# Marijuana: Medical and Retail—Selected Legal Issues

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URL: https://www.frixlaw.com/law-library/documents/crs%3AR43435

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** April 8, 2015
- **Citation:** R43435

## Text

Marijuana: Medical and Retail—
Selected Legal Issues
-name redactedLegislative Attorney
-name redactedSenior Specialist in American Public Law
-name redactedLegislative Attorney
April 8, 2015

Congressional Research Service
7-....
www.crs.gov
R43435

Marijuana: Medical and Retail—Selected Legal Issues

Summary
The federal Controlled Substances Act (CSA) outlaws the possession, cultivation, and distribution
of marijuana except for authorized research. More than 20 states have regulatory schemes that
allow possession, cultivation, and distribution of marijuana for medicinal purposes. Four have
revenue regimes that allow possession, cultivation, and sale generally. The U.S. Constitution’s
Supremacy Clause preempts any state law that conflicts with federal law. Although there is some
division, the majority of state courts have concluded that the federal-state marijuana law conflict
does not require preemption of state medical marijuana laws. The legal consequences of a CSA
violation, however, remain in place. Nevertheless, current federal criminal enforcement
guidelines counsel confining investigations and prosecutions to the most egregious affront to
federal interests.
Legal and ethical considerations limit the extent to which an attorney may advise and assist a
client intent on participating in his or her state’s medical or recreational marijuana system. Bar
associations differ on the precise boundaries of those limitations.
State medical marijuana laws grant registered patients, their doctors, and providers immunity
from the consequences of state law. The Washington, Colorado, Oregon, and Alaska retail
marijuana regimes authorize the commercial exploitation of the marijuana market in small taxable
doses.
The present and potential consequences of a CSA violation can be substantial. Cultivation or sale
of marijuana on all but the smallest scale invites a five-year mandatory minimum prison term.
Revenues and the property used to generate them may merely be awaiting federal collection
under federal forfeiture laws. Federal tax laws deny marijuana entrepreneurs the benefits
available to other businesses. Banks may afford marijuana merchants financial services only if the
bank files a suspicious activity report (SAR) for every marijuana-related transaction that exceeds
certain monetary thresholds, and only if it conducts a level of due diligence into its customers’
activities sufficient to unearth any affront to federal interests.
Marijuana users may not possess a firearm or ammunition. They may not hold federal security
clearances. They may not operate commercial trucks, buses, trains, or planes. Federal contractors
and private employers may be free to refuse to hire them and to fire them. If fired, they may be
ineligible for unemployment compensation. They may be denied federally assisted housing.
At the heart of the federal-state conflict lies a disagreement over dangers and benefits inherent in
marijuana use. The CSA authorizes research on controlled substances, including those in
Schedule I such as marijuana, that may address those questions. Members have introduced a
number of bills in the 114th Congress that speak to the conflict. Additionally, a few marijuanarelated provisions were enacted into law late in the 113th Congress.
This report is available in an abridged form, without footnotes or citations to authority, as CRS
Report R43437, Marijuana: Medical and Retail—An Abbreviated View of Selected Legal Issues,
by (name redacted) and (name redacted). Portions of this report have been borrowed from CRS Report
R43034, State Legalization of Recreational Marijuana: Selected Legal Issues, by (name redacted)
and (name redacted).

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Marijuana: Medical and Retail—Selected Legal Issues

Contents
Introduction...................................................................................................................................... 1
Background ...................................................................................................................................... 1
Controlled Substances Act Today .............................................................................................. 3
Penalties .............................................................................................................................. 5
Forfeiture ............................................................................................................................. 5
Developments in the States........................................................................................................ 7
Medical Marijuana Laws ..................................................................................................... 8
Retail Marijuana ................................................................................................................ 11
Justice Department Memoranda .............................................................................................. 14
The 2009 Ogden Memorandum ........................................................................................ 15
The 2011 Cole Memorandum............................................................................................ 16
The 2013 Cole Memorandum ........................................................................................... 17
The 2014 Cole Memorandum ........................................................................................... 18
Preemption ..................................................................................................................................... 19
Other Constitutional Considerations .............................................................................................. 22
Banking .......................................................................................................................................... 24
Other Federal Law Consequences ................................................................................................. 29
Employment ............................................................................................................................ 29
Government ....................................................................................................................... 30
Private ............................................................................................................................... 31
Taxation ................................................................................................................................... 32
Possession of Firearms ............................................................................................................ 33
Federally Assisted Housing ..................................................................................................... 33
Ethical Considerations ................................................................................................................... 34
Marijuana Research Under Federal Law ....................................................................................... 36
Congressional Response ................................................................................................................ 37
Enacted Marijuana-Related Measures ..................................................................................... 38
Legislative Proposals in the 114th Congress ............................................................................ 38

Contacts
Author Contact Information........................................................................................................... 40

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Introduction
Federal law classifies marijuana as a Schedule I Controlled Substance.1 As a result, it is a federal
crime to grow, sell, or merely possess the drug. In addition to facing the prospect of a federal
criminal prosecution, those who violate the federal Controlled Substances Act (CSA) may suffer a
number of additional adverse consequences under federal law. For example, federal authorities
may confiscate any property used to grow marijuana or facilitate its sale or use; marijuana users
may lose their jobs, their homes, or their right to possess a firearm or ammunition; and sellers of
marijuana may lose the tax benefits and banking services that other merchants enjoy, and
ultimately their businesses.
Nevertheless, without federal statutory sanction, more than 20 states have established medical
marijuana regulatory regimes. Four have gone further and “legalized” marijuana under state
recreational marijuana laws.2 State officials lack the constitutional authority necessary to trump
conflicting federal law. Federal officials, however, lack the unlimited resources necessary to
trump the impact of conflicting state law.
The following is an analysis of some of the legal issues the situation has generated and some of
the proposals to resolve them.

Background
Federal regulation of the drugs, chemicals, and plants now considered controlled substances
began with the Harrison Narcotics Act of 1914.3 Relying upon its constitutional power to tax,
regulate commerce, and implement the nation’s treaty obligations,4 Congress used the legislation
to establish a system under which it taxed lawful medicinal use and proscribed abuse.5

1

Section 202(c) of the Controlled Substances Act (21 U.S.C. §812(c), Sch.I(c)(10)).
As of the date of this report, the retail marijuana laws in Alaska and Oregon had been enacted but were not yet
operational. The terms “recreational marijuana laws” and “retail marijuana laws” are used interchangeably in this
report. Some legislators, advocates, and commentators refer to the laws alternatively as “recreational marijuana laws,”
“retail marijuana laws,” “adult social marijuana laws,” or “states’ rights marijuana laws.” E.g., Malanie, Reid, The
Quagmire that Nobody in the Federal Government Wants to Talk About: Marijuana, 44 N.MEX. L.REV. 169, 171
(2014) (“Colorado and Washington have legalized marijuana use for recreational purposes”); Sam Kamin & Eli Wald,
Marijuana Lawyers: Outlaws or Crusaders, 91 ORE. L. REV. 869, 878 n.35 (2013)(“Many in the marijuana law reform
movement dislike the term ‘recreational use’ and prefer the phrase ‘adult use.’ ... ‘I don’t use the term recreational, I
prefer adult social use’”); H.R. 964 (Respect States’ and Citizens’ Rights Act of 2013); Colorado Retail Marijuana
Code, COLO. REV. STAT. ANN. §§12-43.4-101, et seq.
3
38 Stat. 785 (1914).
4
U.S. Const. Art. I, §8, cls. 1, 3, 18; Art. II, §2, cl.2.
5
H.Rept. 63-23, at 1 (1913)(“... [T]he obligations by which [the United States] is bound by virtue of the international
opium convention signed at the Hague January 23, 1912, should be sufficient evidence of the necessity for the passage
of Federal legislation to control our foreign and interstate traffic in opium, coca leaves, their salts, derivatives, and
preparations.... But there is a real and, one might say, even desperate need of Federal legislation to control our foreign
and interstate traffic in habit-forming drugs, and to aid both directly and indirectly the States more effectually to
enforce their police laws designed to restrict narcotics to legitimate medical channels”), quoted in accord, S.Rept. 63258, at 3 (1914).
2

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Little more than two decades later, Congress supplemented the Harrison Act with the Marihuana
Tax Act of 1937,6 explicitly noting reliance on its tax, commerce, and territorial powers.7 The
Marihuana Act replicated the Harrison Act’s procedures in large measure8 and adopted by crossreference the Harrison Act’s penalty structure.9 It became apparent over time, however, that the
Marihuana Act served no real revenue purpose and in fact had “become, in effect, solely a
criminal law imposing sanctions upon persons who [sold], acquire[d], or possess[ed]
marihuana.”10
This proved problematic when, in the late 1960s, the Supreme Court pointed out the Fifth
Amendment difficulties inherent in a tax-based enforcement structure like that of the Harrison
and Marihuana Tax Acts. The Court in Marchetti observed that a gambler’s “obligations to
register and to pay the [federal] occupational tax created ... real and appreciable ... hazards of selfincrimination” under federal and state anti-gambling laws.11 The same day, in Haynes, it held that
by the same token “the constitutional privilege against self-incrimination provides a full defense
to prosecutions either for failure to register a firearm ... or for possession of an unregistered
firearm” under the tax-based structure of the National Firearms Act.12 Finally, in Leary, it struck
closer to home. There, it held that the Fifth Amendment privilege against self-incrimination
provided a full defense to a charge of transporting marijuana acquired without paying the
Marihuana Tax Act transfer tax.13
Within months, the Senate Judiciary Committee reported out a Commerce Clause/treaty-based
controlled substances proposal that featured most of the components ultimately found in the
Controlled Substances Act.14 It classified marijuana with the most tightly regulated substances in
6

50 Stat. 551 (1937).
H.Rept. 75-792 at 1-3. (1937)(“The purpose of H.R. 6906 is to employ the Federal taxing power to raise revenue from
the marihuana drug traffic and to discourage the widespread use of the drug by smokers and drug addicts.... This bill is
modeled upon both the Harrison Narcotics Act and the National Firearms Act, which were designed to accomplish
these same general objectives with respect to opium and coca leaves, and firearms, respectively.... Your committee has
examined the constitutionality of this bill and is satisfied that it is a valid revenue measure. The law is well settled that
a revenue measure will not be held invalid as an attempt to regulate, under the guise of the taxing power, a subject
matter reserved to the States under the tenth amendment, if it appears on its face to be a revenue measure and contains
no regulatory provisions except those reasonably related to the collection of the revenue.... In addition, certain
provisions of the bill may be sustained under the power of Congress to regulate commerce and the power of Congress
over the District of Columbia and Territories and possessions of the United States”); see also, S.Rept. 75-900, at 2-3
(1937)(“The purpose of H.R. 6906 is to employ the Federal taxing power to raise revenue from the marihuana drug
traffic and to discourage the widespread use of the drug by smokers an drug addicts.... This bill is modeled upon both
the Harrison Narcotics Act and the National Firearms Act, which were designed to accomplish these same general
objectives with respect to opium and coca leaves, and firearms, respectively”)(but including no other explicit reference
to constitutional authority).
8
Marihuana Tax Act, §§2-14, 50 Stat. 551-56 (1937).
9
Id. at §7(e), 50 Stat. 555 (1937)(“All provisions of law (including penalties) applicable in respect of the taxes imposed
by the Act of December 17, 1914 (38 Stat. 785; U.S.C. 1934 ed. title 26, §§1040-1061, 1383-1391), as amended, shall,
insofar as not inconsistent with this Act, be applicable in respect of the taxes imposed by this Act”).
10
The President’s Commission on Law Enforcement and Administration of Justice: Task Force on Narcotics and Drug
Abuse, Task Force Report: Narcotics and Drug Abuse, 12 (1967).
11
Marchetti v. United States, 390 U.S. 39, 48 (1968); see also, Grosso v. United States, 390 U.S. 62, 64-6 (1968).
12
Haynes v. United States, 390 U.S. 85, 100 (1968).
13
Leary v. United States, 395 U.S. 6, 29 (1969).
14
S.Rept. 91-613 (1969). In Gonzales v. Raich, the U.S. Supreme Court ruled that Congress had the constitutional
authority under the Commerce Clause to prohibit the wholly intrastate cultivation or possession of marijuana for
medical purposes, despite state laws that permit such activity. 545 U.S. 1, 32-33 (2005); for more information about
(continued...)
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Schedule I, but punished its abuse less severely, explaining in its critique of an earlier proposal
that
[T]o impose the same high mandatory minimum penalties for marihuana-related
offenses as for LSD and heroin offenses is inequitable in the face of a considerable amount
of evidence that marihuana is significantly less harmful and dangerous than LSD or heroin.
It had also become apparent that the severity of penalties including the length of
sentences does not affect the extent of drug abuse and other drug-related violations. The
basic consideration here was that the increasingly longer sentences that had been legislated in
the past had not shown the expected overall reduction in drug law violations. The opposite
had been true notably in the case of marihuana. Under Federal law and under many States
laws marihuana violations carry the same strict penalties that are applicable to hard narcotics,
yet marijuana violations have almost doubled in the last 2 years alone.
In addition, the severe drug laws specifically as applied to marihuana have helped create
a serious clash between segments of the youth generation and the Government. These youths
consider the marihuana laws hypocritical and unjust. Because of these laws the marihuana
issue has contributed to the broader problem of alienation of youth from the general society
and to a general feeling of disrespect for the law and judicial process.15

Consistent with this view, it called for the establishment of a study commission to examine and
make recommendations on the troubling marijuana-related issues.16 The Commission’s final
report recommended the legalization of possession of marijuana for private personal use, but that
the Controlled Substance Act otherwise remain unchanged.17

Controlled Substances Act Today
Congress enacted the Controlled Substances Act18 as Title II of the Comprehensive Drug Abuse
Prevention and Control Act of 1970.19 The purpose of the CSA is to regulate and facilitate the
manufacture, distribution, and use of controlled substances for legitimate medical, scientific,
research, and industrial purposes, and to prevent these substances from being diverted for illegal
purposes. The CSA places various plants, drugs, and chemicals (such as narcotics, stimulants,
depressants, hallucinogens, and anabolic steroids) into one of five schedules based on the
substance’s medical use, potential for abuse, and safety or dependence liability.20

(...continued)
this decision, see CRS Report RL32844, The Power to Regulate Commerce: Limits on Congressional Power, by
(name redacted).
15
S.Rept. 91-613 at 1-2.
16
Id. at 10 (“The study shall include, but need not be limited to, the following matters: 1. Identification of existing gaps
in our knowledge of marihuana. 2. An intensive examination of the important medical and social aspects of marihuana
use. 3. Surveys of the extent and nature of marihuana use. 4. Studies of the pharmacology and effects of marihuana. 5.
Studies of the relation of marihuana use to crime and juvenile delinquency. 6. Studies of the relation between
marihuana and the use of other drugs”).
17
National Commission on Marihuana and Drug Abuse, Drug Use in America: Problem in Prospective, 458, 466 (2d
Rep. 1973).
18
21 U.S.C. §§801, et seq.
19
P.L. 91-513, 84 Stat. 1236 (1970).
20
21 U.S.C. §§811-812.

