First, U.S. Attorney General Jeff Sessions rescinded an Obama-era memo that kept federal authorities from cracking down on the marijuana trade in states where the drug is legal. Then U.S. Attorney for Massachusetts Andrew E. Lelling said Monday that he could not and would not rule out prosecuting state-sanctioned marijuana businesses.
But Colonel Boothe, co-founder and chief financial officer for Holistic Health Group Inc., said the groundbreaking for a 20,000-square-foot marijuana cultivation center in Middleboro and the search for space for marijuana dispensaries in Boston and Worcester will go on as scheduled, despite uncertainty.
“It’s been an interesting week or so,” Mr. Boothe, 36, of Worcester, said. “But this isn’t stopping us at all.”
His comments were echoed by others in the state’s nascent cannabis industry.
“That’s not going to slow us down, what Lelling and AG Sessions said,” said Caroline Frankel of Douglas, owner of Caroline’s Cannabis, a web-based store offering cannabis-related garden and home decor products. Ms. Frankel plans on applying for a retail marijuana license in April. “What happened this past week really hasn’t shaken me at all, it only has been pushing me forward to really prepare myself for this April 1st deadline.”
Massachusetts voters legalized medical marijuana in 2012. Voters approved Question 4, which legalized marijuana for adult recreational use, by a 54 to 46 percent vote in 2016. Recreational cannabis sales are on track to begin in July under the supervision of the Cannabis Control Commission.
But marijuana remains illegal federally.
On Jan. 4, Mr. Sessions rescinded Obama-era Department of Justice policies that limited prosecution of dispensaries, banks and other participants in state-regulated marijuana markets. Mr. Sessions granted regional federal prosecutors broader discretion to enforce national prohibitions on marijuana.
Asked by sponsors of the 2016 ballot question to clarify his intentions, Mr. Lelling, a Trump appointee, did not rule out prosecuting marijuana-industry participants under federal law.
“I cannot … provide assurances that certain categories of participants in the state-level marijuana trade will be immune from federal prosecution,” Mr. Lelling said in a statement.
“This is a straightforward rule of law issue,” Mr. Lelling continued. “Congress has unambiguously made it a federal crime to cultivate, distribute and/or possess marijuana. As a law enforcement officer in the Executive Branch, it is my sworn responsibility to enforce that law guided by the Principles of Federal Prosecution. To do that, however, I must proceed on a case-by-case basis, assessing each matter according to those principles and deciding whether to use limited federal resources to pursue it.”
The statement caused uncertainty among state officials, many of whom backed the burgeoning industry.
“If you’re a person who is looking to come into Massachusetts and to open up a cannabis business … I’m not sure what type of message that sends or what type of security that gives you - or lack of security, I should say,” House Speaker Robert A. DeLeo told reporters Monday.
A spokesman for Massachusetts Attorney General Maura Healey said the office was “committed to helping implement legalization effectively and as safely as possible,” and called for further clarification from Mr. Lelling “to provide guidance to Massachusetts municipalities, residents and businesses.”
Gov. Charlie Baker will continue to support the CCC’s mission to regulate the new cannabis industry and will continue to fund its work, according to a spokesperson. Mr. Baker also said that he would like the U.S. attorney to focus on stemming fentanyl.
The uncertainty has extended to the cannabis industry.
“I think it’s a wait-and-see stance,” said Jim Borghesani, a spokesman for the Massachusetts Policy Project which pushed the legalization ballot initiative. “There is uncertainty at this point … but we’re not seeing anybody starting to panic, really.”
Attorney Adam D. Fine, managing partner of the Massachusetts office of Vicente Sederberg, a firm focusing on marijuana law, agreed.
“It’s absolutely not time to take dramatic steps or change,” Mr. Fine said. “But it is a shift in national policy and then certainly not encouraging statements, not clarifying statements (from Mr. Lelling) … Unlike Colorado, where the U.S. attorney said nothing will change; we don’t have that type of clarity yet in the commonwealth.”
And that has led to increased calls at the office of Vicente Sederberg, Mr. Fine said.
It is also leading to increased calls at 4Front Ventures and 4Front Advisors, an operations and management firm and investment firm which work throughout the country to help groups operate medical cannabis businesses.
The entity is operating a cultivation and dispensary facility in Worcester, and is in the process of opening dispensaries in Burlington and Adams.
“Honestly, the tone has not been a tone of panic, as much as to just understand what this means,” said Kris Krane, president of 4Front Ventures and managing partner of 4Front Advisors. “It’s a little early to rush to judgment whether this is a crackdown on state marijuana businesses.”
Those interviewed cited several reasons why uncertainty, rather than panic, reigns in the industry.
First, marijuana has been illegal federally throughout the state’s foray into legalization. The Obama-era policies also offered only guidance, not immunity.
“These are people who already know that they are in a risky business because it remains federally illegal,” said Mr. Borghesani.
Moreover, a crackdown on legal marijuana wasn’t altogether out of the realm of possibility. Mr. Krane noted that there appears to be a general pattern of the Trump administration revoking Obama-era policies.
Coupled with Mr. Sessions' “obsession,” as Mr. Boothe said, with marijuana (Mr. Borghesani described this as “straight out of the 1930s,”) a crackdown wasn’t exactly unsurprising.
Finally, protections remain in place for state-legal medical marijuana.
A budget rider prohibits the Justice Department from using money to go after state-legal medical marijuana businesses. Those interviewed were optimistic that this would continue to garner bipartisan support when the federal budget is up for renewal next week.
There was also optimism that the new federal policy could prompt Congress to enact further protections for legal marijuana.
“This action by the Justice Department may very well spur Congress to take action, and take action relatively quickly, likely as part of the new budget bill, to extend the provisions of (the budget rider) to adult use as well as medical use,” Mr. Krane said.
Mr. Borghesani agreed.
“I foresee a movement in Congress to add something in the current budget that would do the same thing for adult-use marijuana as is done for the medicinal marijuana side,” Mr. Borghesani said, citing polls that show 64 percent of all Americans and 51 percent of Republicans support legalization. “This could be seen as some minor last-gasp by a major prohibitionist - Jeff Sessions - and then creating ripples across the pond … Nobody is going to turn back the clock or take away the momentum building for cannabis legalization.”
But the optimism for a federal fix doesn’t entirely eclipse concerns that the state’s marijuana industry could be taking a big hit.
“It will have negative impact on the growth of the industry,” said Mr. Fine. “People are not going to want to be a state-legal operation if the federal attorney general is going to target that … Patients are going to increase their anxiety of going to get medical marijuana if they think they are going to get raided.”
Several of those interviewed wondered whether Mr. Sessions’ and Mr. Lelling’s statements might discourage outside investment in the industry. They noted that a debit card processor had already told multiple dispensaries to stop accepting debit card transactions, causing the businesses to go cash-only. The dispensaries cited the law enforcement officials’ statements as the reason behind the change.
“One hundred percent it’s going to hinder the development of this industry,” said Marc Rosenfeld, CEO of CommCan, which has a medical marijuana cultivation facility in Medway to support future dispensaries in Southboro, Mansfield and Millis. “This industry is more than growing and selling cannabis … When you throw in uncertainty and seemingly random federal prosecution … of course it stifles it.”
But for those who are forging ahead, there is one message that they are taking to heart.
“The best thing you can do is make sure you take compliance very seriously, run completely above board and stay in compliance with all state regulations,” said Mr. Krane.
And they will be watching other states where recreational cannabis is already sold as to whether any crackdown is coming.
“We’re certainly going to be able to see how this plays out,” said Mr. Krane.