On August 16, 2016, the Ninth Circuit ruled in U.S. v. McIntosh that the Department of Justice may not expend federal money to prosecute state-law compliant medical marijuana providers and entities.

Since 2014, through appropriations riders, Congress has ruled that the Department of Justice may not use appropriated funds to pursue federal enforcement actions in ways that would thwart state medical marijuana laws. The relevant language in the budget bills passed in 2014 and renewed in 2015 reads:

“ None of the funds made available in this Act to the Department of Justice may be used, with respect to the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington, and Wisconsin, to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”

However, the DOJ contended that the ban did not undermine its right to prosecute state-law compliant growers and distributors. The Ninth Circuit’s ruling interprets the legislation to mean that it does indeed “prohibit DOJ from spending funds from relevant appropriations acts for the prosecution of individuals who engaged in conduct permitted by state medical marijuana laws and who fully complied with such laws.” U.S. v. McIntosh.

Although a favorable ruling for the cannabis industry, the court also articulated the following two important points limiting its benefits:

1. The ruling only applies to medical marijuana. No federal appellate-level court has directly endorsed, tacitly or otherwise, state-legal recreational cannabis businesses. This implicates much of the cannabis community, especially as medical programs are set to yield to or merge into recreational programs in a number of states that have adopted medical cannabis reform.

2. Instead of ordering lower courts to dismiss the criminal charges, the Ninth Circuit ordered that the cases be remanded to the lower courts to investigate whether the appellants were, in fact, fully compliant with their states’ laws regarding medical cannabis. Compliance with state law is turning out to be the cornerstone for protection from federal criminal prosecution.

That said, the DOJ’s enforcement of the federal Controlled Substances Act cannot occur without the necessary funds to do so and, in making its ruling, the Ninth Circuit Court of Appeals affirmed Congress’s intent to prohibit executive agencies from using appropriated funds for exactly that purpose. Hence, this ruling reduces the risk of federal raids for state-law abiding cannabis businesses in those states within the Ninth Circuit’s purview; namely, Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

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