AG Sessions ends Obama era policy on legal pot; questions arise about Arkansas’ medical marijuana industry

U.S. Attorney General Jeff Sessions threw a monkey wrench into the Natural State’s long-awaited launch of Arkansas’ medical marijuana industry next month by rolling back an Obama-era policy Thursday (Jan. 4) that opened the door to the legalization of pot in Arkansas and 29 other states.

In a letter sent to U.S. Attorneys’ offices across the nation, Sessions rescinded the Obama administration’s so-called Cole memo adopted by former U.S. Attorney Eric Holder in 2013, and said his department would return to the rule of law directed by Congress and follow well-established principles when pursuing prosecutions related to marijuana activities.

“It is the mission of the (DOJ) to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission,” Sessions said in a statement. “Therefore, today’s memo on federal marijuana enforcement simply directs all U.S. Attorneys to use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country.”

In the one-page memo, Sessions remained true to previous threats after President Donald Trump took office that the DOJ would go back to earlier rules enacted by Congress in the 1970s that prohibit cultivation, distribution and possession of pot, and establish significant penalties for these crimes.

“These statutes reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime,” said Sessions, the nation’s top law enforcement official.

Cody Hiland, the recently appointed U.S. Attorney for the Eastern District of Arkansas, said Sessions’ announcement underscores his commitment to entrust prosecutorial discretion to the federal prosecutors locally across the country.

“We are a nation of laws and not men. I took an oath to uphold the Constitution and the laws of the United States, and that is what this office has done and will continue to do throughout my term as U.S. Attorney,” Hiland said. “To that end, we will continue to exercise our prosecutorial discretion and evaluate criminal cases on an individual basis as it relates to the law and the facts as presented.”

Sessions’ surprise announcement comes only days after California formally legalized the sale of adult use or recreational marijuana starting Jan. 1, an irony not lost on Gov. Asa Hutchinson and others aligned with the upcoming launch of the state’s medical pot industry on Feb. 27.

HUTCHINSON: ‘NO RECREATIONAL POT IN ARKANSAS’
“I think it is a very significant development today, but the question is what is he (Sessions) going to replace that guidance with – whether it is going back to the consistent enforcement against all illegal use and trafficking of marijuana or (if) there is going to be any carved-out exceptions in federal enforcement policy,” Hutchinson told reporters gathered on Thursday at his office at the State Capitol.

Like Sessions, Hutchinson has made clear his disdain for marijuana use and possible legalization of recreational use of pot in states like California, Colorado, Nevada and Massachusetts. He said he has known Sessions for more than 30 years, when both served as U.S. Attorneys in Alabama and Arkansas, respectively, and later as lawmakers in Congress, and was surprised it took the new DOJ chief this long to roll back the Obama era rules.

“If you look at where AG Sessions may wind up on this issue, you should look at where President Trump has recognized medical marijuana as an appropriate exception to federal enforcement policy but has not said the same thing on recreational use,” the governor said. “I don’t want Arkansas to become a recreational use state. People passed medical use, they did not adopt recreational marijuana and I don’t think they would.”

BANKING INDUSTRY ‘CHILLING EFFECT’
Concerning Arkansas, Hutchinson said his administration will watch to see if the DOJ distinguishes between medical marijuana and so-called adult or recreational use of legalized pot. Secondly, he said he also looks forward to Sessions’ guidance on the financial side of the legal pot industry and how banking transactions are handled.

Robert Smith and Blake Lewis, attorneys with Friday, Eldredge & Clark, said they believe the DOJ memo may have a “chilling effect” on banks previously thinking of providing payment services to Arkansas’ fledgling medical marijuana sector.

After the November 2016 election, the attorneys issued an alert to banking clients after voters approved Amendment 6, warning that financial institutions providing financial services to a marijuana business could face charges of aiding and abetting money laundering and racketeering. They also said banks could be at risk when approached by marijuana related businesses.

“(Attorney General) Sessions has been so hardcore against marijuana use regardless of the reasons …,” Smith said of the COLE memo. “We had a number of bank clients over the last year or so ask about this that may have wanted to dip their toe and look at it further, but I can’t imagine you will see much in the way of banks wanting to take on the added compliance costs, along with the general unknowns.”

Rep. Doug House, R-North Little Rock, the chief sponsor of more than 50 medical marijuana-related bills passed during the legislative session, said he is interested to know how federal officials will address the cash handling issues for the state’s medical pot industry in the future.

“It they are rolling back the Cole amendment, that is going to scare the daylights out of the banks …,” House warned. “I still think this is going to throw it into the laps of Congress and that is where it should be.”

House said he has had conversations with members of Arkansas’ Congressional delegation, but doesn’t believe there is any resolve in Congress to take on the Trump administration on the Cole amendment or legalization of marijuana for recreational use.

“I am real pleased that a couple of banks stepped up, but they may have to shy away from it,” House said. ”If Congress realizes what billions of dollars in cash money flowing around on the street is doing in terms of corruption, murder, robbery, extortion, blackmail and organized crime …, they could help these (bankers) take these evils off the street.”