Sessions Marijuana Memo Legally Means Nothing for the Hemp Industry

U.S. Attorney General Jeff Sessions this week rescinded guidance documents adopted during the Obama administration favorable to marijuana, giving prosecutors more latitude to enforce federal law and creating uncertainty over the future of medical and recreational marijuana businesses operating under state laws that have blossomed across the United States.

So how does the Jan. 4 memorandum on marijuana enforcement from Sessions impact marketers of hemp-based products like cannabidiol (CBD) in dietary supplements?

“From a legal standpoint, this means nothing for the hemp industry," declared Jonathan Miller, a Kentucky-based hemp lawyer, in a brief phone interview. Sessions “was very explicit that this issue is about marijuana," explained Miller, a member of the law firm, Frost Brown Todd LLC.

Sessions’ memo won’t “cause any hiccups for the hemp industry," added Tim Gordon, president and CEO of Functional Remedies, a Boulder, Colorado-based marketer of hemp supplements.

In his memorandum directed to U.S. attorneys, Sessions rescinded previous guidance documents adopted during the Obama administration. The documents gave the states some level of comfort that their regulated marijuana programs would not be disrupted by U.S. law enforcement authorities, even though marijuana has remained illegal under federal law.

Federal prosecutors had been directed to prioritize their enforcement under the Controlled Substances Act (CSA) based on certain principles, such as focusing on the distribution of marijuana to minors, cracking down on cartels and criminal enterprises, and preventing the growing of marijuana on public lands.

Announcing the new memorandum on marijuana enforcement, the U.S. Department of Justice (DOJ) said it was returning “to the rule of law."

"It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal and federal law enforcement partners to carry out this mission," Sessions said in a statement. "Therefore, today's memo on federal marijuana enforcement simply directs all U.S. attorneys to use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country."

One of the memos cited frequently by the cannabis industry was issued by James M. Cole, a former DOJ official. Cole reiterated in 2013 guidance that certain priorities outlined previously and in his memo—such as preventing the distribution of pot to kids—would continue to guide the DOJ’s marijuana-related enforcement of the CSA.

“In jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of marijuana," Cole wrote, “conduct in compliance with those laws and regulations is less likely to threaten the federal priorities" that DOJ outlined.

Sessions’ reversal of the Cole memo, Gordon said, “should have little to no effect" in the hemp industry other than creating some confusion. Several sources reiterated the U.S. Attorney General was focused on marijuana and that his announcement doesn’t affect the legality of hemp-derived products. What's more, previous guidance documents issued by the DOJ under the Obama administration never changed the actual law.

“It is important to note that the Cole memo strictly focused on marijuana, which is a Schedule [I controlled] substance, a separate industry with separate products altogether," said Josh Hendrix, director of business development, domestic production, CV Sciences Inc., in an emailed statement.

Because marijuana is a Schedule I controlled substance, Sessions’ memo could have significant criminal and monetary ramifications for cannabis-friendly states should federal prosecutors choose to exercise their discretion in cracking down on medical and recreational pot.

Christopher Allen, a member of the State Attorneys General Practice with the law firm Cozen O’Connor, observed the Cole memo “never legalized anything.

“But it at least provided cover and a degree of certainty that you weren’t going to get in trouble," added Allen, whose practice also is focused on cannabis law. “Now, that’s gone."

Sessions’ move has increased uncertainty in the cannabis industry, said Lori Kalani, co-chair of Cozen O'Connor's State Attorneys General Practice. Marijuana stocks reportedly plummeted on the news, reflecting fears over the implications for cannabis companies.

In a statement, Oregon Attorney General Ellen Rosenblum described Sessions’ move as “another example of this administration's overreach."

“States up and down the West Coast, and beyond, have spoken," she said. “This is an industry that Oregonians have chosen, and one I will do everything within my legal authority to protect."

In the wake of Sessions’ memo, states like Oregon may be more keen than ever to take actions to limit the federal government’s scrutiny of state cannabis programs. Kalani, whose practice areas include a focus on cannabis, suggested Sessions’ memo could make it a higher priority for state attorneys general (AGs) to enforce their own cannabis laws to ensure compliance with the state laws within their jurisdictions.

Companies selling hemp-derived products, including supplements, aren’t immune from potential enforcement actions by the likes of Rosenblum. It was her office that sued GNC Holdings Inc., one of the nation’s largest retailers of supplements, in 2015.

AGs “scrutinize the dietary supplement industry especially because these are things people are putting in their bodies, and they’re making specific claims about their effects," Allen said.

Sessions’ memo, he added, “puts another layer of scrutiny and another veneer of uncertainty on companies that are in this [cannabis] space, and makes it more important than ever to really understand what the rules and regulations are and to really scrutinize how you’re operating, what kind of claims you’re making, and what the AGs and other law enforcement officials in your area are doing in this space."

Hemp Distinct From Marijuana

Although U.S. prosecutors now have wider discretion to target marijuana, the same principle doesn’t apply to hemp. While marijuana remains illegal under federal law, there are certain exemptions for hemp under the CSA. As the Hemp Industries Association (HIA) noted last year in court documents, “The express language of the Controlled Substances Act … provides that hemp stalk, fiber, oil and sterilized seed are not controlled as marijuana."

The U.S. Farm Bill, which authorizes the growth and cultivation of hemp under agricultural pilot programs, is another law distinguishing hemp from marijuana.

Sessions’ memo, Denver-based Hoban Law Group stated in an analysis on its website, “does not impact the industrial hemp, or the CBD, industries on its face.

“Unlike marijuana, industrial hemp is legal under federal law within exemptions written into the Controlled Substances Act, as well as when grown or cultivated as part of a Farm Bill-authorized state pilot program," noted the law firm, which specializes in various matters related to cannabis.

Miller, nonetheless, remains concerned about uncertainty in the marketplace, including law enforcement officials who are confused about the difference between hemp and marijuana. Sessions’ memo could lead to further misunderstandings.

“It may cause some initial confusion for folks who are not educated on the subject matter of cannabis in general, and specifically the difference between marijuana and hemp," acknowledged Gordon, president of the Colorado HIA chapter. “We may see some general confusion."

Gordon and others will need to continue to educate consumers, lawmakers and others on the important differences between hemp and marijuana.

“The confusion simply impresses the work industry leaders are currently doing to educate on the distinction between hemp and marijuana," said Hendrix, whose employer is among the largest U.S. providers of CBD derived from hemp and works with the U.S. Hemp Roundtable to educate the public and elected officials about the industry.

Miller also highlighted the importance of continuing education and passing into law the Industrial Hemp Farming Act of 2017. The bill, which has the bipartisan support of nearly 40 lawmakers in the House of Representatives, would exclude industrial hemp from the definition of marijuana under the CSA.

“The fact that we have such a bipartisan multi-ideological coalition supporting it gives us a real good feeling that it’s going to pass," Miller said.