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Schedule I substances are deemed to have no currently accepted medical use in treatment and can
be used only in very limited circumstances, whereas substances classified in Schedules II, III, IV,
and V have recognized medical uses and may be manufactured, distributed, and used in
accordance with the CSA. The CSA requires persons who handle controlled substances (such as
drug manufacturers, wholesale distributors, doctors, hospitals, pharmacies, and scientific
researchers) to register with the Drug Enforcement Administration (DEA) in the U.S. Department
of Justice (DOJ), the federal agency that administers and enforces the CSA.21 Such registrants are
subject to strict requirements regarding drug security, recordkeeping, reporting, and maintaining
production quotas, in order to minimize theft and diversion.22
Because controlled substances classified as Schedule I drugs have “a high potential for abuse”
with “no currently accepted medical use in treatment in the United States” and lack “accepted
safety for use of the drug [] under medical supervisions,”23 they may not be dispensed under a
prescription, and such substances may be used only for bona fide, federal government-approved
research studies.24 Under the CSA, only doctors licensed by the Drug Enforcement
Administration are allowed to prescribe controlled substances listed in Schedules II-V to
patients.25 Federal regulations stipulate that a lawful prescription for a controlled substance may
be issued only “for a legitimate medical purpose by an individual practitioner acting in the usual
course of his professional practice.”26
The CSA establishes an administrative mechanism for substances to be controlled (added to a
schedule); decontrolled (removed from the scheduling framework altogether); and rescheduled or
transferred from one schedule to another.27 Federal rulemaking proceedings to add, delete, or
change the schedule of a drug or substance may be initiated by the DEA, the U.S. Department of
Health and Human Services (HHS), or by petition by any interested person.28 Petitions for
rescheduling marijuana have been largely unsuccessful.29 Congress may also change the
scheduling status of a drug or substance through legislation.

21

The Attorney General delegated his authority under the CSA to the DEA Administrator pursuant to 21 U.S.C.
§871(a); 28 C.F.R. §0.100(b).
22
For more information about these requirements, see CRS Report RL34635, The Controlled Substances Act:
Regulatory Requirements, by (name redacted).
23
21 U.S.C. §812(b)(1).
24
21 U.S.C. §823(f).
25
See 21 C.F.R. §1306.03 (persons entitled to issue prescriptions).
26
21 C.F.R. §1306.04; United States v. Moore, 423 U.S. 122 (1975).
27
The procedures for these actions are found at 21 U.S.C. §811.
28
21 U.S.C. §811(a).
29
At one point an administrative law judge did recommend rescheduling, but that represents the high water mark for
the petition efforts; see, generally, Americans for Safe Access v. DEA, 706 F.3d 438 (D.C. Cir. 2013); and Alliance for
Cannabis Therapeutics v. Drug Enforcement Admin., 15 F.3d 1131, 1133 (D.C. 1994), citing, National Organization
for the Reform of Marijuana Laws v. Ingersoll, 497 F.2d 654 (D.C. Cir. 1974); National Organization for the Reform of
Marijuana Laws v Drug Enforcement Admin., 559 F.2d 735 (D.C. Cir. 1977); National Organization for the Reform of
Marijuana Laws v. Dept of Health, Ed. and Welfare, No. 79-1660 (D.C. Cir. Oct. 16, 1980); Alliance for Cannabis
Therapeutics v. Drug Enforcement Admin., 930 F.2d 936 (D.C. Cir. 1991).

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Penalties
Federal civil and criminal penalties are available for anyone who manufactures, distributes,
imports, or possesses controlled substances in violation of the CSA (both “regulatory” offenses as
well as illicit drug trafficking and possession).30
When Congress enacted the CSA in 1970, marijuana was classified as a Schedule I drug.31 Today,
marijuana is still categorized as a Schedule I controlled substance and is therefore subject to the
most severe restrictions contained within the CSA. Pursuant to the CSA, the unauthorized
cultivation, distribution, or possession of marijuana is a federal crime.32 Although various factors
contribute to the ultimate sentence received, the mere possession of marijuana generally
constitutes a misdemeanor subject to up to one year imprisonment and a minimum fine of
$1,000.33 A violation of the federal “simple possession” statute that occurs after a single prior
conviction under any federal or state drug law triggers a mandatory minimum fine of $2,500 and
a minimum imprisonment term of 15 days (up to a maximum of two years); if the defendant has
multiple prior drug offense convictions at the time of his or her federal simple possession offense,
the sentencing court must impose a mandatory minimum fine of $5,000 and a mandatory
minimum imprisonment term of 90 days (up to a maximum term of three years).34 On the other
hand, the cultivation or distribution of marijuana, or the possession of marijuana with the intent to
distribute, is subject to more severe penalties, ranging from imprisonment for five years to
imprisonment for life.35 Moreover, property associated with the offense may be confiscated
without or with any prior or accompanying criminal conviction.36

Forfeiture
Either in addition to, or in lieu of, bringing criminal prosecutions, the Department of Justice may
choose to rely more heavily on the civil forfeiture provisions of the CSA in order to disrupt the
operation of marijuana dispensaries and production facilities. Forfeiture is a penalty associated
with a particular crime in which property is confiscated or otherwise divested from the owner and
30
For a detailed description of the CSA’s civil and criminal provisions, see CRS Report RL30722, Drug Offenses:
Maximum Fines and Terms of Imprisonment for Violation of the Federal Controlled Substances Act and Related Laws,
by (name redacted).
31
21 U.S.C. §812(c).
32
Very narrow exceptions to the federal prohibition do exist. For example, one may legally use marijuana if
participating in a U.S. Federal and Drug Administration-approved study or participating in the Compassionate
Investigational New Drug program.
33
21 U.S.C. §844(a).
34
Id
35
The escalating terms of imprisonment for possession of various amounts of marijuana are as follows: (1) Less than
50 kilograms (110lbs.)/fewer than 50 plants: imprisonment for not more than 5 years, 21 U.S.C. §841(b)(1)(D); (2)
Less than 100 kilograms (220lbs) or less than 100 plants: imprisonment for not more than 20 years, 21 U.S.C.
§841(b)(1)(C); (3) 100 kilograms (220lbs) or more /100 plants or more: imprisonment for not less than 5 years or more
than 40 years, 21 U.S.C. §841(b)(1)(B); (4) 1000 kilograms or more/1000 plants or more: imprisonment for not less
than 10 years or more than life, 21 U.S.C. §841(b)(1)(A); (5) Drug kingpin (over 5 or more others & substantial
income): imprisonment for not less than 20 years or more than life, 21 U.S.C. §848(a), (c); and (6) Drug kingpin
involving (a) 30,000 kilograms or more/30,000 plants or more, or (b) $10 million or more in annual gross receipts:
imprisonment for life, 21 U.S.C. §848(b)(2)(emphasis added).
36
21 U.S.C. §853 (criminal forfeiture of the proceeds and property derived from a violation as well as property used to
facilitate violation); 21 U.S.C. §881 (civil/administrative forfeiture of conveyances and real property used in a violation
and the proceeds of a violation and property traceable to the proceeds of a violation).

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forfeited to the government, in accordance with constitutionally required due process
procedures.37
Property forfeiture is used both to enforce criminal laws and to deter crime. Forfeitures are
classified as civil or criminal depending on the nature of the judicial procedure which ends in
confiscation. Civil forfeiture is ordinarily the product of a civil, in rem (against the property)
proceeding in which the property is treated as the offender. No criminal charges are necessary
against the owner, landlord, or mortgage holder because the guilt or innocence of the property
owner, landlord, mortgage holder, or anyone else with a secured interest in the property is
irrelevant; it is enough that the property was involved in, or otherwise connected to, an illegal
activity (in which forfeiture is authorized).38 Criminal forfeiture proceedings, on the other hand,
are in personam (against the person) actions, and confiscation is possible only upon the
conviction of the owner of the property and only to the extent of the defendant’s interest in the
property.39 Property that is subject to forfeiture includes both the direct and indirect proceeds of
illegal activities as well as any property used, or intended to be used, to facilitate that crime.40
Section 511 of the CSA (21 U.S.C. §881) makes a wide array of property associated with
violations of the CSA subject to seizure by the Attorney General and forfeiture to the United
States. Property subject to the CSA’s civil forfeiture provision includes any controlled substance
that has been manufactured, distributed, dispensed, acquired, or possessed in violation of federal
law, as well as any equipment, firearm, money, mode of transportation, or real property used or
intended to be used to facilitate a violation of the CSA.41 In order to seize the covered property,
the government need only show that the property is subject to forfeiture by a preponderance of
the evidence.42 Once forfeited, the Attorney General may destroy the controlled substances
seized, and sell the other property at public auction.43 After expenses of the forfeiture proceeding
are recouped, excess funds are forwarded to the DOJ Asset Forfeiture Fund.44
Forfeiture proceedings are generally less resource intensive than a criminal prosecution and have
been used in the past against medical marijuana dispensaries.45 In practice, DOJ would be able to
seize and liquidate property, both real and personal, associated with marijuana production,
37

U.S. CONST. amend. V (“No person shall ... be deprived of ... property, without due process of law ...”).
Calero-Toledo v. Pearson Yacht Leasing Co, 416 U.S. 663, 683-90 (1974)(confiscation of a yacht upon which those
to whom it was leased smoke marijuana, because the owners failed to show that they had done all they possibly could
to avoid the illegal use of their property). In controlled substances cases, there is a limited statutory innocent owner
defense if the owner of an interest in the property can show by a preponderance of the evidence that either he “(i) did
not know of the conduct giving rise to the forfeiture; or (ii) upon learning of the conduct giving rise to the forfeiture,
did all that reasonably could be expected under the circumstances to terminate such use of the property,” 18 U.S.C.
§983(d).
39
For a more extensive discussion of forfeiture generally, see CRS Report 97-139, Crime and Forfeiture, by (name re
dacted).
40
See, e.g., 21 U.S.C. §881(a)(6)(proceeds), and 21 U.S.C. §881(a)(2)(products and equipment used to facilitate the
offense).
41
21 U.S.C. §881(a)(emphasis added).
42
18 U.S.C. §981(b).
43
21 U.S.C. §881(e).
44
21 U.S.C. §881(e).
45
See, e.g., U.S. Dep’t of Justice, Press Release: Federal Authorities Take Enforcement Actions Against Commercial
Marijuana Stores in Orange County Cities of Anaheim and La Habra, August 21, 2012, available at
http://www.justice.gov/usao/cac/Pressroom/2012/111.html.
38

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distribution, or retail sale facilities, without bringing any criminal action. As explained above, a
civil asset forfeiture proceeding is a civil proceeding against the property in question. Although
an interested party may object to the seizure, given that such facilities are in clear violation of
federal law, so long as the property is indeed being used for marijuana-related activities, it would
appear unlikely that many successful challenges to these actions could be waged.46

Developments in the States
Most of the states have legislation modeled after the federal Controlled Substances Act.47 Over
the years, some have reduced possession of small amounts of marijuana to a civil offense under
state law,48 while the District of Columbia went a step further and fully legalized possession of
small amounts of marijuana and personal cultivation of a small number of marijuana plants.49
More than 20 states also have established a state law exception for medical marijuana.50 Colorado
46

