Two weeks ago, a prominent cannabis industry figure in California was indicted on federal charges of committing fraud and violating labor laws. In an affidavit from the FBI for the case, the Bureau revealed what could be a softer approach to the marijuana industry.
On August 13, news broke that Dan Rush — the first person in the nation to organize cannabis workers into a union in Oakland, California through the larger United Food and Commercial Workers Union — was charged by the FBI’s Public Corruption and Civil Rights Squad with allegedly accepting over $600,000 in cash and gift bribes and creating a conflict of interest in the union organizing process.
His arrest shook the Bay Area cannabis community and he has since been fired from the United Food and Commercial Workers Union. As his case unfolds, one small detail in the FBI’s unsealed affidavit has revealed what could be a significant federal marijuana policy shift.
The FBI built its case against Rush with reports from two informants, Martin Kaufman of Oakland’s Blum dispensary and Derek Patterson of Terra Tech. Usually, the FBI provides non-prosecution agreements to such informants to protect them from incriminating themselves in their testimony. However, the FBI states in the affidavit for the Rush case that Kaufman did not receive a non-prosecution agreement. Instead, the FBI stated it had no intention of prosecuting him because he was acting in compliance with California’s state marijuana laws.
“Consistent with the U.S. Attorney’s Office policy on medical marijuana, it is not the intention of the U.S. Attorney’s Office to prosecute Kaufman for the medical marijuana-related conduct described in the Affidavit,” the affidavit reads.
The U.S. Attorney’s policy that the affidavit references is the “Cole Memo,” written by the Deputy Attorney General James Cole in August 2013. The Cole Memo outlines a federal policy that government agencies would prioritize things like preventing the distribution of marijuana to minors and preventing revenue from marijuana from reaching cartels — thereby deprioritizing the prosecution of individuals and companies operating in compliance with state laws.
However, there has not been concrete proof until now that the FBI was purposefully acting in compliance with the Cole Memo or that the FBI would treat cannabis industry individuals acting decently in a different manner than those acting indecently, according to the office of Robert Raich, an Oakland-based cannabis lawyer who has argued twice before the U.S. Supreme Court on cannabis cases.
“Statements in the affidavit… illustrate that the federal government is making a decision to adhere to the policy of not prosecuting individuals and businesses complying with their own state’s laws as outlined by the second Cole Memo,” said Raich in an email.
In fact, Raich said, this affidavit illustrates that even though the FBI became intimately aware of multiple cannabis businesses’ operations and finances while investigating Rush, they still were unwilling to pull the trigger on prosecuting those state-compliant businesses.
“Without a formal non-prosecution agreement for their cooperation, the U.S. Attorney could have easily decided to initiate prosecutions against Kaufman and Peterson based on the origin of Kaufman’s funds and TerraTech’s business operations through MediFarm and other subsidiaries,” Raich said in an email. “The U.S. Attorney chose not to do so, and that is significant.”
A spokesperson for the San Francisco division of the FBI, Michele Ernst, said the Bureau could not comment given the ongoing nature of the investigation.
Raich also noted that this affidavit in no way establishes a legal precedent, and the FBI could certainly shift their policies or reinterpret the Cole Memo.
The Department of Justice — which oversees the FBI — has already proven adept at such reinterpretations of government policy.
This April, a representative of the DOJ, Patrick Rodenbush, told the LA Times that the department still had the authority to prosecute individuals and organizations in medical marijuana states, even though the Rohrabacher-Farr amendment prohibits the DOJ from spending money to prosecute state-compliant cannabis actors.
The amendment, Rodenbush said, only prohibited the DOJ from “impeding the ability of states to carry out their medical marijuana laws.” Effectively, he said, the DOJ can prosecute anyone as long as they do not stop the state from implementing their laws.
The language of the Cole Memo is open to similar interpretations. For example, the Cole Memo could be interpreted to allow the federal government to prosecute state-compliant businesses in any state whose regulations they deem too loose.
The Rush affidavit suggests that the Department of Justice considers California’s medical marijuana market legitimately regulated. But until cannabis is no longer considered a Schedule I drug under the Controlled Substances Act, federal policies are always subject to change.
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