For years, the biggest risk in the cannabis industry — and the one scaring away the biggest investors — was the federal Justice Department.
As U.S. attorneys and DEA agents have demonstrated, medical marijuana operations can follow state law to the letter only to lose everything when federal law enforcement decides to get involved. This is what shut down a third of San Francisco's licensed and permitted medical marijuana dispensaries during the 2011-2012 crackdown.
That risk appears to be over now. On Monday, a federal judge ruled that recent actions in Congress bar the Justice Department from interfering with a state-legal marijuana enterprise — a stunning rebuke for federal drug cops, and a game-changing victory for legal weed.
The ruling came in the case of the Marin Alliance for Medical Marijuana, a modest (by today's standards) outfit that sold cannabis in the town of Fairfax — with a permit created by the town's police chief — from 1997 to 2012.
The dispensary attracted the feds' attention early, but managed to stay in business for another decade after a 2002 injunction, until U.S. Attorney Melinda Haag filed a forfeiture action against the dispensary's landlord and forced operator Lynette Shaw to close her doors. Help for Shaw came from Congress. Earlier this year, federal lawmakers de-funded Justice Department efforts taken against medical marijuana operations that comply with state law.
That sounds good — after all, if there is no money for police, there's no way police can function — but skeptics were cautious. The Controlled Substances Act still stood, and cannabis is still illegal, so how did this change anything?
The answer came from U.S. District Judge Charles R. Breyer — brother of Supreme Court Justice Stephen Breyer — who ruled that while the 2002 injunction against Shaw still stands, the federal government cannot enforce it.
“The plain reading of [Congress's action] forbids the Department of Justice from enforcing this injunction against MAMM to the extent that MAMM operates in compliance with California law,” Breyer wrote.
“To the Court's recollection,” he added, “the Government has yet to allege or even suggest that MAMM was at any time operating in violation of state law.”
Let's say that again: the federal Justice Department can no longer interfere with a marijuana operation as long as it complies with state law.
And state law, thanks to Gov. Jerry Brown and the Legislature, which passed a package of bills outlining statewide regulations — and expressly allowed for-profit “commercial cannabis activity” — has just become stricter and clearer than ever.
The budget amendment, authored by California Reps. Dana Rohrabacher (R-Huntington Beach) and Sam Farr (D-Carmel), is set to expire at the end of the current federal budget next year, but is almost sure to be renewed — unless, of course, Congress goes further and decides to remove cannabis from the Controlled Substances Act.
In the meantime, the message is clear: if you thought the Green Rush was wild now, it's about to get wilder.
As for Shaw? Despite a reported $3 million tax bill due to the IRS, she's looking for investors and seeking to reopen MAMM. Some of the San Francisco operators closed during the crackdown may not be far behind.
Sean Parker Circulates Legalization Language
Monday was a big day for cannabis. On the heels of the MAMM decision came the victory of Justin Trudeau's Liberal Party in Canada, which has vowed to legalize recreational marijuana.
Drug reform advocates celebrated, and used the opportunity to push forward on legalizing in California as well.
Legalization has been in a bit of a nether region, with no big money backers signaling support for any of the proposed legalization measures floating around. (It will take as much as $20 million to run and win a statewide ballot measure in November 2016, with $3 million or more needed at the onset to run a petition drive.)
The biggest pro-legalization money out there is in Silicon Valley billionaire Sean Parker's bank account. Parker has been mum so far, but his political and fundraising team has begun circulating proposed language to reform advocacy groups.
What does it say? Until Parker declares it public, it's a big secret.
“We've seen it, but we're in a weird situation,” said Mason Tvert, a spokesman for the Marijuana Policy Project, the main force behind Colorado's successful legalization bid in 2012.
Parker's team has circulated the language under a strict embargo, which means, “We can't really comment on it,” Tvert said.
Parker's language, which could be public this week or next, was supposedly hashed out in cooperation with Justin Hartfield, the Orange County CEO of Weedmaps, who parked $1 million in a political action committee earlier this year.
Parker's team did not respond to a request for comment left through his assistant. But word is that forces within the industry are already unhappy about being left out of the drafting process.
That could be why instead of leading the marijuana crusade, Lt. Gov. Gavin Newsom — a friend of Parker and legalization's most vocal pitchman to date — chose last week to sponsor another, easier initiative: gun control.