Marijuana Illegal According to Feds

What's Next for Ohio?

By John Corrigan


Since 1970, the Controlled Substances Act (CSA) (21 U.S.C. § 811) has prohibited the cultivation, distribution, and general possession of marijuana as a Schedule 1 drug with "no accepted medical use," stating it has a high potential for abuse and physical or psychological dependence. Cannabis use is illegal for any reason, except for FDA-approved research programs.

Despite this Federal law, individual states including Ohio in 2016, have legalized some degree of usage of marijuana. Eight states have legalized the recreational and or medicinal use of the drug. Twenty-three states have legalized the drug for what they term as medicinal purposes. Fourteen states have decriminalized aspects of marijuana possession. Ohio is in the process of implementing a medical marijuana program, with the cultivation, distribution, and usage under some medical related circumstances set to go live in September of this year.

As late as August 11, 2016, the U.S. Food and Drug Administration (FDA) at the urging of the Obama Administration, studied the issue of marijuana for medicinal reasons. They declined to delist marijuana as a Schedule 1 drug, stating that there is no accepted medicinal value and the drug’s usage “does not meet the criteria for currently accepted medical use in treatment in the United States." The finding also pointed out "there is a lack of accepted safety for its use under medical supervision, and it has a high potential for abuse."

In 2009, the Obama Administration set guidelines at the U.S. Department of Justice, formalized in 2013 by a memo from Deputy U.S. Attorney General James Cole, that directed U.S. Attorney Offices across the country to essentially look the other way as it related to enforcement of the Controlled Substances Act, and not prosecute states and localities that passed laws in conflict with Federal law.

On January 4, 2017, U.S. Attorney General Jeff Sessions formally rescinded the Obama Administrations “Cole Memo” creating a serious conflict for states.

While Sessions has been criticized by politicians of all political stripes for the policy change, the law has never changed, and the Trump Administration has stated vociferously that America was a nation of laws, and selective enforcement of law would not be acceptable.  It is incumbent on Congress to change the laws should that be the will of the people.

Should Congress determine to take up the issue it appears they would have the support of the President.  Trump said in this 2016 interview that the decision to legalize marijuana should be left up to the states.  

What impact will all of this have on Ohio?  Plenty.  

First, Sessions is leaving the enforcement of the law to the local U.S. Attorneys. They will be able to choose how aggressively they will prosecute cases of violations of the Controlled Substances Act. Southern District of Ohio’s U.S. Attorney Ben Glassman told WOSU the memo won’t change how he approaches marijuana law enforcement in the district, in large part because his main focus is on the opioid crisis.

At first blush, Ohio’s medical marijuana law may be safe. An Amendment to the Federal budget, that expires this January 19th, blocks enforcement of marijuana policy on states that legalized medical marijuana. However, while that does add some safety to Ohio’s program, it does not protect the industry in general, only Ohio’s ability to offer such a program. The Amendment does have widespread Congressional support, and is expected to continue as policy when a new budget deal is struck.

However, Ohio law is still in conflict with Federal law. The Kasich Administration and Attorney General Mike DeWine will undoubtedly confer as to Ohio’s next steps to implement medical marijuana under the auspices of the Ohio Medical Marijuana Control Board housed in the Ohio Department of Commerce.  Already under intense scrutiny due to a multitude of missteps in the award of state cultivation licenses, and facing at least one lawsuit, Ohio will have to proceed cautiously in the implementation of this program.

3rd Rail reached out to Attorney General DeWine and were told they do not have a comment at this time.

There are other significant legal difficulties associated with implementation. That we know of, there is no federal or state chartered bank in Ohio that banks cannabis business.  There are such banks in other states. Financial institutions, and potential vendors who face the prospect of being prosecuted for money laundering however, may shy away from supporting any business associated with this industry.

The tremendous costs of doing business in Ohio’s heavily regulated medical marijuana industry also raises questions. It is generally considered as industry standard that cultivators and the yet to be announced retail stores, known as dispensaries, will take two to three years to become profitable as Ohio’s industry ramps up from illegality to legality.  That will require private investment, and the prospect of Federal law enforcement closely monitoring interstate financial transactions could hamper that investment.  Moving money from one state to another with the profits of an illegal product, such as marijuana, is against Federal law. If an Ohio license holder that conducts business in Illinois or Colorado moves money into Ohio to pay for its investment, that is against the law and now could be prosecuted as money laundering.

Private prospective investment in Ohio’s marijuana industry may also suffer.  Investing in an illegal enterprise remains against Federal law. Reporting earnings from illegal enterprises, or not reporting earnings from illegal enterprises are both against the law, federally. How does an Ohio medical marijuana business engage investors, knowing that they are breaking the law? There is no legal way to make an investment in medical marijuana.

States such as Ohio could pressure Congress to legalize all or part of marijuana policy, such as allowing for state medical marijuana programs. Despite the FDA’s research, advocates of marijuana for medicinal purposes point to therapeutic value and testimony by individuals who have used the products safely and to desired result of pain management.  

Governor Kasich and his national colleagues could seek to settle the matter legally, rather than face the uncertainty associated with states in open violation of Federal statute, and the consequences associated with those conflicts.

Stephanie Gostomski, Assistant Director of Communications for the Ohio Department of Commerce told 3rd Rail, "The Ohio Department of Commerce is following the legislative guidelines set up by HB523. Our responsibility is to fulfill all statutory mandates in establishing Ohio’s medical marijuana program. The Department cannot speculate on any decisions made at the federal level, but our program officials will continue to monitor any developments."  

With the Federal Government's return to enforcing marijuana-related laws, Ohio's troubled implementation of the medical marijuana program just became more complicated.