By: Melissa Chapaska

The Big Win

On August 16, 2016, the 9th Circuit dealt a big win to state-legal marijuana growers and suppliers when it ruled that the United States Department of Justice (DOJ) is prohibited from spending money to prosecute medical marijuana businesses that are in compliance with state law.  The case, United States v. McIntosh consolidated ten appeals by medical marijuana growers and dispensary operators in California and Washington prosecuted by the DOJ for violations of the Controlled Substances Act. The 9th Circuit case arose from three district court cases – McIntosh, Lovan, and Kynaston – where private individuals were indicted for violations of the Controlled Substances Act resulting from their involvement with medical marijuana grow and supply operations, including the popular Hollywood Compassionate Care in California.

Following their prosecution, the medical marijuana growers and suppliers filed interlocutory appeals and writs of mandamus seeking dismissal of their indictments or to enjoin their prosecutions on the basis of Section 542 of the 2016 Consolidated Appropriations Act.  Interestingly, the 9th Circuit did not base its decision on public policy or the extent of executive power; rather, the court relied on the basis of the language of the congressional appropriations rider at Section 542, which prohibits the Department of Justice from using the congressionally allocated funds “to prevent any of [the states] from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”

The DOJ argued that Section 542 only prohibited the agency from pursuing legal action against a state and did not apply to their power to prosecute private individuals operating state law-compliant medical marijuana businesses.  However, the 9th Circuit agreed with Appellants that Section 542, although “not a model of clarity,” specifically restricts the DOJ from spending money to prosecute individuals who are in compliance with the medical marijuana laws in the states where they operate. Therefore, the individuals in McIntosh are entitled to an evidentiary hearing to prove that they were in compliance with state law before the DOJ can move forward with the indictments at issue.

The Rohrabacher-Farr Amendment

Although not addressed by the 9th Circuit decision, the history of Section 542 is helpful to understanding the DOJ’s interpretation and the implications of the 9th Circuit’s reliance on the congressional appropriations rider. Section 542’s restriction on federal prosecution of state-compliant medical marijuana growers and suppliers began in the House as the Rohrabacher-Farr Amendment. The amendment originally passed the House in May 2014 with a strong bipartisan showing of 49 Republicans joining 170 Democrats in support of the amendment.  It was the first time either chamber of Congress had ever voted in favor of a measure to relax federal marijuana laws or enforcement.

The House reauthorized the bipartisan Rohrabacher-Farr Amendment in 2015 with bipartisan support. Following its passage, the amendment’s co-sponsor, Rep. Sam Farr (D-Calif.) released a statement acknowledging “[s]tates with medical marijuana laws are no longer the outliers; they are the majority. This vote showed that Congress is ready to rethink how we treat medical marijuana patients in this country. This amendment gives states the right to determine their own laws for medical marijuana use; free of federal intervention.”

After its journey through Congress, the Rohrabacher-Farr Amendment ultimately became Section 542 of the Consolidated Appropriations Act and central to the 9th Circuit’s decision in McIntosh.  However, even following its passage, questions loomed as the DOJ continued medical marijuana prosecutions based on its interpretation that Section 542 doesn’t apply to cases against individuals or organizations.  The continued prosecution by the DOJ and resulting agency interpretation led sponsors of the Rohrabacher-Farr Amendment to send a letter to Attorney General Eric Holder in 2015: “As the authors of the provision in question, we write to inform you that this interpretation of our amendment is emphatically wrong” – a conclusion with which the 9th Circuit agreed.

The War Rages On

Despite the McIntosh decision, medical marijuana growers and suppliers are still not in the clear.  Medical marijuana businesses should be aware: the federal government has not been stripped of its power under the Controlled Substances Act.  In fact, the 9th Circuit decision in McIntosh is substantially limited.

First, the 9th Circuit emphasized that their ruling and protections of Section 542 extend only to growers and suppliers who are in strict compliance with state medical marijuana laws. The 9th Circuit explicitly rejected the argument that Section 542 requires the federal government to step back and allow states exclusive control over medical marijuana suppliers who are not in compliance with state medical marijuana law.  As such, DOJ retains the ability to prosecute any individuals that fail to comply “with all relevant conditions imposed by state law on the use, distribution, possession, and cultivation of medical marijuana.”

Furthermore, the 9th Circuit ruling does not bind courts outside of the jurisdiction of the 9th Circuit.  So, east coast states with state-legal medical marijuana, such as Pennsylvania in the 3rd Circuit, will not receive a direct benefit of the 9th Circuit’s ruling.  Additionally, Section 542 does not extend past medical marijuana; therefore, recreational marijuana businesses will also not share the shield of the 9th Circuit ruling. Also, Congress is free to eliminate the Section 542 prohibition and restore DOJ’s funding for criminally pursuing state-legal medical marijuana businesses.

The 9th Circuit acknowledged many of these considerations itself when it concluded the McIntosh decision with a stark reality-check about this the legal limbo of state-legal medical marijuana:

To be clear, § 542 does not provide immunity from prosecution for federal marijuana offenses … Congress currently restricts the government from spending certain funds to prosecute certain individuals. But Congress could restore funding tomorrow, a year from now, or four years from now, and the government could then prosecute individuals who committed offenses while the government lacked funding. Moreover, a new president will be elected soon, and a new administration could shift enforcement priorities to place greater emphasis on prosecuting marijuana offenses…while the CSA remains in effect, states cannot actually authorize the manufacture, distribution, or possession of marijuana. Such activity remains prohibited by federal law.

While state-legal medical marijuana advocates were dealt a big win this battle, the McIntosh decision comes with two important lessons: (1) it is essential for medical marijuana businesses to remain in full compliance with state law, and (2) the war on fully legalizing medical marijuana rages on.

9th CircuitAttorneys at Cannabis Law PA are dedicated to helping their clients navigate the medical marijuana licensing, permitting, certification, and regulatory compliance processes necessary to thrive in the budding medical marijuana industry. Cannabis Law PA attorneys are licensed in Pennsylvania, New Jersey, and New York.