Introduction

The medicinal and recreational use and popularity of marijuana has continuously grown throughout the U.S. since Oregon became the first state to decriminalize marijuana in 1973. To date, thirty-eight states and the District of Columbia have implemented medical marijuana programs, twenty-five of which have also expanded into adult-use.

Regardless of the jurisdiction, cannabis and its derivatives remain highly regulated and thoroughly scrutinized by legislatures and associated regulatory agencies tasked with implementing and intense regulatory systems. As the ever evolving and malleable marijuana laws pace alongside the expanding marijuana market, the importance of attorneys in navigating such landscape has never been clearer. This is due to the states’ expectation that licensees understand and abide by the tremendous number of ongoing changes to statutes, regulations, and policies. Thus, it is important for anyone engaged in or servicing a marijuana plant-touching business to consult with and utilize a licensed attorney who focuses on cannabis when navigating the complex issues unique to the cannabis industry.

I. Marijuana’s Current Status as Schedule I Under the Controlled Substances Act (CSA)

As the news sources recently have highlighted, marijuana remains a Schedule I substance pursuant to the CSA. This scheduling is currently under fire and changes are expected this year. Specifically, in August 2023, the Department of Human and Health Services submitted its recommendation that the Drug Enforcement Administration (DEA) reschedule marijuana to a Schedule III substance. This recommendation was further endorsed by the Department of Justice, a process that is currently pending via the formal rulemaking process via the DEA. Public comment is currently open until July 22, 2024.

Even when marijuana is rescheduled, marijuana will not be a legal substance. Thus, current states’ regulatory structures will undoubtedly remain in place, especially as they relate to adult-use marijuana. State alcohol commissions or related departments often oversee legalized adult-use marijuana, as many states have enacted legislation or constitutional amendments mandating that marijuana regulation be managed similarly to alcohol regulation.

Despite numerous differences among state regulatory systems, they generally share common themes in their implementation. Specifically, states require seed-to-sale tracking systems for all marijuana and marijuana products. These requirements include ensuring plants above a certain height (over eight inches for the most part) be tagged with a unique identification number, which is then tracked throughout its growth and transfer for manufacturing into marijuana products, or directly to stores for sale. These systems are implemented for a multitude of reasons, including insuring adequate testing is achieved for each harvest as well as to deter diversion from the regulated marijuana system.

Another commonality are the robust requirements pertaining to financial disclosures of both owners and investors. These requirements were routinely implemented at the outset of regulated systems that both Colorado and Washington implemented as the first states with medical marijuana regulatory structures. Part of the reasoning for immense disclosures relates to the now-rescinded “Cole Memo”[1]. The Cole Memo, particularly the 2013 version and its 2014 update, essentially outlined key federal priorities. These included preventing marijuana revenue from funding criminal enterprises, ensuring state-authorized marijuana activities were not used as a pretext for trafficking other illegal substances, and preventing the distribution of marijuana to minors. As a result, states implemented lengthy disclosure requirements and background checks.

Finally, another commonality state marijuana regulatory systems share are immense testing requirements. States implement robust testing requirements to ensure public safety. These testing requirements include microbial, mycotoxins, potency, pesticides, and heavy metals. States may vary as to the acceptable limits for the products, but these testing requirements are heavily enforced with a goal of ensuring public safety.

II. Federal Policy towards State Legal Cannabis Businesses

Given that businesses can operate in complete compliance with state law, while simultaneously in violation of federal law, marijuana businesses must be made aware of the potential for federal enforcement. There is some federal guidance and policies giving cover to state legal marijuana businesses, but federal law enforcement has always been clear that it has the authority to enforce federal law in states where marijuana has been legalized on a state level. The U.S. Department of Justice (DOJ), via the Rohrabacher-Farr amendment, is prohibited from spending funds to interfere with the implementation of state medical marijuana laws. However, this policy applies to those businesses complying with state law and not to those dealing in illicit marijuana trafficking.

III. Benefits of Hiring an Attorney

As highlighted throughout this article, the ever-changing regulatory landscape of marijuana is quite precarious and will continue to grow in complexity for the near future. As such, hiring a seasoned attorney to guide your business throughout the licensing and post-licensing operational process is prudent, if not necessary. A seasoned cannabis attorney can ensure that each step of the application requirements are met; help explain and navigate the nuances between the federal and state regulatory frameworks; and ultimately minimize any risks associated with operating a federally-illegal, state-sanctioned cannabis business.

[1] Nuance Communications, Inc. (justice.gov); followed by the 2014