Federal court rules that DEA must stop interfering with compliant medical marijuana businesses

by Dentons
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On October 19, 2015, the United States District Court for the Northern District of California rejected an argument by the US Government seeking a narrow interpretation of congressional legislation designed to limit federal law enforcement efforts in the face of state laws legalizing marijuana.

The issue before the court was Marin Alliance for Medical Marijuana’s (MAMM) request for the court to dissolve a permanent injunction entered against it in 2002 ordering it to cease distribution of cannabis on the grounds of there being “a strong likelihood” that MAMM’s conduct violated the Controlled Substances Act and the Supremacy Clause of the United States Constitution. Despite the injunction, MAMM has operated a medical marijuana dispensary in compliance with California’s Compassionate Use Act of 1996, which exempted from state criminal prosecution physicians, patients and primary caregivers who possess or cultivate marijuana for medicinal purposes with a physician’s recommendation. The court denied the motion to dissolve the injunction, but held that the enforcement of the injunction must be consistent with the new directive of Congress in Section 538 of the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235, 128 Stat. 2130 (2014) (2015 Appropriations Act).

Section 538, also known as the Rohrabacher-Farr Amendment (Amendment), prohibits the United States Department of Justice (DOJ) from expending any funds in connection with the enforcement of any law that interferes with a state’s ability to implement its own law(s) authorizing the use, distribution, possession or cultivation of medical marijuana. See 2015 Appropriations Act § 538. When the legislation passed, both supporters and opponents of the Amendment agreed that the bill prohibits the Drug Enforcement Administration (DEA) from spending funds to arrest medical marijuana patients and providers that comply with applicable state law.

The Government contended that the Amendment only prevents actions against states and not against the individuals or businesses engaged in marijuana-related activities. The court rejected this argument, finding that the Government’s assertion “that enjoining any one medical marijuana dispensary—here, MAAM—does not impede California’s implementation of its medical marijuana law” is an inherent contradiction. The court interpreted the Government’s argument “to mean that, in the grand scheme of things, shutting down any given dispensary may be presumed to have such a minimal effect on California’s medical marijuana regime that it does not ‘prevent’ California from ‘implementing’ its State law.” The court found this argument to be “at odds with fundamental notions of the rule of law” for it has “never been a legal principle than an otherwise impermissible government intrusion can be countenanced because any one defendant is a small piece of the legal landscape.”

While the court held that a plain reading of the amendment forbade the DOJ from enforcing the injunction to the extent that MAMM operated in compliance with California law, the court also considered the legislative history of the Amendment in its order. In rejecting the Government’s argument that the legislative history was irrelevant, the court referenced an April 8, 2015, letter written by co-authors of the Amendment, Representatives Dana Rohrabacher and Sam Farr, addressed to then Attorney General Eric Holder. The letter responded to earlier “statements [made by the DOJ] indicating that the [DOJ] does not believe such a spending restriction designed to protect [the medical marijuana laws of 35 states] applies to specific ongoing cases against individuals and businesses engaged in medical marijuana activity.” The court cited the following passage from the letter in finding that the legislative history was relevant and did not support the Government’s position:

“as the authors of the provision in question, we write to inform you that this interpretation of our amendment is emphatically wrong. Rest assured, the purpose of our amendment was to prevent the Department from wasting its limited law enforcement resources on prosecutions and asset forfeiture actions against medical marijuana patients and provides, including businesses that operate legally under state law. In fact, a close look at the Congressional Record of the floor debate of the amendment clearly illustrates the intent of those who sponsored and supported this measure. Even those who argued against the amendment agreed with the proponents’ interpretation of their argument.”

Ultimately, the court concluded that as long as Congress precludes the DOJ from expending funds in the manner proscribed by Section 538, the court must enforce the terms of the Amendment.

While the decision is significant, it of course does not bind other courts who increasingly will be called upon to determine the interplay between state and federal laws regarding marijuana. In fact, in Colorado, an attorney who has been charged with money laundering and trying to deposit proceeds from an illegal enterprise into a bank in connection with certain state-licensed marijuana facilities, has moved to dismiss the claims based on the amendment. We will continue to follow developments related to the Amendment.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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