See David Downs, City of Oakland Loses Lawsuit Against Department of Justice; Harborside Forfeiture Case
Proceeds, February 15, 2013, EAST BAY EXPRESS, available at http://www.eastbayexpress.com/LegalizationNation/
archives/2013/02/15/city-of-oakland-loses-lawsuit-against-department-of-justice-harborside-forfeiture-case-proceeds
(describing how a federal magistrate judge dismissed the City of Oakland’s lawsuit against Attorney General Eric
Holder and U.S. Attorney Melinda Haag, which sought to prevent Haag from seizing the building leased by Harborside
Health Center, one of the world’s largest medical marijuana dispensaries. The judge held that only the dispensary and
its landlords have legal standing to challenge the U.S. government’s attempted seizure of the property.).
47
ALA. CODE §§20-2-1 to 20-2-190; ALASKA STAT. §§11.71.010 to 11.71.900, 17.30.010 to 17.30.900; ARIZ. REV.
STAT. ANN. §§36-2501 to 36-2553; ARK. CODE ANN. §§5-64-101 to 5-64-608; CAL. HEALTH & SAFETY CODE §§11000
to 11657; COLO. REV. STAT. ANN. §§18-18-101 to 18-18-605; CONN. GEN. STAT. ANN. §§21a-240 to 21a-283; Del.
Code Ann. tit.16 §§4701 to 47696; FLA. STAT. ANN. §§893.01 to 893.165; GA. CODE §§16-13-20 to 16-13-65; HAWAII
REV. STAT. §§329-1 to 329-128; IDAHO CODE §§37-2701 to 37-2751; 720 ILL. COMP. STAT. ANN. §§570/100 to
570/603; IND. CODE ANN. §§35-48-1-1 to 35-48-7-15; IOWA CODE ANN. §§124.101 to 124.602; KAN. STAT. ANN. §§6541-1 to 65-4166; KY. REV. STAT. ANN. §§218A.010 to 218A.993; LA. REV. STAT. ANN. §§40:961 to 40:995; ME. REV.
STAT. ANN. tit.17-A §§1101 to 1118; MD. CODE ANN. Crim. Law §§5-101 to 5-1101; MASS. GEN. LAWS ANN. ch. 94C
§§1 to 48; Mich. Comp. Laws Ann. §§333.7101 to 333.7545; MINN. STAT. ANN. §§152.01 to 152.20; MISS. CODE ANN.
§§41-29-101 to 41-29-185; MO. ANN. STAT. §§195.010 to 195.320; MONT. CODE ANN. §§50-32-101 to 50-32-405;
NEB. REV. STAT. §§28-401 to 28-457; NEV. REV. STAT. §§453.011 to 453.740; N.H. REV. STAT. ANN. §§318-B:1 to
318-E:1; N.J. STAT. ANN. §§2C:35-1 to 2C:35-24, 2c:36-1 to 2C:36-10, 24:21-1 to 24-21-54; N.MEX. STAT. ANN. §§3031-1 to 30-31-41; N.Y. PUBLIC HEALTH LAW §§3300 to 3396; N.C. GEN. STAT. §§90-86 to 90-113.8; N.D. CENT. CODE
§§19-03.1-01to 19-03.1-46; OHIO REV. CODE ANN. §§3719.01 to 3719.99; OKLA. STAT. ANN. tit.63 §§2-101 to 2-610;
ORE. REV. STAT. §§475.005 to 475.295, 475.940 to 475.999; 35 PA. STAT. ANN. §§780-101 to780-144; R.I. GEN. LAWS
§§21-28-1.01 to 21-28-6.02; S.C. CODE ANN. §§44-53-110 to 44-53-590; S.D. COD. LAWS §§34-20B-1 to 34-20B-114;
TENN. CODE ANN. §§39-17-401 to 39-17-434, 53-11-301 to 53-11-452; TEX. HEALTH & SAFETY CODE ANN. §§481.001
to 481.005; UTAH CODE ANN. §§58-37-1 to 58-37-21; VA. CODE §§54.1-3400 to 54.1-3472; WASH. REV. CODE ANN.
§§69.50.101 to 69.50.609; W.VA. CODE ANN. §§60A-1-101 to 60A-6-605; WIS. STAT. ANN. §§961.001 to 961.62;
WYO. STAT. §§35-7-.... to 35-7-..... Vermont has a Regulated Drugs Act that roughly corresponds to the Controlled
Substances Act, VT. STAT. ANN. tit.18 §§4201 to 4254.
48
E.g., ALASKA STAT. §§11.71.190, 11.71.060, 12.55.135(j) (max. fine $500/less than 1 oz.); CAL. HEALTH & SAFETY
CODE §11357(b) (max. fine $100/28.5 grams or less); CONN. GEN. STAT. ANN. §21a-279a (max. fine $150/ less than .5
oz.); ME. REV. STAT. ANN. tit. 22 §2383[1][A](max. fine $600/1.25 oz. or less); MASS. GEN. LAWS ANN. ch. 94C §32L
(max. fine $100/1 oz. or less); MINN. STAT. ANN. §§152.027[subd.4(a)], 152.01 [subd. 16] (max fine $200/42.5 grams
or less); MISS. CODE ANN. §41-29-139(c)(2)(A); NEB. REV. STAT. §28-416(13)(a) (max. fine $300/1 oz. or less); NEV.
REV. STAT. §453.336[4](max. fine $600/1 oz. or less); N.Y. PENAL LAW §130.35; N.C. GEN. STAT. §§90-95(d)(4)(maxs.
$200 fine—10 days imprisonment/.5 oz. or less); OHIO REV. CODE ANN. §§2925.11(C)(3), 2929.28(A)(2)(a)(v)(max.
fine $150/100 grams or less); ORE. REV. STAT. §475.864(3)(max. fine $650/1 oz. or less); R.I. GEN. LAWS §21-284.01(c)(2)(iii)(max. fine $150/1 oz. or less); VT. STAT. ANN. tit.18 §4230a (max. fine $200/1 oz. or less).
49
D.C. CODE §48-901.01(a)(1). There is some uncertainty about whether a provision of the 2015 Consolidated
Appropriations Act, P.L. 113-235, prohibits the implementation of the measure during FY2015. See CRS Legal Sidebar
WSLG1182, The Antideficiency Act as an Impediment to D.C.’s Marijuana Legalization Initiative?, by (name redacted).
50
ALASKA STAT. §§17.37.010 to 17.37.080; ARIZ. REV. STAT. ANN. §§36-2801 to 36-2819; CAL. HEALTH & SAFETY
(continued...)

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and Washington have enacted legislation authorizing the retail and personal growth, sale, and
possession of marijuana under state law.51 Alaska and Oregon have enacted similar retail
marijuana laws; however, they were not fully operational as of the publication date of this
report.52

Medical Marijuana Laws
State medical marijuana laws follow a general pattern, although most have some individual
characteristics and the manner in which they are enforced can differ considerably. Some of their
features are attributable to the CSA and a case from the United States Court of Appeals for the
Ninth Circuit, Conant v. Walters.53
Conant, a California physician, sought to enjoin the federal government from revoking his
authority to prescribe controlled substances at all in retaliation for his recommending marijuana
to some of his patients.54 Then, as now, the CSA permits the Attorney General, acting through the
Drug Enforcement Administration, to withdraw a physician’s authority to prescribe controlled
substances upon a failure to comply with the demands of the CSA.55
The Ninth Circuit acknowledged the prospect of criminal liability if the doctor were doing more
than engaging in an abstract discussion with his patient: “A doctor would aid and abet by acting
with the specific intent to provide a patient with the means to acquire marijuana. Similarly, a
conspiracy would require that a doctor have knowledge that a patient intends to acquire
marijuana, agree to help the patient acquire marijuana, and intend to help the patient acquire
marijuana.”56 Yet, “[h]olding doctors responsible for whatever conduct the doctor could anticipate
a patient might engage in after leaving the doctor’s office is simply beyond the scope of either
conspiracy or aiding and abetting.”57 On the other hand, such doctor-patient discussions do

(...continued)
CODE §§11362.5 to 11362.9; COLO. REV. STAT. ANN. §§12-43.3-101 to 12-43.3-1102; CONN. GEN. STAT. ANN. §§21a408 to 21a-408q; DEL. CODE ANN. tit.16 §§4901A to 4926A; D.C. CODE §§7-.....01 to 7-.....13; H
AWAII REV. STAT.
§329-121 to 329-128; 410 ILL. COMP. STAT. ANN. §§130/10 to 130/140; ME. REV. STAT. ANN. tit. 22 §§2421 to 2430-B;
MD. CODE ANN. HEALTH-GEN. §§13-3301 to 13-3316; MASS. GEN. LAWS ANN. ch. 94C App. §§1-1 to 1-17; MICH.
COMP. LAWS ANN. §§333.26421 to 333.26430; MONT. CODE ANN. §50-46-301 to 50-46-344; NEV. REV. STAT.
§§453A.010 to 453A.810; MINN. STAT. §§125.22 to 152.37; N.H. REV. STAT. ANN. §§126-X:1 to 126-X:11; N.J. STAT.
ANN. §§24:61-1 to 24:61-16; N.MEX. STAT. ANN. §§26-2B-1 to 26-2B-7; ORE. REV. STAT. §§475.300 to 475.346; R.I.
GEN. LAWS §21-28.6-1 to 21-28.6-13; N.Y. PUB. HEALTH §§3360 to 3369-E.; VT. STAT. ANN. tit.18 §§4471 to 4474l;
WASH. REV. CODE ANN. §69-51A.005 to 69-51A.903. The Supreme Court in Oakland Cannabis Buyers’ Cooperative
held that the federal Controlled Substances Act does not contain an implicit medical marijuana exception, United States
v. Oakland Cannabis Buyers’ Cooperative, 532 U.S. 483, 495 (2001).
51
COLO. REV. STAT. ANN. §§12-43.3-101 to 12-43.3-1102; WASH. REV. CODE ANN. §§69-50.325 to 69-50.369.
52
ALASKA STAT. §§17.38.010 to 17.38.900; 43.61.010 to 43.61.030; Oregon Ballot Measure 91, Control, Regulation,
and Taxation of Marijuana and Industrial Hemp Act (hereinafter Oregon Ballot Measure 91).
53
309 F.3d 629 (9th Cir. 2002).
54
Id. at 632.
55
21 §823(f)(“The Attorney General shall register practitioners (including pharmacies ... ) to dispense ... controlled
substances.... The Attorney General may deny an application for such registration ... [in] the public interest. In
determining the public interest, the following factors shall be considered: ... (4) Compliance with applicable State,
Federal, or local laws relating to controlled substances.... ”).
56
Id. at 636 (internal citations omitted).
57
Id. (emphasis in the original).

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implicate First Amendment free speech principles. The Ninth Circuit therefore affirmed the
district court’s order which had enjoined any DEA enforcement action.58
As a consequence of the CSA and the Conant decision, the state medical marijuana laws are
predicated upon a doctor’s recommendation, rather than a prescription and the medicine is
dispensed other than through a pharmacy.59 In addition, the laws afford registered patients, care
givers, cultivators, and distributors immunity from the consequences of state criminal laws.60

Patients
Physicians may recommend medical marijuana only for patients suffering from one or more
statutorily defined “debilitating,” or “qualifying” medical conditions. The typical list would
include the following:
“Debilitating medical condition” means one or more of the following:
(a) Cancer, glaucoma, positive status for human immunodeficiency virus, acquired
immune deficiency syndrome, hepatitis c, amyotrophic lateral sclerosis, crohn’s disease,
agitation of alzheimer’s disease or the treatment of these conditions.
(b) A chronic or debilitating disease or medical condition or its treatment that produces
one or more of the following: cachexia or wasting syndrome; severe and chronic pain; severe
nausea; seizures, including those characteristic of epilepsy; or severe and persistent muscle
spasms, including those characteristic of multiple sclerosis.
(c) Any other medical condition or its treatment added by the department pursuant to
section 36-2801.01.61

The list usually includes a condition such as “severe pain,” or “chronic pain,” or “severe and
chronic pain” that is easy to claim, difficult to diagnose, and grounds for potential abuse. Some
states seek to limit the scope of the term by statute or by regulation.62 In many jurisdictions, a
58

Id. at 636-39.
ALASKA STAT. §§17.37.010 to 17.37.080; ARIZ. REV. STAT. ANN. §§36-2801 to 36-2819; CAL. HEALTH & SAFETY
CODE §§11362.5 to 11362.9; CONN. GEN. STAT. ANN. §§21a-408 to 21a-408q; COLO. REV. STAT. ANN. §§12-43.3-101
AWAII REV. STAT.
to 12-43.3-1102; DEL. CODE ANN. tit.16 §§4901A to 4926A; D.C. CODE §§7-.....01 to 7-.....13; H
§§329-121 to 329-128; 410 ILL. COMP. STAT. ANN. §§130/10 to 130/140; MD. CODE ANN. HEALTH-GEN. §§13-3301 to
13-3316; ME. REV. STAT. ANN. tit. 22 §§2421 to 2430-B; MASS. GEN. LAWS ANN. ch. 94C App. §§1-1 to 1-17; MICH.
COMP. LAWS ANN. §§333.26421 to 333.26430; MINN. STAT. §§125.22 to 152.37; MONT. CODE ANN. §§50-46-301 to
50-46-344; NEV. REV. STAT. §§453A.010 to 453A.810; N.H. REV. STAT. ANN. §§126-X:1 to 126-X:11; N.J. STAT. ANN.
§§24:6I-1 to 24:6I-16; N.MEX. STAT. ANN. §§26-2B-1 to 26-2B-7; N.Y. PUB. HEALTH §§3360 to 3369-E.; ORE. REV.
STAT. §§475.300 to 475.346; R.I. GEN. LAWS §§21-28.6-1 to 21-28.6-13; VT. STAT. ANN. tit.18 §§4471 to 4474l;
WASH. REV. CODE ANN. §§69-51A.005 to 69-51A.903.
60
ALASKA STAT. §17.37.030; ARIZ. REV. STAT. ANN. §36-2811; CAL. HEALTH & SAFETY CODE §§11362.71(e),
11362.765, 11362.775; CONN. GEN. STAT. ANN. §§21a-408a to 21a-408c; DEL. CODE ANN. tit.16 §4903A; D.C. CODE
§7-.....02; H AWAII REV. STAT. §329-122; 410 ILL. COMP. STAT. ANN. §130/25; MD. CODE ANN. HEALTH-GEN. §133313; ME. REV. STAT. ANN. tit. 22 §§2423-A to 2423-D; MASS. GEN. LAWS ANN. ch. 94C App. §§1-4, 1-5; MICH.
COMP. LAWS ANN. §333.26424; MINN. STAT. §152.32; MONT. CODE ANN. §50-46-319; NEV. REV. STAT. §453A.310;
N.H. REV. STAT. ANN. §126-X:2; N.J. STAT. ANN. §24:6I-6; N.MEX. STAT. ANN. §26-2B-4; N.Y. PUB. HEALTH §3369;
ORE. REV. STAT. §§475.316, 475.319; R.I. GEN. LAWS §21-28.6-8; VT. STAT. ANN. tit.18 §4474b; WASH. REV. CODE
ANN. §69-51A.030.
61
ARIZ. REV. STAT. ANN. §36-2801[3].
62
E.g., DEL. CODE ANN. tit. 16 §4902A(3)[b](“... severe, debilitating pain, that has not responded to previously
(continued...)
59

