Complied with State Law? Sessions Doesn't Care.

Tara Tedrow

Despite the fact that the majority of citizens in his home state support cannabis legalization, Sessions unsurprisingly isn't budging from his steadfast opposition to marijuana. Cannabusiness owners across the country are probably still having similar inner monologues:

There's nothing to be worried about. I've done everything by the books. Our lawyers and accountants reviewed everything. Our permits were properly issued by the state. This is just politics as usual. Right? Right. Of course I'm not going to jail. I've paid taxes every year. Can they really take my money and then put me in jail? God. I hope not.

Quit talking yourself in a circle. The answer is simple, and you've (hopefully) known it all along. Yes, your business was state legal. But no, your business was not federally legal. So yes, the federal government can collect your tax money, ignore your state issued marijuana permits and licenses, and prosecute you regardless. That is, if they actually choose to do so.

Forbes put out an article today giving three pieces of (fairly obvious) advice to everyone still having mild coronary issues in the wake of the Sessions memo.

The first suggestion was "to review with competent counsel all elements of their company compliance programs." Of course. Hopefully you've operated that way since day one, but if you haven't, now is certainly the time to hire the appropriate professionals to review all facets of your operations. The author correctly noted that "compliance programs offer no guarantees, particularly where the marijuana-related businesses by definition presumptively violate federal law." Some worry that all of the permits, licenses, and other state approvals leave a huge target on their back. Not to mention most of the seed to sale software has tracked their every harvest and transaction, basically creating a comprehensive Exhibit "A" in a prosecutor's case. Nevertheless, "a company’s ability to demonstrate its efforts to work within the framework of applicable and governing state laws may prove persuasive for the lawyer advocating for the marijuana-related business." It's certainly better than a track record of violating both federal and state law.

The second suggestion, another no-brainer, was "don’t cut corners and do tighten up documentation." For anyone using legalzoom.com type services for their cannabis industry- think again. Read through any standard lease, purchase and sale agreement or business contract that you can buy for a flat fee online (or perhaps that your lawyer cousin sent you as a favor), and look for provisions on things like venue, enforcement and compliance with the law. For example, simple statements requiring compliance with all "local, state and federal laws" are routine and innocuous to the average businessman. Unfortunately, if you're a dispensary tenant and you sign a lease with a provision like that, you're automatically in default when pen hits paper. As the old saying goes, you get what you pay for.

The last piece of advice is that "individuals and businesses involved in state legal marijuana businesses should pay close attention to the US Attorney overseeing that person’s or business’ federal district to ascertain that US Attorney’s philosophical perspective on state legal medical or recreational marijuana businesses." Set a google alert. Hire a lawyer or consultant. Read the news. If you are operating a marijuana business and are worried about your future, take simple steps to minimize some of the unnecessary concern. Know your state's position and remain vigilant as to changes on both a state and federal level.

I wish I could say the hardest part is behind you. But unfortunately, too many questions still remain unanswered. The advice above is a good starting place as to what questions you should start getting answered.

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