Yesterday, Attorney General Jeff Sessions issued an enforcement memo on Marijuana which will rescind the Obama administration's guidance and policy on allowing individual states to develop their own system and regulations around the legal marijuana in their state. The Obama administration allowed states to legalize marijuana without federal intervention, however, this was just overturned by Sessions in a one-page memo which makes it clear that marijuana possession and distribution is against federal law, and it will direct U.S. attorneys to approach these cases as they do all other cases when enforcing them.
This move by Jeff Sessions now injects a high level of uncertainty into the cannabis industry, especially in the regions of the country that have legalized the production and sale of marijuana. This adds a layer of uncertainty and whether it is okay to grow, buy or use marijuana in states where it's legal. California and the other states that have legalized marijuana sales are now in an unclear position as to their legal stance and what federal prosecutors will do. The new guidance threatens to upend legal sales by giving federal prosecutors more discretion in how they enforce federal law. According to a senior DOJ official, "This is the return of the rule of law,"
Sessions told reporters Thursday that the Obama guidance in the Cole memo -- written by then-Deputy Attorney General James Cole -- wasn't consistent with federal law.
"It was interpreted as a safe harbor for individuals," Sessions said. "This memo does not have safe harbors in it."
“In deciding which marijuana activities to prosecute under these laws with the Department’s finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions,” considering the seriousness of a crime and its impact on the community, Sessions told prosecutors in a one-page memo.
What is not clear is how the change might affect states where marijuana is legal for medical purposes. A congressional amendment blocks the Justice Department from interfering with medical marijuana programs in states where it is allowed. Justice officials said they would follow the law, but would not preclude the possibility of medical marijuana related prosecutions.
Here are links to the articles and source of this news...
https://apnews.com/19f6bfec15a74733b40eaf0ff9162bfa
https://www.cbsnews.com/news/jeff-sessions-marijuana-policy-announcement/
What is clear is that Session's new memo is not being well received in the Cannabis industry, even Republicans hate Jeff Sessions' new weed policy.
I believe all this does is open up even more legal battles against Session, DOJ and the Federal Gov't. This new memo just makes it more expensive to operate a marijuana-related business (cultivation or sales) in the US, which is why you may want to look north to Canada for a clear and legal path to operating a cannabis business.
As a result of this new development, the cannabis stocks in the US have sold off and could be a cause for concern for investors. We may see it become more difficult for financing deals, capital may dry up until we get better guidance on what the prosecutors will do. Overall, I think this is a temporary setback for the cannabis industry in the states and just a way for various federal agencies to get a piece of the cannabis pie in terms of legal fees, licensing and to slow down an industry that they have very little control over. This does present a good buying opportunity for US-based cannabis stocks, but it may be wise to wait and see what happens over the next few weeks.
Yesterday and today, the US Marijuana index sold off around 20% on the news but has recovered slightly in the last few hours.
Ironically, 2 days ago I wrote a blog posted on Steemit, which discusses the North American Index and how the US stock may outperform over the coming year. I think this is just a set back in the stock prices and may be a good time to add to positions.
Here is the blog:
North American Cannabis Stocks Rise 200% In Last 2 Months. How You Can Profit From Legalization.
Vin Maru - Editor at InvestInMJ.com, Research Analyst, and MJ Entrepreneur.