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qualified patient must be a resident of the jurisdiction.63 Most states and the District of Columbia
restrict the amount of marijuana a patient may possess for medical purposes. The limit is usually
an amount less than three ounces.64 Medical marijuana statutes ordinarily do not allow patients to
use marijuana in public.65

Caregivers
Typically, caregivers must register and be designated by one or more registered medical
marijuana patients.66 Many medical marijuana laws also afford caregivers the same immunity and
impose the same limitations upon them as apply to patients.67

Dispensaries
Some state medical marijuana laws contemplate cultivation exclusively by the patient or his or
her caregiver.68 Most, however, establish a regulatory scheme for dispensaries.69

(...continued)
prescribed medication or surgical measures for more than 3 months or for which other treatment options produced
serious side effects.... ”).
63
E.g., CONN. GEN. STAT. ANN. §21a-408(10); D.C. CODE §7-.....01(19); M ICH. COMP. LAWS ANN.
§333.264246(a)(6); MONT. CODE ANN. §50-46-307(1)(d); N.H. REV. STAT. ANN. §126-X:1[X], [XVI]; N.J. STAT. ANN.
§24:6I-3; N.MEX. STAT. ANN. §26-2B-3 [G]; R.I. GEN. LAWS §21-28.6-3(10); VT. STAT. ANN. tit.18 §4472(12); but see
NEV. REV. STAT. §453A.364 (recognition of nonresident cards).
64
E.g., ALASKA STAT. §17.37.040(a)(4)(1 oz.); DEL. CODE ANN. tit.16 §4903A(a)(6 oz.); D.C. CODE §7-.....03(a)(2
oz.); 410 ILL. COMP. STAT. ANN. §130/10(a)(1), 130/25(a)(2.5 oz.); ME. REV. STAT. ANN. tit. 22 §§2423-A[1][A](2.5
oz.); MICH. COMP. LAWS ANN. §333.26424(2.5 oz.); MONT. CODE ANN. §50-46-319 (1 oz.); NEV. REV. STAT.
§453A.200 (1 oz.); N.H. REV. STAT. ANN. §126-X:2[I](2 oz.); ORE. REV. STAT. §475.320 (24 oz.); R.I. GEN. LAWS §2128.6-4 (2.5 oz.).
65
E.g., ALASKA STAT. §17.37.040(a)(2); CONN. GEN. STAT. ANN. §21a-408a(b)(2); DEL. CODE ANN. tit.16 §4904A(3);
D.C. CODE §7-.....03; 410 I LL. COMP. STAT. ANN. §130/30(3)(F); MICH. COMP. LAWS ANN. §333.26427(b)(3)(B);
N.H. REV. STAT. ANN. §126-X:3[II](c); N.MEX. STAT. ANN. §26-2B-5[A](3)(d); ORE. REV. STAT. §§475.316(1)(b).
66
E.g., ALASKA STAT. §17.37.010(e); ARIZ. REV. STAT. ANN. §36-2804.02; CONN. GEN. STAT. ANN. §21a-408b; DEL.
CODE ANN. tit.16 §4909A; 410 ILL. COMP. STAT. ANN. §130/55; ME. REV. STAT. ANN. tit. 22 §§2425; MASS. GEN.
LAWS ANN. ch. 94C App. §1-1; MONT. CODE ANN. §50-46-308; NEV. REV. STAT. §453A.210; N.H. REV. STAT. ANN.
§126-X:4; N.J. STAT. ANN. §24:6I-4; N.MEX. STAT. ANN. §26-2B-7; ORE. REV. STAT. §§475.309, 475.312; R.I. GEN.
LAWS §21-28.6-4; VT. STAT. ANN. tit.18 §4474.
67
E.g., ARIZ. REV. STAT. ANN. §36-2811; CAL. HEALTH & SAFETY CODE §§11362.77, 11362.775; CONN. GEN. STAT.
ANN. §21a-408b; DEL. CODE ANN. tit.16 §4903A; 410 ILL. COMP. STAT. ANN. §130/25; MASS. GEN. LAWS ANN. ch. 94C
App. §§1-4, 1-5; MICH. COMP. LAWS ANN. §333.26424; MONT. CODE ANN. §50-46-319; NEV. REV. STAT. §453A.200;
N.H. REV. STAT. ANN. §126-X:2; N.J. STAT. ANN. §24:6I-6; N.MEX. STAT. ANN. §26-2B-4; ORE. REV. STAT.
§§475.316, 475.319; R.I. GEN. LAWS §21-28.6-8; VT. STAT. ANN. tit.18 §4474b.
68
E.g., ALASKA STAT. §17.37.030; HAWAII REV. STAT. §329-122; MICH. COMP. LAWS ANN. §333.26424; ORE. REV.
STAT. §§475.316, 475.319; R.I. GEN. LAWS §21-28.6-8.
69
E.g., ARIZ. REV. STAT. ANN. §36-2804; CAL. HEALTH & SAFETY CODE §11362.8; CONN. GEN. STAT. ANN. §21a-408h;
DEL. CODE ANN. tit.16 §4914A; D.C. CODE §7-.....06; H AWAII REV. STAT. §329-122; 410 ILL. COMP. STAT. ANN.
§§130/85 to 130/130; ME. REV. STAT. ANN. tit. 22 §2428; MASS. GEN. LAWS ANN. ch. 94C App. §§1-9; MONT. CODE
ANN. §§50-46-308, 5-46-309; NEV. REV. STAT. §§453A.320 to 453A.344; N.H. REV. STAT. ANN. §126-X:8; N.J. STAT.
ANN. §24:6I-7; N.MEX. STAT. ANN. §26-2B-7; ORE. REV. STAT. §475.304; VT. STAT. ANN. tit.18 §4474g.

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Retail Marijuana
Four states, Washington, Colorado, Oregon, and Alaska, have established retail marijuana
regimes. Each regulates the distribution of marijuana without a necessary medical nexus, but
raises many of the same federal-state conflict issues found in the medical marijuana statutes.
Much like the medical marijuana regimes, each recreational marijuana regime shares general
patterns, but they also each have some unique characteristics. In some instances, for example
Washington, the statutory authority establishing the retail regime is fairly specific. In others, such
as Colorado, the statute provides only a broad framework while authorizing a state regulatory
agency to fill in the details through regulations.

Decriminalization of Personal Possession and Consumption
Each of the retail marijuana laws decriminalizes the consumption and possession of varying
amounts and forms of marijuana by individuals at least 21 years of age within the state. The laws,
however, prohibit consumption of marijuana in public and maintain a prohibition on driving
vehicles under the influence of marijuana, even if it was acquired and consumed in compliance
with the state law.70
Washington Initiative 502, for example, legalizes marijuana possession by amending state law to
provide that the possession of small amounts of marijuana “is not a violation of this section, this
chapter, or any other provision of Washington law.”71 Under the Initiative, individuals over the
age of 21 may possess up to one ounce of dried marijuana, 16 ounces of marijuana-infused
product in solid form, or 72 ounces of marijuana infused product in liquid form.72 However,
marijuana must be used in private, as it is unlawful to “open a package containing marijuana ... or
consume marijuana ... in view of the general public.”73
Colorado voters approved an amendment to the Colorado Constitution (Amendment 64) to ensure
that it “shall not be an offense under Colorado law or the law of any locality within Colorado” for
an individual 21 years of age or older to possess, use, display, purchase, consume, or transport
one ounce of marijuana; or possess, grow, process, or transport up to six marijuana plants.74
Unlike Initiative 502, which permits only state-licensed facilities to grow marijuana, Amendment
64 allows any individual over the age of 21 to grow small amounts of marijuana (up to six plants)
for personal use.75 In similar fashion to Washington’s Initiative 502, marijuana may not be
consumed “openly and publicly or in a manner that endangers others” under Colorado law.76
Oregon Ballot Measure 91 decriminalizes personal possession, for individuals of at least 21 years
old, of up to eight ounces of “homegrown marijuana,” up to 16 ounces of “homegrown marijuana
70

E.g., Washington Initiative 502 §31, amending RCW 69.50.4013 and 2003 c 53 s 334, available at http://sos.wa.gov/
_assets/elections/initiatives/i502.pdf (hereinafter Washington Initiative 502).
71
Id. at §20
72
Id. at §15.
73
Id. at §21.
74
Colorado Amendment 64, Amending Colo. Const. Art. XVIII §16(3), available at http://www.colorado.gov/cs/
Satellite?blobcol=urldata&blobheader=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=
1251834064719&ssbinary=true (hereinafter Colorado Amendment 64).
75
Id.
76
Id.

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products in solid form,” and up to 72 ounces of “homegrown marijuana in liquid form.” It also
decriminalizes cultivation of up to four marijuana plants.77 Ballot Measure 91 also explicitly
prohibits “the use of marijuana items in a public place,”78 as well as the production and storage of
marijuana or marijuana products where they “can be readily seen by normal unaided vision from
a public place.”79
Alaska law allows individuals of at least 21 years old to possess up to one ounce of marijuana and
six (but no more than three that are mature and flowering) marijuana plants.80 The public
consumption and cultivation of marijuana is prohibited under Alaska law.81

Licensing Regime for Retail Production, Distribution, and Sale
Another common feature of recreational marijuana laws is the establishment of licensing regimes
for the retail production, distribution, and sale of marijuana. Although the specifics vary, each
retail marijuana regime establishes license application processes, qualification standards, and
license maintenance standards that are to be implemented and overseen by a state regulatory
agency.
Washington Initiative 502 provides that the “possession, delivery, distribution, and sale” by a
validly licensed producer, processor, or retailer, in accordance with the newly established
regulatory scheme administered by the state Liquor Control Board (LCB), “shall not be a criminal
or civil offense under Washington state law.”82 The Initiative establishes a three-tiered production,
processing, and retail licensing system that permits the state to retain regulatory control over the
commercial life cycle of marijuana. Qualified individuals must obtain a producer’s license to
grow or cultivate marijuana, a processor’s license to process, package, and label the drug, or a
retail license to sell marijuana to the general public.83
Initiative 502 also establishes various restrictions and requirements for obtaining the proper
license and directs the state LCB to adopt procedures for the issuance of such licenses. On
October 16, 2013,84 the LCB adopted detailed rules for implementing Initiative 502. These rules
describe the marijuana license qualifications and application process, application fees, marijuana
packaging and labeling restrictions, recordkeeping and security requirements for marijuana
facilities, and reasonable time, place, and manner advertising restrictions.85
The licensing standards in Colorado were implemented through a combination of statutes and
regulations enacted to supplement Amendment 64. The Colorado General Assembly passed three
bills that were signed into law by Governor Hickenlooper on May 28, 2013.86 On September 9,
77

Oregon Ballot Measure 91 §6.
Id. at §54.
79
Id. at §56.
80
ALASKA STAT. §17.38.020.
81
ALASKA STAT. §17.38.020 and §17.38.030.
82
Washington Initiative 502 §4.
83
Id.
84
Joel Millman, Washington State Sets Pot-Sales Rules, WALL ST. JOURNAL, October 16, 2013.
85
Washington State Liquor Control Board, Marijuana Licenses, Application Process, Requirements, and Reporting,
available at https://lcb.app.box.com/adopted-rules.
86
See Colorado Dep’t of Revenue, Permanent Rules Related to the Colorado Retail Marijuana Code, September 9,
(continued...)
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2013, the Colorado Department of Revenue and State Licensing Authority adopted regulations to
implement licensing qualifications and procedures for retail marijuana facilities.87 The regulations
establish procedures for the issuance, renewal, suspension, and revocation of licenses; provide a
schedule of licensing and renewal fees; and specify requirements for licensees to follow regarding
physical security, video surveillance, labeling, health and safety precautions, and product
advertising.88
Alaska’s recreational marijuana law establishes a licensing and registration regime for cultivation
facilities, manufacturing facilities, and retail stores.89 A state Marijuana Control Board is
authorized to issue regulations to implement the licensing and registration regime, including rules
that establish license application and renewal processes, qualification standards, labeling
requirements, and advertising limitations.90
Oregon Ballot Measure 91 empowers the Oregon Liquor Control Commission to issue regulations
establishing similar licensing standards.91

Taxation Authority
Each of the retail marijuana laws also imposes taxes on recreational marijuana. These taxing
measures vary in size and applicability and establish different purposes for which the revenue
generated through these taxes will be used.
For example, in accordance with adopted regulations, Washington will impose an excise tax of
25% of the selling price on each marijuana sale within the established distribution system.92 The
state excise tax will, therefore, be imposed on three separate transactions: the sale of marijuana
from producer to processor, from processor to retailer, and from retailer to consumer. All
collected taxes are deposited into the Dedicated Marijuana Fund and distributed, mostly to social
and health services, as outlined in the Initiative.93
Similarly, Colorado voters approved a 25% tax on retail marijuana transactions (a 15% excise tax
that would raise revenues generally to be used for public school capital construction, and an
additional 10% sales tax that predominately would generate revenues to fund the enforcement of
the retail marijuana regulations).94
(...continued)
2013, available at https://www.colorado.gov/pacific/sites/default/files/
Retail%20Marijuana%20Rules,%20Adopted%20090913,%20Effective%20101513%5B1%5D_0.pdf.
87
Id.
88
Id.
89
ALASKA STAT. §17.38.70.
90
ALASKA STAT. §17.38.90.
91
Oregon Ballot Measure 91 §7.
92
See Colorado Dep’t of Revenue, Permanent Rules Related to the Colorado Retail Marijuana Code, September 9,
2013, available at https://www.colorado.gov/pacific/sites/default/files/
Retail%20Marijuana%20Rules,%20Adopted%20090913,%20Effective%20101513%5B1%5D_0.pdf.at 20-21.
93
Washington Initiative 502 §26.
94
Colorado Legislative Council Staff, Fiscal Impact Statement: Proposition AA, Retail Marijuana Taxes, September
24, 2013, available at http://www.leg.state.co.us/LCS/Initiative%20Referendum/1314initrefr.nsf/
b74b3fc5d676cdc987257ad8005bce6a/e3e37fa33a36873887257b6c0077ac93/$FILE/
(continued...)

