Recreational cannabis sales will become legal in California on January 1. Some businesses will make a ton of money as eager consumers rush to avail themselves of the dizzying selection suddenly now available. The state’s legal marijuana market has been valued at $5 billion.
Due to marijuana prohibition at the federal level, most banks still won’t give cannabis businesses accounts. They understandably don’t want to be charged under federal laws which make it possible to prosecute them for criminal conspiracy.
So, the Golden State will soon have a bunch of wildly successful businesses with loads of cash and no good place to put it. What could go wrong?
Plenty, of course. And all that money could become a target for local cops with help from the feds.
Patchwork Enforcement in California
Local governments in California are making the call on whether to let marijuana stores in under Prop 64. They can also decide on just how difficult to make regulations. Many cities and counties have chosen not to license weed dispensaries at all for January.
But that’s the very scenario which puts the early-opening pot stores at risk. Under current law, local cops can actually seize property and cash from pot businesses they suspect could be involved in illegal activity through a process called civil asset forfeiture. They can keep the property and cash indefinitely without a criminal conviction.
Civil Asset Forfeiture: A Nightmare Scenario
One of the darker scenarios, with pot-hating Attorney General Jeff Sessions at the helm of the Justice Department, involves federal agents assisting local cops with civil asset forfeiture. A report released by the DOJ showed that in the last ten years that federal agents have seized more than $3 billion in cash from drug-related suspects.
This is a terrifying prospect for veterans of the cannabis industry as well as newcomers who have, in many cases, invested their livelihoods into applying for all the licenses necessary to transition into California’s new legal market. Everything they own could be seized at a moment’s notice because it was allegedly purchased with the proceeds of “illegal drug sales.”
Marijuana is, after all, still a Schedule I substance federally, right up there with LSD and heroin. Even meth and cocaine are considered safer by the feds, down on Schedule II. That’s why California’s medical marijuana dispensaries have always been shut out of banking services.
California = Big Money
Weed merchants in places like Colorado, Washington state, and Oregon have adapted by hiring armored car services to move their money. Others have employed digital currencies like Bitcoin. Some cities and states are also looking into opening state-run banks, which would allow dispensaries to open bank accounts, making it harder for local cops to seize their profits than if they’re working all in cash. But California has double the population of all currently green states combined, making it the largest potential target for law enforcement yet.
Cole Memo vs. Jeff Sessions
The federal DOJ, since the Obama Administration backed off on raids, hasn’t focused marijuana enforcement efforts in states where cannabis is legal for medical or recreational use. The biggest factor in that is the Obama-era Cole Memorandum, which refocused federal enforcement on sales to minors and residents in non-legal states.
A major part of that was also the Rohrabacher-Farr amendment, a congressional budget rider first passed in 2014, which cut off funding for the Justice Department to interfere with state medical marijuana programs. The amendment, now known as Rohrabacher-Blumenauer (Farr retired), has been passed each year since. It’s currently tied to the passage of the congressional spending bill by December 31.
Representative Earl Blumenauer said in a statement about the amendment earlier this month: “As Congress works out a long-term funding bill, it must also include these protections. And ultimately, Congress must act to put an end to the cycle of uncertainty and permanently protect state medical marijuana programs—and adult use—from federal interference.”
Atty. Gen. Sessions is an old school drug warrior who dislikes marijuana. While he has yet to make any serious crackdowns on state dispensaries, he emphasized as recently as October that it’s his right to do so.
The Way Around Cole?
If the budget passes as currently written, with the Rohrabacher-Blumenauer amendment, Sessions won’t be able to spend federal funds to send the Drug Enforcement Administration into California to shut down pot businesses. But, remember we were talking about local law enforcement partnering with the feds to seize money from local pot shops? Yeah, that’s where they come in.
“Drug task forces” are a way for local police departments to get federal assistance in going after local cannabis businesses. When they seize assets, the feds and the local cops share in the profits.
Democratic lawmakers in California did their best to protect licensed marijuana stores from this type of cooperation with the feds during the last legislative session. They wrote a bill that would block local cops from helping federal agents take action against pot shops without a court order.
But it didn’t go over well with the California Sheriff’s Association. Kern County Sheriff Donny Youngblood, head of the Association, said the bill was “offensive” and said “at some point the federal government is going to have to step in and say, ‘You can’t do that.'” The anti-task force bill then stalled out in the California Senate. Meanwhile, Youngblood’s Kern County has banned all commercial marijuana activity.
Under state law, 60 percent of civil asset forfeiture proceeds went to local law enforcement between 2002 and 2013, according to the Institute for Justice.