In the wee hours of Friday, May 30, 2014, the U.S. House of Representatives approved an amendment to an appropriations bill that medical marijuana proponents hope will stop the Drug Enforcement Administration raids of businesses operating legally under state medical marijuana laws.
What the Amendment Says
The full text of the amendment to H.R. 4660 is relatively short:
None of the funds made available in this Act to the Department of Justice may be used, with respect to the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington, and Wisconsin, to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.
It is similar to an amendment that failed in 2012, except for the longer list of states.
Now it goes to the Senate, where govtrack.us gives it a 28 percent chance of success. There is also a legitimate question about whether it would make much of a difference, since the DEA generally claims that it targets only those who violate state law. Passage of the provision may not actually give owners and investors the security they desire.
But what if it fails? Does the message of failure mean federal enforcement efforts may target legitimate businesses operating within state law? If so, we have a problem. The negative inference should scare the pants off investors and businesses.
Federal Enforcement Priorities
In August 2013, the Department of Justice announced that it would narrow its enforcement focus to eight areas. These included preventing marijuana distribution to minors, cracking down on drugged driving and stopping drug trafficking by gangs and cartels. Many business people found the list reassuring and were consequently blindsided by a swift uptick in enforcement activity against medical marijuana. The link to the announced priorities has yet to be explained.
In April 2012, federal agents raided Oaksterdam University, (closely linked to Oakland’s Harborside Health Center, one of the largest and most respected dispensaries in Oakland, California), hauling away computers, files and pot plants. In May 2014, The Denver Post reported that DEA agents conducted a door-smashing, SWAT-style raid on four medical marijuana dispensaries in Denver. Some have suggested that, regardless of whether the enforcement activity proves to be justified, the passage of time between the raid and the dismissal of charges is enough to finish off many small businesses.
The Rohrabacher Amendment
We have been here before, but the legal environment for some forms of legalization has changed a lot in the last two years.
Last September, Senator Patrick Leahy raised the issue of whether it made sense to use federal resources to prosecute the personal or medicinal use of marijuana in states that have made such consumption legal. President Obama has long used much the same argument. Nonetheless, the amendment only has a 28 percent of passing — those are not good odds.
Patients and doctors care about protection for medical marijuana for compassionate reasons; libertarians look at it as a states rights issue. For the industry, it would be better if the excitement were about growing revenues, not about having inventory and bank accounts seized. As the issue moves to the Senate, businesses and investors may want to make their voices heard. The provision may not offer foolproof protection against capricious enforcement, but the alternative is worse.