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Under Oregon Ballot Measure 91, marijuana producers will be taxed $5 for each immature
marijuana plant, $10 for each ounce of marijuana leaves, and $35 for each ounce of flowers.95
The revenue generated will be used first to offset the costs of implementing the state’s marijuana
regime and remaining monies will be distributed to a variety of existing state funds, including the
state’s Common School Fund and the Mental Health Alcoholism and Drug Services Account.96
Alaska law imposes an excise tax of $50 per ounce marijuana for each transaction between a
marijuana cultivation center and either a processor or retail store.97

Local Control
Another issue relevant to each retail marijuana law is the question of whether local governments
within the state are permitted to ban or otherwise regulate marijuana businesses within their local
jurisdictions. Colorado Amendment 64 expressly permits local governments within Colorado to
regulate or prohibit the operation of such facilities.98 The Alaska recreational marijuana law also
expressly provides local governments with certain authority to ban recreational marijuana
businesses from operating and otherwise restrict “the time, place, manner, and number of
marijuana establishment operations” with their respective jurisdictions.99 Oregon Ballot Measure
91 also expressly authorizes localities to impose “reasonable time, place, and manner” restrictions
on marijuana businesses.100 Washington’s Initiative 502, on the other hand, does not expressly
allow Washington cities to ban marijuana stores from opening within their borders, and there is
uncertainty about the degree to which such local prohibitions or moratoriums on the operation of
recreational marijuana businesses may be enforced.101

Justice Department Memoranda
The Department of Justice is not required, and realistically lacks the resources, to prosecute every
single violation of the CSA. Pursuant to the doctrine of “prosecutorial discretion,” federal law
(...continued)
Retail%20Marijuana%20Taxes_FN.pdf. A provision of the Colorado Constitution may affect the disbursements of
marijuana-related tax revenue. See Jack Healy, In Colorado, Marijuana Taxes May Have to Be Passed Back, N.Y.
TIMES, April 1, 2015, available at http://www.nytimes.com/2015/04/02/us/colorado-lawmakers-scramble-to-keepmillions-in-marijuana-taxes.html?_r=0.
95
Oregon Ballot Measure 91 §33.
96
Id. §44.
97
ALASKA STAT. §43.61.010.
98
Colorado Amendment 64 §16(5)(f). See also Dan Frosch, Colorado Localities Make Own Rules Before Final
Decision on Marijuana Sales, N.Y. TIMES, June 12, 2013; John Ingold, Colorado Marijuana Stores Likely to be
Concentrated in Few Cities, THE DENVER POST, July 25, 2013.
99
ALASKA STAT. §17.38.110.
100
Oregon Ballot Measure 91 §58.
101
See Chelan County Judge Agrees with Attorney General’s Opinion, Holds that Local Governments Can Ban
Marijuana Businesses, Wash. State Off. of the Attorney Gen. Press Release, Oct. 17, 2014, available at
http://www.atg.wa.gov/news/news-releases/chelan-county-judge-agrees-attorney-general-s-opinion-holds-localgovernments-can; Jake Ellison, City/County Bans, Moratoriums, and Zoning Approvals for Marijuana Businesses in
Washington, SEATTLE POST INTELLIGENCER, December 12, 2013, available at http://blog.seattlepi.com/marijuana/2013/
12/12/bans-moratoriums-and-zoning-approvals-for-marijuana-businesses-as-far-as-we-know/#18853101=0&
18413103=0; Gene Johnson, No Welcome Yet for Pot Shops in Many Wash. Cities, SEATTLE POST INTELLIGENCER,
January 1, 2014.

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enforcement officials have “broad discretion” as to when, whom, and whether to prosecute for
violations of the CSA.102 Courts have recognized that the “decision to prosecute is particularly illsuited to judicial review,” as it involves the consideration of factors, such as the strength of
evidence, deterrence value, and existing enforcement priorities, “not readily susceptible to the
kind of analysis the courts are competent to undertake.”103
Through the exercise of prosecutorial discretion, DOJ is able to develop a policy outlining what
marijuana-related activities will receive the most attention from federal authorities. DOJ has
issued four memoranda since 2009 that explain the Obama Administration’s position regarding
state-authorized marijuana activities, as described in the following sections.

The 2009 Ogden Memorandum
In 2009, Deputy Attorney General David W. Ogden provided guidance to federal prosecutors in
states that have authorized the use of medical marijuana.104 Citing a desire to make “efficient and
rational use of its limited investigative and prosecutorial resources,” the memorandum stated that
while the “prosecution of significant traffickers of illegal drugs, including marijuana … continues
to be a core priority,” federal prosecutors “should not focus federal resources [] on individuals
whose actions are in clear and unambiguous compliance with existing state laws providing for the
medical use of marijuana.”105 The memorandum made clear, however, that “this guidance [does
not] preclude investigation or prosecution, even where there is clear and unambiguous
compliance with existing state law, in particular circumstances where investigation or prosecution
otherwise serves important federal interests.”106 Nevertheless, the Ogden Memorandum was
widely considered an assurance that DOJ would not prosecute any marijuana cultivation,
distribution, or possession, as long as those activities complied with state law.107
At about the same time, it became apparent the state medical marijuana programs had
consequences that were perhaps unintended. In some states, the affliction most easily claimed and
most difficult to diagnose—chronic pain—accounted for 90% of all physicians’
102

United States v. Goodwin, 457 U.S. 368, 380 (1982).
Wayte v. United States, 470 U.S. 598, 607 (1985).
104
Memorandum for selected U.S. Attorneys from David W. Ogden, Deputy Attorney General, Investigations and
Prosecutions in States Authorizing the Medical Use of Marijuana, October 19, 2009 (hereinafter Ogden Memorandum)
available at http://www.justice.gov/opa/documents/medical-marijuana.pdf.
105
Id. at 1-2.
106
Id. at 3.
107
Todd Grabarsky, Conflicting Federal and State Medical Marijuana Policies: A Threat to Cooperative Federalism,
116 W.VA. L. REV. 1, 3 (2013)(“While the Ogden Memo reaffirmed the illegality of all forms of medical marijuana at
the federal level, it made clear that the federal executive policy with regards to medical marijuana permissible at the
state level would be for the most part hands-off.”); Karen O’Keefe, State Medical Marijuana Implementation and
Federal Policy, 16 J. HEALTH CARE L & POL’Y 39, 51 (2013)(“On October 19, 2009, Deputy Attorney General David
Ogden issued a memorandum memorializing the new federal policy.... This memo was widely interpreted as meaning
that the federal government would not be targeting medical marijuana providers.”); Sam Kamin & Eli Wald, Marijuana
Lawyers: Outlaws or Crusaders? 91 ORE. L. REV. 869, 881 (2013)(“In states that had adopted [Medical Marijuana]
provisions, the memo was seen as a green light to the open sale of marijuana.”); Alex Kreit, Reflections on Medical
Marijuana Prosecutions and the Duty to Seek Justice, 89 DENV. U. L. REV. 1027, 1037 (2012)(“The New York Times
ran a front-page article about the memo under the headline U.S. Won’t Prosecute in States That Allow Medical
Marijuana reporting that ‘[p]eople who use marijuana for medical purposes and those who distribute it to them should
not face federal prosecution, provided they act according to state law, the Justice Department said Monday in a
directive with far-reaching political and legal implications.’”).
103

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recommendations.108 It was said that Los Angeles alone had somewhere between 500 and 1,000
medical marijuana dispensaries.109 No one knew how many for sure, but all agreed there were
more dispensaries than there were Starbucks coffee shops.110 Rather than the old and infirm,
“[r]emarkably the age distribution of medical marijuana users seem[ed] to mimic that of
recreational users in its concentration of young persons.”111

The 2011 Cole Memorandum
DOJ reiterated and clarified its position in a subsequent memorandum in 2011 drawing a clear
distinction between the potential prosecutions of individual patients who require marijuana in the
course of medical treatment and “commercial” dispensaries.112 After noting that several
jurisdictions had recently “enacted legislation to authorize multiple large-scale, privately operated
industrial marijuana cultivation centers,” DOJ stated that
The Ogden memorandum was never intended to shield such activities from federal
enforcement action and prosecution, even where those activities purport to comply with state
law. Persons who are in the business of cultivating, selling or distributing marijuana, and
those who knowingly facilitate such activities, are in violation of the [CSA] regardless of
state law. Consistent with resource constraints and the discretion you may exercise in your
district, such persons are subject to federal enforcement action, including potential
prosecution.113

The surge in enforcement activity proximate to the release of the 2011 Cole Memorandum114
caught unawares many of those who considered the Ogden Memorandum a green light for
marijuana entrepreneurship.115
108
Gerald Caplan, Medical Marijuana: A Study of Unintended Consequences, 43 MCGEORGE L. REV. 127, 130, 136-37
(2012)(“Statewide, more than 70% of doctors recommendations were written by fewer than 15 physicians in Colorado,
and severe or chronic pain, a catchall category, accounted for ninety-four percent of all reported conditions.... [In]
Oregon, fewer than ten percent of the roughly 35,000 patients holding cards suffered from cancer, multiple sclerosis,
glaucoma, or the other specific debilitating conditions cited in the legislation. Ninety percent of registered cardholders
cited chronic pain as their qualifying debilitating disease. Nevada’s percentages are nearly identical. Montana’s are
slightly lower, with seventy-one percent of all medical marijuana users suffering from chronic pain.”).
109
Alex Kreit, The Federal Response to State Marijuana Legalization: Room for Compromise, 91 ORE. L. REV. 1029,
1036 n.33 (2013).
110
Id.
111
Id. at 135.
112
Memorandum for U.S. Attorneys from James M. Cole, Deputy Attorney General, Guidance Regarding the Ogden
Memo in Jurisdictions Seeking to Authorize Marijuana for Medical Use, June 29, 2011 (hereinafter Cole 2011
Memorandum), available at http://www.justice.gov/oip/docs/dag-guidance-2011-for-medical-marijuana-use.pdf.
113
Id. at 2.
114
Sam Kamin & Eli Wald, Marijuana Lawyers: Outlaws or Crusaders? 91 ORE. L. REV. 869, 881-83 (2013)(“In the
fall of 2011, California’s four Untied States Attorneys announced that a federal grand jury had returned indictments
against several marijuana cooperative owners throughout the state, charging them with violations of the CSA. In
addition, the United States Attorneys sent cease and desist letters to both dispensary owners and their landlords, giving
them forty-five days to move their operations or else face arrest. In addition to the clear threat of criminal prosecution,
this action made clear that the threat of civil enforcement—explicit in the Cole memo—was not an empty one. For a
federal government with limited enforcement resources, the specter of civil forfeiture is an incredibly powerful tool.
Similar crackdowns have since taken place in Washington state, Colorado, and Montana.”).
115
See, e.g., Montana Caregivers Association, LLC v. United States, 841 F.Supp.2d 1147, 1148 (D.Mont. 2012)(“The
plaintiffs describe themselves as ‘caregivers: growers and distributors of medical marijuana to qualified patients within
the State of Montana.’ They filed their complaint after federal authorities raided their facilities in March 2011 and
(continued...)

