Last week, Attorney General Jeff Sessions released a formal memorandum effectively withdrawing the Cole Memorandum. As you may recall from our earlier posts, the Cole Memo directed the federal government not to use it’s limited resources to police robustly regulated state-legal cannabis. Under the direction of the Cole Memo, the DOJ would defer cannabis regulation to the individuals states which legalized it.

The Sessions Memo

In contrast, Sessions’ 1-page memo states that  going forward, US Attorneys should weigh the following factors when deciding which cases to prosecute: (1) federal law enforcement priorities set by the Attorney General, (2) the seriousness of the crime, (3) the deterrent effect of criminal prosecution, and (4) the cumulative impact of particular crimes on the community. The memo essentially leaves federal prosecution of cannabis crimes to the discretion of the US attorneys in each district. However, if Sessions decides to place cannabis enforcement as a priority, it could place pressure on US attorneys to devote more of their resources to prosecuting such cases.

What does this mean for Oregon?

In a statement responding to the new memo,  US Attorney for Oregon, Billy Williams, has suggested that he will stick with the status quo for now. His office “will continue working with our federal, state, local and tribal law enforcement partners to pursue shared public safety objectives, with an emphasis on stemming the overproduction of marijuana and the diversion of marijuana out of state, dismantling criminal organizations and thwarting violent crime in our communities.”

We discussed these objectives a few months earlier, with the passage of SB 1057 and the new tracking requirements under the OMMP.

Banking

While Oregon may not see a big shift in federal enforcement within the state, the new memo is likely to produce a chilling effect on banking. Those in the cannabis industry already know that banking can already be extremely challenging. There are a very limited number of banks  willing to open accounts for new cannabis related businesses, and those that do often charge higher fees and place greater restrictions on the accounts.

Currently, banks that work with cannabis related businesses are able to do so because of the 2014 FinCEN guidelines published by the Department of Treasury in response to the Cole Memo.  Under those guidelines, banks are allowed to open accounts for cannabis related businesses as long as they make the required  “Suspicious Activity Report” (SAR) fillings. As long as the information contained in the SAR does not invoke a prosecution priority under the Cole Memo (i.e. the business is stringently following all state cannabis regulations), those businesses are not prosecuted by the federal government.

With the Cole Memo rescinded, it seems likely that the Department of Treasury will update their cannabis banking regulations to be consistent with the DOJ enforcement priorities. Until that happens, banks may become even more weary to open new accounts with cannabis related businesses.

If you have any questions about how these policy changes affect your cannabis business, or would like to learn more about cannabis regulation, please feel free to contact us!