Congress Extends Protections for Legal Marijuana and Hemp Businesses

Last Friday, President Trump signed the federal spending bill, which included three provisions protecting the cannabis industry from federal interference. These protections are similar to provisions found in previous versions of the bill in 2015 and 2016. Specifically, Section 537 applies to medical marijuana laws in states where it is legal, and Sections 538 and 773 apply to industrial hemp programs in states where industrial hemp cultivation is legal under state law.

Section 537, which only applies to medical marijuana businesses, not recreational, states that the U.S. Department of Justice may not use federal funds to “prevent [states] from their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” The U.S. Court of Appeals for the Ninth Circuit upheld a previous version of this provision in U.S. v. McIntosh. In McIntosh, where the court held while marijuana is still illegal under federal law, the provision “prohibits DOJ from spending funds from relevant appropriations acts for the prosecution of individuals who engaged in conduct permitted by the State Medical Marijuana Laws and who fully complied with such laws.”

Section 538 prohibits the U.S. Department of Justice and the U.S. Drug Enforcement Administration from using federal funds to interfere with the 2014 Farm Bill, while Section 773 prohibits the use of federal funds “to prohibit the transportation, processing, sale, or use of industrial hemp that is grown or cultivated in accordance with [the 2014 Farm Bill], within or outside the State in which the industrial hemp is grown or cultivated.”

This is mostly good news for the cannabis industry and demonstrates Congress’ desire to prevent the federal government from interfering with legitimate business activities with regards to cannabis in states where the conduct is legal. Trump, in signing the bill, however, did state that he would treat the provision “consistently with [his] constitutional responsibility to take care that the laws be faithfully executed.” In other words, Trump reserved the right to ignore this provision.

The spending bill expires on September 30, 2017, and our firm will continue to monitor this situation and provide updates accordingly.