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The 2013 Cole Memorandum
The Obama Administration’s official response to the Colorado and Washington initiatives was
provided on August 29, 2013, when Deputy Attorney General James M. Cole sent a memorandum
to all U.S. Attorneys intended to guide the “exercise of investigative and prosecutorial discretion”
when it comes to civil and criminal enforcement of the federal Controlled Substances Act within
all states, including those that have legalized marijuana for medicinal or recreational use.116 The
memorandum expresses DOJ’s position that, although marijuana is a dangerous drug that remains
illegal under federal law, the federal government will not pursue legal challenges against
jurisdictions that authorize marijuana in some fashion, assuming those state and local
governments maintain strict regulatory and enforcement controls on marijuana cultivation,
distribution, sale, and possession that limit the risks to “public safety, public health, and other law
enforcement interests.” This DOJ decision has received both praise117 and criticism.118
The memorandum instructs federal prosecutors to prioritize their “limited investigative and
prosecutorial resources to address the most significant [marijuana-related] threats” and identified
the following eight activities as those that the federal government wants most to prevent: (1)
distributing marijuana to children; (2) revenue from the sale of marijuana going to criminal
enterprises, gangs, and cartels; (3) diverting marijuana from states that have legalized its
possession to other states that prohibit it; (4) using state-authorized marijuana activity as a pretext
for the trafficking of other illegal drugs; (5) using firearms or violent behavior in the cultivation
and distribution of marijuana; (6) exacerbating adverse public health and safety consequences due
to marijuana use, including driving while under the influence of marijuana; (7) growing
marijuana on the nation’s public lands; and (8) possessing or using marijuana on federal
property.119 The memorandum advises U.S. Attorneys and federal law enforcement to devote their
resources and efforts toward any individual or organization involved in any of these activities,
regardless of state law. Furthermore, the memorandum recommends that jurisdictions that have
legalized some form of marijuana activity “provide the necessary resources and demonstrate the
willingness to enforce their laws and regulations in a manner that ensures they do not undermine
federal enforcement priorities.”120 However, the memorandum cautions that, to the extent that
state enforcement efforts fail to sufficiently protect against the eight harms listed above, the
federal government retains the right to challenge those states’ marijuana laws.
(...continued)
seized live marijuana plants, dried marijuana, and related equipment. The plaintiffs claim the raids were unlawful
because (1) Montana law allowed them to grow and produce marijuana for medical consumption and (2) the United
States Department of Justice represented that they would not actively prosecute medical marijuana caregivers.”);
United States v. Washington, 887 F.Supp.2d 1077, 1090-91 (D. Mont. 2012)(“All of the pending motions to dismiss on
estoppel grounds rely on the common underlying principle that the federal government, having stated several times that
it would not initiate federal drug prosecutions of sellers or users of medical marijuana acting in compliance with the
laws of their respective states, should now be estopped from pursuing this federal prosecution in contradiction of those
statements. The most prominent of the federal government’s various pronouncements on the topic of medical marijuana
is what has become known as the ‘Ogden memo.’”).
116
Memorandum for U.S. Attorneys from James M. Cole, Deputy Attorney General, Guidance Regarding Marijuana
Enforcement, August 29, 2013 (hereinafter 2013 Cole Memorandum), available at http://www.justice.gov/iso/opa/
resources/3052013829132756857467.pdf.
117
See, e.g., New York Times Editorial, A Saner Approach on Drug Laws, N.Y. TIMES, September 1, 2013.
118
See, e.g., Wall Street Journal Editorial, The Beltway Choom Gang, WALL ST. J., September 5, 2013.
119
2013 Cole Memorandum, at 1-2.
120
Id. at 2-3.

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Two additional points made in the memorandum are worth highlighting. First, the memorandum
acknowledges a change in Administration policy with respect to “large scale, for-profit
commercial enterprises” that may ease the concerns of potential state-licensed marijuana
distributors and retailers in Colorado and Washington.121 In previous guidance issued to U.S.
Attorneys in states with medical marijuana laws, DOJ had suggested that large-scale marijuana
enterprises were more likely to be involved in marijuana trafficking, and thus could be
appropriate targets for federal enforcement actions.122 In the guidance, DOJ directs prosecutors
“not to consider the size or commercial nature of a marijuana operation alone as a proxy for
assessing whether marijuana trafficking implicates the Department’s enforcement priorities ...”123
The memorandum suggests that a state with a robust regulatory system for the control of
recreational marijuana “is less likely to threaten [] federal priorities ...” than a state that lacks such
controls. This statement may inform the long-running debate over the extent to which state
marijuana regulatory and licensing laws (as opposed to mere penalty exemptions) conflict with
federal law. Some courts have suggested, for example, that whereas a state is generally free to
remove state penalties for marijuana use, the more robust a state’s licensing and regulatory
program, the more likely the law is to be preempted by federal law.124 The Oregon Supreme
Court, for instance, has suggested that states may not “affirmatively authorize” an individual to
participate in conduct prohibited by federal law.125
The memorandum makes no statements with regard to the application of various federal money
laundering and banking laws that have hampered the ability of commercial marijuana
establishments to obtain the necessary financing and financial services to establish and grow their
businesses.126

The 2014 Cole Memorandum
The 2014 Cole memorandum, however, did address banking and money laundering laws.127 It
recited eight priority points listed in the 2013 memorandum and explained that the same
considerations should guide the allocation of investigation and prosecution resources to
marijuana-related offenses involving financial transactions—money laundering, money transfers,
and Bank Secrecy Act transgressions, discussed later in this report.

121

Id. at 3.
2011 Cole Memorandum, at 1-2.
123
2013 Cole Memorandum, at 3.
124
See discussion supra pp. 14-19.
125
Emerald Steel Fabricators, Inc., v. Bureau of Labor and Indus., 348 Ore. 159, 230 P.3d 518 (2010).
126
For more information about this topic, see CRS Legal Sidebar WSLG682, Banking Difficulties for State-Legalized
Marijuana Dispensaries, by (name redacted);
see also Reuters, Easier Pot Policy Won’t Relieve Dispensaries’
Banking Woes, CNBC.com, September 5, 2013, available at http://www.cnbc.com/id/101011966; Serge F. Kovaleski,
Banks Say No to Marijuana Money, Legal or Not, N.Y. TIMES, January 11, 2014.
127
Memorandum for U.S. Attorneys from James M. Cole, Deputy Attorney General, Guidance Regarding Marijuana
Related Financial Crimes, February 14, 2014 (hereinafter 2014 Cole Memorandum), available at
http://www.justice.gov/usao/wae/news/2014/2014-02-14-FinCin.html.
122

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Preemption
To what extent does the CSA trump or preempt state medical and recreational marijuana laws?
The preemption doctrine stands at the threshold of the federal-state marijuana debate. The
preemption doctrine is grounded in the Supremacy Clause of Article VI, cl. 2, which states that
“[t]he Constitution, and the Laws of the United States which shall be made in Pursuance thereof;
and all Treaties made ... under the Authority of the United States, shall be the supreme Law of the
Land.”128 The Supremacy Clause, therefore, “elevates” the U.S. Constitution, federal statutes,
federal regulations, and treaties129 above the laws of the states.130 As a result, where federal and
state law are in conflict, the state law is generally preempted, leaving it void and without effect.131
Preemption is a matter of Congress’s choice when it operates within its constitutionally
enumerated powers. In some instances, Congress has exercised its authority so pervasively as to
preclude the possibility of state activity within the same legislative field.132 On the other hand,
where Congress prefers the co-existence of state and federal law, state law must give way only
when it conflicts with federal law in either of two ways: (1) if it is “physically impossible” to
comply with both the state and federal law (“impossibility preemption”); or (2) if the state law
“stands as an obstacle to the accomplishment and execution of the full purposes and objectives of
Congress” (“obstacle preemption”).133
What constitutes an obstacle for preemption purposes is a matter “to be informed by examining
the federal statute as a whole and identifying its purpose and intended effects.”134 When Congress
acts within an area traditionally within the purview of the states, it will be assumed not to have
intended to give its words preemptive force unless a contrary purpose is manifestly clear.135
The Controlled Substances Act contains an explicit statement of the extent of Congress’s
preemptive intent. Section 903 provides that
No provision of this subchapter shall be construed as indicating an intent on the part of the
Congress to occupy the field in which that provision operates, including criminal penalties,
to the exclusion of any State law on the same subject matter which would otherwise be
within the authority of the State, unless there is a positive conflict between that provision of
136
this subchapter and that State law so that the two cannot consistently stand together.
128

U.S. CONST., Art. VI, cl. 2.
See discussion of preemptive effect of treaties infra.
130
Northern States Power Co. v. Minnesota, 447 F.2d 1143, 1145 (8th Cir. 1971).
131
See, e.g., Mutual Pharmaceutical Co., Inc. v. Bartlett, 133 S.Ct. 2466, 2473 (2013)(“Under the Supremacy Clause,
from which our pre-emption doctrine is derived, any state law, however clearly within a State’s acknowledged power,
which interferes with or is contrary to federal law, must yield.”).
132
Arizona v. United States, 132 S.Ct. 2492, 2501 (2012)(“[T]he States are precluded from regulating conduct in a
field that Congress, acting within its proper authority, has determined must be regulated by its exclusive governance.
The intent may be inferred from a framework of regulation so pervasive ... that Congress has left no room for the states
to supplement it or where there is a federal interest ... so dominant that the federal system will be assumed to preclude
enforcement of state laws on the same subject.”).
133
Hillman v. Maretta, 133 S.Ct. 1943, 1950 (2013).
134
Arizona v. United States, 132 S.Ct. at 2501.
135
Hillman v. Maretta, 133 S.Ct. 1943, 1950 (2013).
136
21 U.S.C. §903.
129

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Several state courts have addressed the preemption challenges to state medical marijuana laws
with mixed results. For example, appellate courts in Colorado, California, and Michigan have
concluded that at least some aspects of the medical marijuana laws in those states survive both
impossibility and obstacle preemption analysis. In two instances, they have held that the language
in Section 903 evidences an intent to preempt state laws only under impossibility preemption and
not under obstacle preemption.137
The Colorado case, People v. Crouse, arose when a defendant, acquitted of cultivation charges on
the basis of immunity under the state medical marijuana law, petitioned the trial court to order
police to return marijuana plants they had seized in connection with his prosecution.138 The state
questioned whether the CSA precluded such an action. The Court of Appeals of Colorado
determined that a state marijuana law is only in “positive conflict” with the CSA when it is
“physically impossible” to simultaneously comply with the state and federal law. It held that in
order to preempt the CSA Section 903 “demands more than that the state law ‘stands as an
obstacle to the accomplishment and execution’ of the federal law.’”139 Thus, the language of the
CSA “cannot be used to preempt a state law under the obstacle preemption doctrine.”140 The
decision in Crouse adopted141 the reasoning of County of San Diego v. San Diego NORML, a
California state court decision that also determined that obstacle preemption should not be
applied in determining whether a state marijuana law is preempted by the CSA.142
In both instances, however, the court supplied an alternative, obstacle preemption explanation. In
Crouse, the court noted Section 885(d) of the CSA “carves out a specific exemption for
distribution of controlled substances by law enforcement officers.”143 Thus, if the officers
returned (“distributed”) the marijuana to Crouse they would not be obstructing the CSA but acting
in a manner which it authorized.144
In San Diego NORML, the California law required local governments to issue medical marijuana
cards to qualified applicants.145 In the eyes of the California appellate court, the medical
marijuana statute posed no obstacle to the CSA, because “[t]he purpose of the CSA is to combat
recreational drug use, not to regulate a state’s medical practices.”146
The Michigan case, Beek v. City of Wyoming, involved a Wyoming City property owner and
medical marijuana registrant who sought a declarative judgment against a city ordinance which
proscribed the use of his property in a manner contrary to federal law including the CSA.147 Beek
137
See, e.g., County of San Diego v. San Diego NORML, 165 Cal.App. 4th 798 (2008)(holding that a state law conflicts
with the CSA only where it is impossible to comply with both the state and federal law).
138
2013 Colo.App. LEXIS 1971 (December 19, 2013).
139
Id. at *4.
140
Id. at *11.
141
Id. at *4 (“We consider County of San Diego well-reasoned and follow it here.”)
142
Cnty. of San Diego v. San Diego NORML, 165 Cal.App. 4th 798 (2008).
143
2013 Colo.App. LEXIS 1971 at *4.
144
Id. at *5.
145
Cnty. of San Diego v. San Diego NORML, 165 Cal.App.4th at 808.
146
Id. at 826. The court also found that the California law was not vulnerable to impossibility preemption since the
CSA did not outlaw the issuance of the medical marijuana cards that the California law required. Thus, it was not
impossible for an individual to honor both the CSA and the California card law. Id. at 819-21.
147
495 Mich. 1, 24-25 (Mich. 2014).

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argued that the Michigan Medical Marihuana Act (MMMA), which immunized an individual’s
cultivation of marijuana for medical purposes, invalidated the city ordinance. The City argued
that the CSA preempted the MMMA. The Michigan Supreme Court held that the CSA did not
preempt the MMMA, but also that the ordinance must yield to the MMMA.148 As understood by
the court, the MMMA escaped impossibility preemption because it was permissive and therefore
did not command the performance of an act prohibited by federal law: “impossibility results when
state law requires what federal law forbids, or vice versa.”149 The MMMA escaped obstacle
preemption because it merely conveyed immunity from the consequences of state law: “the
MMMA’s limited state-law immunity for [medical marijuana] use does not frustrate the CSA’s
operation nor refuse its provisions their natural effect, such that its purpose cannot otherwise be
accomplished.... [T]his immunity does not purport to alter the CSA’s federal criminalization of
marijuana, or to interfere with or undermine federal enforcement of that prohibition.”150
The Oregon Supreme Court understood obstacle preemption a little differently in Emerald
Steel.151 State regulators had charged Emerald Steel with disability discrimination for firing an
employee for medical marijuana use. The Oregon court concluded, based on its interpretation of
U.S. Supreme Court precedent, that “[a]ffirmatively authorizing a use that federal law prohibits
stands as an obstacle to the implementation and execution of the full purposes and objectives of
the Controlled Substances Act.”152 Thus, “[t]o the extent that [the Oregon statute] affirmatively
authorizes the use of medical marijuana, federal law preempts that subsection leaving it without
effect.”153
The continued viability of Emerald Steel may be open to question. While the Oregon Supreme
Court has not overturned its earlier decision, it has observed in Willis that Emerald Steel’s
“affirmative authorization” obstacle preemption test may have been an overgeneralization:
“Emerald Steel should not be construed as announcing a stand-alone rule that any state law that
can be viewed as ‘affirmatively authorizing’ what federal law prohibits is preempted. Rather it
reflects this court’s attempt to apply the federal rule and the logic of the most relevant federal
cases to the particular preemption problem that was before it. And particularly where, as here, the
issue of whether the statute contains an affirmative authorization is not straightforward, the
analysis in Emerald Steel cannot operate as a simple stand-in for the more general federal rule.”154

