
year of enactment of the bill.259 The legislation declares that no provision of the CSA, nor any
provision of the Federal Food, Drug, and Cosmetic Act,260 shall prohibit or otherwise restrict in a
state where the medical use of marijuana is lawful under state law, the production, prescription,
transportation, distribution, possession, or use of marijuana for medical use.261 Finally, the bill
would require the Attorney General, within 180 days of the bill’s enactment, to transfer control
over access to marijuana for research purposes (currently the responsibility of the National
Institute on Drug Abuse, a component of the National Institutes of Health, U.S. Department of
Health and Human Services) to an executive branch entity “that is not focused on researching the
addictive properties of substances.”262 The bill would require such entity to “take appropriate
251 Id. §301.
252 Id. §302.
253 H.R. 501, §2(a), adding new 26 U.S.C. §5901.
254 The bill defines “marijuana enterprise” as a producer, importer, manufacturer, distributor, retailer, or any person
who transports, stores, displays, or otherwise participates in any business activity that handles marijuana or marijuana
products. Id. §2(a), adding new 26 U.S.C. §5904(8).
255 Id. §2(a), adding new 26 U.S.C. §5911.
256 Id. §2(a), adding new 26 U.S.C. §5912.
257 Id. §2(a), adding new 26 U.S.C. §§5921, 5922.
258 H.R. 689, §2(a)(1).
259 Id. §2(a)(2).
260 21 U.S.C. §§301 et seq.
261 H.R. 689, §§2(b), (3).
262 Id. §4.
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actions to ensure that an adequate supply of marijuana is available for therapeutic and medicinal
research.”263
H.R. 710, Truth in Trials Act. This bill would amend the federal criminal code (Title 18 of the
U.S. Code) to provide an affirmative defense for conduct regarding the medical use of marijuana
in a prosecution or proceeding for any marijuana-related offense under any federal law.
Individuals asserting such defense must establish, by a preponderance of the evidence, that their
marijuana-related activities were conducted in compliance with state law regarding medical use
of marijuana.264 The bill would require that any property seized by the government in connection
with such prosecution or proceeding be returned to the owner within 10 days of the court finding
that the owner has established a valid affirmative defense.265 Finally, the bill would permit a court
to hold liable for the marijuana-related offense a defendant who has engaged primarily, but not
exclusively, in medical marijuana activities, only with respect to the amount of marijuana that
was used for nonmedical purposes.266
H.R. 784, States’ Medical Marijuana Property Rights Protection Act. This bill would amend
the civil forfeiture provisions of the CSA267 to provide that no real property may be subject to
civil forfeiture to the United States due to medical marijuana-related activities that are performed
in compliance with state law.268
H.R. 964, Respect States’ and Citizens’ Rights Act of 2013. This bill would amend the CSA’s
preemption provision, Section 708 (codified at 21 U.S.C. §903), to provide a specific rule of
construction pertaining to state marijuana laws: that no provision of the CSA shall be construed
as—(1) indicating an intent on the part of Congress to occupy the field in which that provision
operates, including criminal penalties, to the exclusion of state law regarding marijuana, or (2)
preempting any such state law.269 The bill may or may not be intended to preclude enforcement of
the CSA’s marijuana provisions, regardless the status of marijuana under state law.
H.R. 1523, Respect State Marijuana Laws Act of 2013. This bill would amend federal law to
provide that no provision of the CSA related to marijuana may be applied to any person acting in
compliance with state laws relating to marijuana.
H.R. 1635, National Commission on Federal Marijuana Policy Act of 2013. This bill would
establish a federal commission to undertake a comprehensive review of current federal policies
toward marijuana.
H.R. 2652, Marijuana Businesses Access to Banking Act of 2013. This bill would provide legal
immunity from federal criminal prosecution to banks and credit unions, their officers and
employees that provide financial services to marijuana-related businesses that engage in activities
pursuant to state law (“marijuana related legitimate business”).270 It would protect from criminal,
263 Id.
264 H.R. 710, §2(a), adding new 18 U.S.C. §§3436(a), (b)(1).
265 §2(a), adding new 18 U.S.C. §3436(c).
266 Id. §2(a), adding new 18 U.S.C. §3436(b)(2).
267 21 U.S.C. §881.
268 H.R. 784, §3, amending Section 511(a) of the CSA (21 U.S.C. §881(a)(7)).
269 H.R. 964, §2, amending Section 708 of the CSA (21 U.S.C. §903).
270 H.R. 2652, §3(a).
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Marijuana: Medical and Retail—Selected Legal Issues
civil, or administrative forfeiture a depository institution’s interest for a loan related to such a
business.271 It would not otherwise shield financial institutions from any civil or administrative
forfeiture that might attend the services it provides to marijuana businesses. The bill would,
however, absolve financial institutions of the suspicious activity reports they might otherwise be
required to file with respect to the services to provide for marijuana-related legitimate
businesses.272 Finally, it would bar federal bank regulators from jeopardizing a depository bank’s
federally insured status based on its relationship with marijuana-related legitimate business.273
H.R. 3483, Protecting Individual Liberties and States’ Rights Act. This bill would amend
federal firearms law. Existing law denies users of controlled substances or those with a prior
felony conviction the right to purchase or possess firearms or ammunition. The bill would amend
these provisions to remove from the felony disqualification a federal conviction related to
marijuana in a state where the conduct was lawful and to remove from the marijuana user
disqualification instances where the possession is lawful under state law and the user is a resident
of the state.
H.R. 4046, Unmuzzle the Drug Czar Act of 2014. This bill would delete from existing law the
provision that prohibits the Office of National Drug Control Policy from expending federal funds
for any study or contract relating to the legalization of any Schedule I controlled substances such
as marijuana.
H.R. 4137, Preserving Welfare for Needs Not Weed Act. This bill would add marijuana
dispensaries to the list of business in which Temporary Assistance for Needy Families (TANF)
credits may not be used.
H.R. 4142, No Welfare for Weed Act of 2014. This bill would add marijuana dispensaries to the
list of businesses in which Temporary Assistance for Needy Families (TANF) credits may not be
used. It would also amend the definition of “food” for purposes of the food stamp (SNAP)
program to exclude marijuana products.
H.R. 4179, Lucid Act. This bill would amend federal law relating to highway assistance to the
states to add driving under the influence of marijuana requirements to the existing drunk driving
requirements.
Author Contact Information
Todd Garvey
Charles Doyle
Legislative Attorney
Senior Specialist in American Public Law
tgarvey@crs.loc.gov, 7-0174
cdoyle@crs.loc.gov, 7-6968
271 Id. at §3(c).
272 Id. at §5, amending 31 U.S.C. §5318(g).
273 Id. at §2.
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