148

Id. at 24.
Id. at 12.
150
Id. at 14-15.
151
Emerald Steel Fabricators, Inc. v. Bureau of Labor and Indus., 230 P.3d 518 (2010).
152
Id. at 529 (“To be sure, state law does not prevent the federal government from enforcing its marijuana laws against
medical marijuana users in Oregon if the federal government chooses to do so. But the state law at issue in Michigan
Canners did not prevent the federal government from seeking injunctive and other relief to enforce the federal
prohibition in that case. Rather, state law stood as an obstacle to the enforcement of federal law in Michigan Canners
because state law affirmatively authorized the very conduct that federal law prohibited, as it does in this case”), citing,
Michigan Canners & Freezers Assoc. v. Agricultural Marketing and Bargaining Bd., 467 U.S. 461, 478 (1984).
153
Id. at 529.
154
Willis v. Winters, 253 P.3d 1058, 1064 n.6 (2011). In Willis, the court held that the federal statute that outlawed
firearm possession by a user of controlled substances did not preempt the Oregon statute that authorizes sheriffs to
issue “concealed carry” permits to otherwise qualified applications who were users of medical marijuana. Id. at 106566.
149

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Finally, in what is one of the few reported statements by a federal court relating to preemption of
state marijuana laws, in In re: Rent-Rite Super Kegs West LTD,155 a bankruptcy court noted (in
what was clearly dicta) that “conflict preemption is not an issue here. Colorado constitutional
amendments for both medical marijuana, and the more recent amendment legalizing marijuana
possession and usage generally, both make it clear that their provisions apply to state law only.
Absent from either enactment is any effort to impede the enforcement of federal law.”156

Other Constitutional Considerations
Other colorable constitutional issues involving the CSA and state medical or recreational
marijuana statutes have arisen on a number of occasions. The Supreme Court resolved one of
them when it found that Congress’s constitutional authority to regulate interstate and foreign
commerce enabled it to craft the CSA so as to categorically outlaw the cultivation and possession
of marijuana.157
Congress’s Commerce Clause authority, however, does not include the power to compel a state
legislature to act at its bidding or a state official to enforce its will.158 From time to time, medical
marijuana litigants have invoked this limitation in an effort to shield themselves from the CSA.
Because the CSA makes no demands of state legislatures or officials, those efforts have been to
no avail.159 The related Tenth Amendment argument that the CSA intrudes upon those police
powers reserved to the states has enjoyed no greater success.160
155
In re: Rent-Rite Super Kegs West Ltd., 484 B.R. 799 (December 19, 2012). Whether the debtor was engaged in
criminal activity was an issue in the case because “a federal court cannot be asked to enforce the protections of the
Bankruptcy Code in aid of a Debtor whose activities constitute a continuing federal crime.” Id. at 805.
156
Id. at 805 (“The fact that there is a difference in legislative philosophy creates no conflict that requires an analysis of
federal preemption under the Supremacy Clause.”). Part of the confusion over the proper application of obstacle
preemption to state marijuana laws may stem from an apparent disagreement over the nature of the obstacle that is
required to trigger preemption. As previously noted, the Supreme Court has held that a state law is preempted when it
“stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hillman
v. Maretta, 133 S.Ct. at 1950 (emphasis added). Most courts that have rejected preemption challenges to state medical
marijuana laws have interpreted “the full purposes and objectives of Congress” in relation to the federal government’s
ability to enforce federal law. As such, these courts have generally held that because the state law does not create a
shield or otherwise immunize state residents from federal criminal prosecutions, the law does not constitute an obstacle
to “the enforcement of federal law.” To the contrary, the Oregon Supreme Court reasoned that the fact that the state law
in no way inhibited federal prosecutions did not mean that the law did not otherwise create an obstacle to the
Congress’s chief objective in enacting the CSA; that of curtailing drug use. Emerald Steel Fabricators, Inc. v. Bureau of
Labor Indus., 230 P.3d at 529.
157
Gonzales v. Raich, 545 U.S. 1, 5, 22 (2005)(The question presented in this case is whether the power vested in
Congress by Article I, §8, of the Constitution, ‘[t]o make all Laws which shall be necessary and proper for carrying into
Execution’ its authority to ‘regulate Commerce with foreign Nations, and among the several States’ includes the power
to prohibit the local cultivation and use of marijuana in compliance with California law.... Given the enforcement
difficulties that attend distinguishing between marijuana cultivated locally and marijuana grown elsewhere, ... we have
no difficulty concluding that Congress had a rational basis for believing that failure to regulate the intrastate
manufacture and possession of marijuana would leave a gaping hole in the CSA. Thus, as in Wickard, ... Congress was
acting well within its authority to ‘make all Laws which shall be necessary and proper’ to ‘regulate Commerce ...
among the several States.’”).
158
New York v. United States, 505 U.S. 144, 161 (1981)(“Congress may not commandeer the legislative process of the
States by directly compelling them to enact and enforce a regulatory program.”). Printz v. United States, 521 U.S. 898,
935 (1997)(“The Federal Government may [not] ... command the States’ officers, or those of their political
subdivisions, to administer or enforce a federal regulatory program.”).
159
United States v. Washington, 887 F.Supp.2d 1077, 1101 (D.Mont. 2012); United States v. Stacy, 696 F.Supp.2d
(continued...)

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Of course, the purported exercise of an explicit constitutional power such as the Commerce
Clause will be defeated, if the exercise is beyond the scope of the asserted power or is contrary to
some other explicit or implicit constitutional limitation. In the case of the fundamental rights of
the people, the Tenth Amendment, the Ninth Amendment, and the substantive due process
components of the Fifth and Fourteenth Amendments all impose limits on the federal or state
legislative powers.161 Here too, litigants generally have been unable to convince the courts that
the limitations entitle them to relief. Tenth Amendment reservations with respect to the rights of
the people disappear once it is established that the Constitution has expressly delegated a power
to the United States, as in the case of the Necessary and Proper Clause and the CSA.162 A
limitation on intrusion upon the rights of the people, however, may flow from the Ninth
Amendment and the Due Process Clauses’ implicit prohibition on governmental encroachment on
a fundamental right.
Fundamental rights are those “deeply rooted in this Nation’s history and tradition, and implicit in
the concept of ordered liberty, such that neither liberty nor justice would exist if they were
sacrificed.”163 The courts have thus far declined to find such a fundamental right in the
possession, use, or cultivation of marijuana, even for medicinal purposes.164
Due process and equal protection challenges have surfaced both in cases questioning the CSA and
those contesting application of the various state marijuana laws. At the federal level, several
courts have rejected the suggestion that the government is estopped from enforcing the CSA by
virtue of misleading or inconsistent statements in the Ogden Memorandum and elsewhere.165
(...continued)
1141, 1145 (S.D.Cal. 2010); Raich v. Gonzales, 500 F.3d 850, 867 n.17 (9th Cir. 2007).
160
Sacramento Nonprofit Collective v. Holder, 855 F.Supp.2d 1100 (E.D.Cal. 2012)(“[I]t is well established under
United States Supreme Court authority that if a power is delegated to Congress in the Constitution, the Tenth
Amendment expressly disclaims any reservation of that power to the States. Since the power to regulate the intrastate
possession, manufacturing, and distribution of marijuana is delegated to Congress through the Commerce Clause,
Raich I, 545 U.S. at 15, [the] allegation that the power to regulate marijuana in California was reserved to California
through the Tenth Amendment is foreclosed by United States Supreme Court precedent.”). Montana Caregivers
Association, LLC v. United States, 841 F.Supp.2d 1147, 1149-150 (D.Mont. 2012)(to the same effect).
161
U.S. Const. amend. X (emphasis added)(“The powers not delegated to the United States by the Constitution, nor
prohibited by it to the States, are reserved to the States respectively, or to the people.”); amend. IX (“The enumeration
in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”);
amend. V (“No person shall ... be deprived of life, liberty, or property without due process of law.... ”); amend. XIV, §1
(“... No State shall ... deprive any person of life, liberty, or property without due process of law.... ”).
162
Cf., Raich v. Gonzales, 500 F.3d 850, (9th Cir. 2007)(“The Supreme Court held in Gonzales v. Raich that Congress
acted within the bounds of its Commerce Clause authority when it criminalized the purely intrastate manufacture,
distribution, or possession of marijuana in the Controlled Substances Act, See 125 S.Ct. at 2215. Thus, after Gonzales
v. Raich, it would seem that there can be no Tenth Amendment violation in this case.”).
163
Washington v. Glucksberg, 521 U.S. 702, 721 (1997)(internal citations omitted).
164
Raich v. Gonzales, 500 F.3d at 861-66; United States v. Fry, 787 F.2d 903, 905 (4th Cir. 1986); United States v.
Fogarty, 692 F.2d 542, 547 (8th Cir. 1982); Marin Alliance for Medical Marijuana v. Holder, 866 F.Supp.2d 1142,
1156-157 (N.D.Cal. 2011); Kuromiya v. United States, 37 F.Supp.2d 717, 725-27 (E.D.Pa. 1999).
165
United States v. Washington, 887 F.Supp.2d 1077 (D.Mont. 2012)(“Estoppel by official misleading statement ...
applies where the defendant had a reasonable belief that his conduct was sanctioned by the government. [It] requires
the accused to show that (1) an authorized government official, empowered to render the claimed erroneous advice, (2)
who has been made aware of all the relevant historical facts, (3) affirmatively told him the proscribed conduct was
permissible, (4) that he relied on the false information, and (5) that his reliance was reasonable. The Defendants assert
the defense of estoppel by official misleading statement based on the Ogden memo; statements made to the press or to
Congress by then-presidential-candidate Barack Obama, his campaign spokesman, his White House spokesman, and
United States Attorney General Eric Holder; the characterizations of those statements in news media; the government’s
(continued...)

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Some of these same cases have rejected the contention that placement of marijuana in Schedule I
of the CSA is irrational and consequently constitutes a violation of equal protection.166
Municipal zoning or land use ordinances set the stage for most of the state marijuana-related due
process cases. State laws vary as to whether municipalities may ban or restrict marijuana-related
activities within their jurisdictions.167 Where they may do so, the regulatory scheme must comply
with due process requirements.168

Banking
The federal banking laws are designed to shield financial institutions from individuals and entities
that deal in controlled substances. Congress has crafted several of them to enlist financial
institutions in the investigation and prosecution of those who violate the CSA. As a consequence,
medical marijuana providers have experienced difficulty securing banking services.169 On
(...continued)
entry into the stipulation in Santa Cruz; and statements made to at least one Defendant by Flathead Tribal Police drug
investigator Arlen Auld. None of these statements justifies dismissal on a theory of estoppel by official misleading
statement.”); Marin Alliance for Medical Marijuana v. Holder, 866 F.Supp.2d at 1155-156; Sacramento Nonprofit
Collective v. Holder, 855 F.Supp.2d at 1111; United States v. Stacy, 696 F.Supp.2d at1146-148; United States v.
Schafer, 625 F.3d 629, 637-38 (9th Cir. 2010).
The Second Circuit has rejected the contention that the Ogden memo constituted a rescheduling of marijuana. United
States v. Canori, 737 F.3d 181, 184-85 (2d Cir. 2013).
166
United States v. Washington, 887 F.Supp.2d at 1102-103 (“The Ninth Circuit squarely rejected a rational basis
challenge to the classification of marijuana as a schedule I substance in United States v. Miroyan, 577 F.2d 489, 495
(9th Cir. 1978). Although Fleming argues that since Miroyan, additional studies and changes in state law have called
into question the rationality of Congress’ policy, there remains sufficient debate regarding the public benefits and
potential for harmful consequences of marijuana use to find a rational basis to uphold the continued classification of
marijuana as a schedule I controlled substance.”); Marin Alliance for Medical Marijuana v. Holder, 866 F.Supp.2d at
1146-147 (“There is no right under the Constitution to have a law go unenforced against you, even if you are the first
person against whom it is enforced, and even if you think (or can prove) you are not as culpable as some others who
have gone unpunished. The law does not need to be enforced everywhere to be legitimately enforced
somewhere”)(responding to plaintiffs’ equal protection challenge that prosecutors’ threatened to take legal action
against them as the landlords of marijuana dispensaries’ but visited no similar threats upon the landlords of Colorado
dispensaries); Sacramento Nonprofit Collective v. Holder, 855 F.Supp.2d at 1109-110 (same equal protection
challenge; same result).
167
Beek v. City of Wyoming, 2014 Mich. LEXIS 194 (Mich. 2014)(Michigan Medical Marihuana Act precludes any
absolute municipal ban on cultivating marijuana within city limits); City of Riverside v. Inland Empire Patients Health
and Wellness Center, Inc., 300 P.3d 494, 499 (Cal. 2013)(City may use its municipal powers to ban marijuana
dispensaries within the city); Giuliani v. Jefferson County Board of County Commissioners, 303 P.3d 131, 135
(Colo.App. 2012)(municipal officials may ban the cultivation or sale of marijuana within the county).
168
Santa Barbara Patients’ Collective Health Coop. v. City of Santa Barbara, 911 F.Supp. 884, 892-93 (C.D.Cal.
2012)(pre-ordinance permit holder enjoyed a vested right to operate a marijuana dispensary that could not be curtailed
without due process of law); Conejo Wellness Center, Inc. v. City of Agoura Hills, 214 Cal.App.4th 1534, 1562 (2013)
(pre-ordinance dispensary operator had no vested liberty right requiring procedural due process to extinguish).
169
See, e.g., Deirdre Fernandes, Banks Shun Fledgling Marijuana Firms in Mass, THE BOSTON GLOBE (“Elsewhere in
the country, legal marijuana businesses have run into the same problems ... Some marijuana businesses have found
ways to get a bank account by, for example, setting up separate holding companies that avoid any reference in the
names to marijuana. Even then, once banks get a whiff of where the money comes from, they close the accounts”),
available at http://www.bostonglobe.com/business/2014/01/29/medical-marijuana-firms-face-cash-economy-bankssteer-clear/88ftUTUbcaYvZfA7fpuENN/story.htm; Legal Marijuana Market Exceeds Tax Hopes, Creating
Opportunities, MARKETWATCH (“The Denver Post reported Wednesday that banks holding commercial loans on
properties that lease to Colorado marijuana businesses say they don’t plan to refinance those loans when they come
(continued...)

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February 14, 2014, the Department of Justice and the Treasury Department’s Financial Crimes
Enforcement Network (FinCEN) issued guidance with respect to marijuana-related financial
crimes.170 FinCEN’s guidance specifically addresses the obligations to file suspicious activity
reports (SARs).
Banks must file SARs with FinCEN relating to any transaction involving $5,000 or more that
they have reason to suspect are derived from illegal activity.171 Willful failure to do so is
punishable by imprisonment for not more than five years (not more than 10 years in cases of a
substantial pattern of violations or transactions involving other illegal activity).172 Breaking up a
transaction into two or more transactions to avoid the reporting requirement subjects the offender
to the same 5/10 year maximum terms of imprisonment.173 Banks must also establish and
maintain anti-money laundering programs,174 designed to ensure that bank officers and employees
will have sufficient knowledge of the banks’ customers and of the business of those customers to
identify the circumstances under which filing SARs is appropriate.175
Suspicion aside, banks must file currency transaction reports (CTRs) with FinCEN relating to
transactions involving $10,000 or more in cash.176 Willful failure to do so is punishable by
imprisonment for not more than five years (not more than 10 years in cases of a substantial
pattern of violations or transactions involving other illegal activity).177 Again, structuring a
transaction to avoid the reporting requirement exposes the offender to the same 5/10 year
maximum terms of imprisonment.178
Banks, their officers, employees, and customers may also face criminal liability under the money
laundering statutes for marijuana-related financial transactions. Section 1957 makes it a federal
crime to deposit or withdraw $10,000 or more in proceeds derived from the distribution of
marijuana and any other controlled substances.179 Section 1956 makes it a federal crime to engage
in a financial transaction involving such proceeds conducted with an eye to promoting further
offenses, for example, by withdrawing marijuana-generated funds in order to pay the salaries of
medical marijuana dispensary employees.180
(...continued)
due. Banks say property used as collateral for those loans theoretically is subject to federal drug-seizure laws, which
makes the loans a risk. Colorado’s two largest banks, Wells Fargo Bank and First Bank, say they won’t offer new loans
to landowners with preexisting leases with pot businesses. And Wells Fargo and Vestra Bank have told commercial
loan clients they either have to evict marijuana business or seek refinancing elsewhere.”), available at
http://www.marketwatch.com/story/legal-marijuana-market-exceeds-tax-hopes-creating-opportunities-2014-02-27?/
reflink=MW-news-stmp.
170
2014 Cole Memorandum; Department of the Treasury, Financial Crimes Enforcement Network, BSA Expectations
Regarding Marijuana-Related Business, FIN-2014-G001 (Feb. 14, 2014)(herein after FinCEN guidance), available at
http://www.fincen/gov/sstatutes_regs/guidance/pdf/FIN-2014-G002.pdf.
171
21 U.S.C. §5318(g); 31 C.F.R. §1020.320.
172
31 U.S.C. §5322.
173
31 U.S.C. §5324(d).
174
31 U.S.C. §5318(h); 12 U.S.C. §1818(s); 12 U.S.C. §1786(q)(1).
175
31 C.F.R. §§1020.200-1020.220.
176
31 U.S.C. §5313; 31 C.F.R. subpt.1020C; 31 C.F.R. subpt.1010 C.
177
31 U.S.C. §5322.
178
31 U.S.C. §5324(d).
179
18 U.S.C. §§1957(a), (d).
180
18 U.S.C. §1956(a)(1)(A)(i).

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Section 1956 violations are punishable by imprisonment for not more than 20 years.181 Section
1957 violations are punishable by imprisonment for not more than 10 years.182 Conspiracy to
violate either section carries the same maximum penalties,183 as does aiding and abetting the
commission of either offense.184 Moreover, any real or personal property involved in, or traceable
to, a transaction proscribed by either statute is subject to confiscation under either civil or
criminal forfeiture.185
Federally insured state- and federally chartered depository institutions that engage in illegal or
unsafe banking practices also run the risk of being assessed civil money penalties and even losing
deposit insurance coverage, which would result in the termination of their status as an insured
depository institution.186
In its recent guidance, FinCEN addressed banks’ SAR reporting requirements. FinCEN began its
guidance by emphasizing the point made in the accompanying 2014 Cole Memorandum, that the
Justice Department’s investigation and prosecution of financial crimes would be focused on
activities that conflict with any of several federal priorities:
•

preventing the distribution of marijuana to minors;

•

preventing revenue from the sale of marijuana from going to criminal enterprises,
gangs, and cartels;187

•

preventing the diversion of marijuana from states where it is legal under state law
in some form to other states;188

•

preventing state-authorized marijuana activity from being used as a cover or
pretext for the trafficking of other illegal drugs or other illegal activity;

•

preventing violence and the use of firearms in cultivation and distribution of
marijuana;189

•

preventing drugged driving and the exacerbation of other adverse public health
consequences associated with marijuana use;

181

18 U.S.C. §1956(a)(1).
18 U.S.C. §1957(a).
183
18 U.S.C. §1956(h).
184
18 U.S.C. §2. E.g., United States v. Lyons, 740 F.3d 702, 715 (1st Cir. 2014)(internal citations omitted)(“An aider
and abettor is punishable as a principal if, first, someone else actually committed the offense and, second, the aider and
abettor became associated with the endeavor and took part in it, intending to ensure its success. The central requirement
for the second element is a showing that the defendant consciously shared the principal’s knowledge of the underlying
criminal act, and intended to help the principal.”).
185
18 U.S.C. §§981(a)(1)(A), 982(a)(1).
186
12 U.S.C. §1818.
187
This presumably does not include enterprises, gangs, or cartels that possess or distribute marijuana in violation of
the CSA but in compliance with applicable state law.
188
This would seem to serve as a warning to interstate marijuana tourists and the businesses that serve them.
189
Given the value of the product, violence may be an inescapable attribute of marijuana cultivation and sale, see e.g.,
Benjamin B. Wagner & Jared C. Dolan, Medical Marijuana and Federal Narcotics Enforcement in the Eastern District
of California, 43 MCGEORGE L. REV. 109, 121 (2012).
182

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•

preventing the growing of marijuana on public lands and attendant public safety
and environmental dangers posed by marijuana production on public lands;190
and

•

preventing marijuana possession or use on federal property.191

FinCEN advised financial institutions that in providing services to a marijuana-related business
they must file one of three forms of special SARs: a marijuana limited SAR, a marijuana priority
SAR; or a marijuana termination SAR. The marijuana limited SAR is appropriate when the bank
determines, after the exercise of due diligence, that its customer is not engaged in any of the
activities that violate state law or that would implicate any of the Justice Department investigation
and prosecution priorities listed in the 2014 Cole Memorandum.192 A marijuana priority SAR
must be filed when the bank believes its customer is engaged in such activities.193 A bank files a
marijuana termination SAR when it finds it necessary to sever its relationship with a customer in
order to maintain an effective anti-money laundering program.194
FinCEN also provides examples of “red flags” that may indicate that a marijuana priority SAR is
appropriate:
•

The business is unable to produce satisfactory documentation or evidence to
demonstrate that it is duly licensed and operating consistently with state law.

•

The business is unable to demonstrate the legitimate source of significant outside
investments.

•

A customer seeks to conceal or disguise involvement in marijuana-related
business activity. For example, the customer may be using a business with a nondescript name (e.g., a “consulting,” “holding,” or “management” company) that
purports to engage in commercial activity unrelated to marijuana, but is
depositing cash that smells like marijuana.

•

Review of publicly available sources and databases about the business, its
owner(s), manager(s), or other related parties, reveal negative information, such
as a criminal record, involvement in the illegal purchase or sale of drugs,
violence, or other potential connections to illicit activity.

•

The business, its owner(s), manager(s), or other related parties are, or have been,
subject to an enforcement action by the state or local authorities responsible for
administering or enforcing marijuana-related laws or regulations.

•

A marijuana-related business engages in international or interstate activity,
including by receiving cash deposits from locations outside the state in which the
business operates, making or receiving frequent or large interstate transfers, or

190

Id. at 122 (“About seventy percent or more of marijuana eradicated in California every year comes from public
lands.”); Marijuana Crops in California Threaten Forests and Wildlife, The New York Times, available at
http://www.nytimes.com/2013/06/21/us/marijuana-crops-in-california-threaten-forests-and-wildlife.html.
191
FinCEN guidance, at 2.
192
Id. at 3-4.
193
Id. at 4.
194
Id. at 4-5.

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otherwise transacting with persons or entities located in different states or
countries.
•

The owner(s) or manager(s) of a marijuana-related business reside outside the
state in which the business is located.

•

A marijuana-related business is located on federal property or the marijuana sold
by the business was grown on federal property.

•

A marijuana-related business’s proximity to a school is not compliant with state
law.

•

A marijuana-related business purporting to be a “non-profit” is engaged in
commercial activity inconsistent with that classification, or is making excessive
payments to its manager(s) or employee(s).

•

A customer appears to be using a state-licensed marijuana-related business as a
front or pretext to launder money derived from other criminal activity (i.e., not
related to marijuana) or derived from marijuana-related activity not permitted
under state law. Relevant indicia could include the following:
•

The business receives substantially more revenue than may reasonably be
expected given the relevant limitations imposed by the state in which it
operates.

•

The business receives substantially more revenue than its local competitors
or than might be expected given the population demographics.

•

The business is depositing more cash than is commensurate with the amount
of marijuana-related revenue it is reporting for federal and state tax purposes.

•

The business is unable to demonstrate that its revenue is derived exclusively
from the sale of marijuana in compliance with state law, as opposed to
revenue derived from (i) the sale of other illicit drugs, (ii) the sale of
marijuana not in compliance with state law, or (iii) other illegal activity.

•

The business makes cash deposits or withdrawals over a short period of time
that are excessive relative to local competitors or the expected activity of the
business.

•

Deposits apparently structured to avoid Currency Transaction Report
(“CTR”) requirements.

•

Rapid movement of funds, such as cash deposits followed by immediate cash
withdrawals.

•

Deposits by third parties with no apparent connection to the account holder.

•

Excessive commingling of funds with the personal account of the business’s
owner(s) or manager(s), or with accounts of seemingly unrelated businesses.

•

Individuals conducting transactions for the business appear to be acting on
behalf of other, undisclosed parties of interest.

•

Financial statements provided by the business to the financial institution are
inconsistent with actual account activity.

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•

A surge in activity by third parties offering goods or services to marijuanarelated businesses, such as equipment suppliers or shipping servicers.”195

The FinCEN guidance ends with the observation that a bank is not absolved of its obligation to
file a currency transaction report for any financial transaction involving more than $10,000 in
cash, regardless of how it resolves its marijuana SAR obligations.196

Other Federal Law Consequences
Employment
The use of marijuana, medicinal or otherwise, may have adverse employment consequences.197
Both state and federal courts have upheld firing an employee for medical marijuana use.198
Employee challenges have cited in vain state medical marijuana laws as well as federal and state
anti-discrimination laws. The state medical marijuana laws ordinarily immunize medical
marijuana users from the adverse consequences of the law, but do not give them a right that can
be used affirmatively against a private entity.199 The Americans with Disabilities Act (ADA) and
similar state anti-discrimination in employment statutes are predicated upon discrimination based
on lawful activity and the CSA has consequently proven to be an insurmountable obstacle.200
They differ somewhat in the case of nongovernment employees, because, among other things,
federal, state, and local government employees enjoy Fourth Amendment protections. The Fourth
Amendment, binding on government employers, does not give employees the right to use
marijuana, medical or otherwise, but it limits the likelihood that their employers will discover
their use. The Fourth Amendment’s proscription on unreasonable governmental searches means

195

Id. at 5-7.
Id. at 7.
197
See, generally, Matthew D. Macy, Employment Law and Medical Marijuana, 41 COLORADO LAWYER 57 (2012).
198
Coats v. Dish Network, LLC, 303 P.3d 147 (Colo.App. 2013); Casias v. Wal-Mart Stores, Inc., 695 F.3d 428 (6th
Cir. 2012); Emerald Steel Fabricators, Inc. v. Bureau of Labor and Indus., 230 P.3d at 518; Ross v. RagingWire
Telecomm., Inc., 42 Cal.4th 920 (2008).
199
Casias v. Wal-Mart Stores, Inc., 695 F.3d at 435 (internal citations omitted)(emphasis in the original)(“[T]he
MMMA [Michigan Medical Marihuana Act] does not regulate private employment; [r]ather the Act provides a
potential defense to criminal prosecution or other adverse action by the state.... MMMA contains no language stating
that it repeals the general rule of at-will employment in Michigan or that it otherwise limits the range of allowable
private decisions by Michigan businesses”); Emerald Steel Fabricators, Inc. v. Bureau of Labor and Indus., 230 P.3d at
169 n.7, citing, Roe v

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR43435. Public record. Not legal advice.