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The Marijuana Industry's Love-Hate Relationship With Jeff Sessions

By Sean Williams - Jul 15, 2018 at 7:21AM

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Sessions' war on weed is derailing medical research, as well as inciting calls for reform at the federal level that might otherwise not be heard.

Don't blink, or you might miss some incredible changes occurring in the legal cannabis space. To our north, Canada became the first industrialized country in the world to pass a law legalizing recreational marijuana last month, while to our south, Mexico gave the green light to medical cannabis in June 2017.

Marijuana in the U.S.: Progress, but with some big caveats

Within the U.S., we have 30 states that've legalized marijuana in some capacity since 1996, with deeply red state Oklahoma being the latest to grant its OK to medical weed. Nine of these 30 have also OK'd the recreational use of pot, including Vermont, which earlier this year became the first state ever to legalize the adult-use of marijuana entirely through the legislative process (i.e., without putting it to vote on a ballot).

A man holding a lit cannabis joint with his fingertips.

Image source: Getty Images.

We've also witnessed a marked shift in the way the American public views cannabis. During the height of the War on Drugs, favorability toward weed was low. In 1995, just a quarter of the respondents in Gallup's annual poll favored the idea of legalizing marijuana. By comparison, an all-time high 64% of survey-takers in Gallup's October 2017 preferred the idea of legalizing pot nationally.

Yet for as far as the legal cannabis industry has come in the United States, it firmly remains a Schedule I substance at the federal level. This classification, in plainer terms, puts marijuana on par with heroin and LSD, and deems it entirely illegal, highly prone to abuse, with no recognized medical benefits.

This classification is also responsible for a host of headaches. As a result of being labeled as a Schedule I drug, pot-based businesses often have little or no access to basic banking services. The thesis here is that since the federal government completely bans cannabis, and the Federal Deposit Insurance Corporation is a federally created entity that financial institutions report to, providing any assistance to marijuana companies could be construed as money laundering, under a very strict interpretation of federal law. Banks simply don't want to deal with the possibility of financial and/or criminal penalties for providing these services to cannabis companies.

Businesses involved in this industry are also subject to a more than three-decade-old tax section known as 280E. Assuming they're profitable, they'll be unable to take normal corporate income tax deductions if they're selling a federally illicit substance, as defined by the Controlled Substances Act. This can lead to an effective income tax of up to 90% for weed companies.

And the chief headache among all of this is Attorney General Jeff Sessions.

Jeff Sessions addressing an audience.

Image source: Jeff Sessions' Senate webpage.

The marijuana industry hates Jeff Sessions...

Since being appointed as the head of the Department of Justice, Jeff Sessions has done everything imaginable to thwart the expansion of legal cannabis in the United States.

For instance, Sessions sent letters to a handful of his congressional colleagues last year requesting that they repeal the Rohrabacher-Farr Amendment (also known as Rohrabacher-Blumenauer). This is an amendment that's been attached to all federal spending bills approved by Congress since 2014, and it's designed to protect medical cannabis businesses operating in states that've passed medical weed laws. In effect, Sessions was asking his colleagues for permission to go after medical marijuana companies.

Though Sessions has been unsuccessful in his attempts to repeal this critical amendment, he was able to stick it to the marijuana industry in January when he rescinded the Cole memo, which was crafted by Deputy Attorney General James Cole during the Obama administration.

The Cole memo was a set of eight primary "guidelines" that needed to be followed by legalized states if they wanted to keep the federal government off their backs. It included things like keeping cannabis out of the hands of minors, and ensuring that marijuana grown within a state stayed in that state. Its rescinding opened the door for state-level prosecutors to use their discretion in bringing criminal charges against businesses and people who were in violation of the Controlled Substances Act, inclusive of marijuana.

A doctor holding a cannabis leaf between his hands.

Image source: Getty Images.

Sessions has also purposefully whiffed on a pledge to increase medical marijuana research at the federal level. Though federal cannabis policy was mostly stuck in the mud during the Obama presidency, one concession was a promise to conduct additional medical research, which among other things is constrained by the fact that there's only ever been one approved grow facility (the University of Mississippi) in this country. Yet, despite receiving 25 applications for new federal grow sites for medical research, Sessions and the Justice Department have done nothing.

It's for all these reasons that the marijuana industry rightfully hates Jeff Sessions.

...but the pot industry also loves him

And yet, as the Los Angeles Times recently proclaimed in an editorial opinion column, the marijuana industry should also love Sessions. 

You see, without Jeff Sessions, any sort of discussion of marijuana may not have even been possible at the federal level. Remember, Republicans have spent the majority of their time attempting to reform healthcare and passing the Tax Cuts and Jobs Act since Trump took office. While it might seem like there's been a lot of time on the docket for cannabis reform, there simply hasn't. Plus, let's face the facts: Republicans tends to have a mixed or negative view on marijuana, making reform at the federal level that much more unlikely.

But Sessions' crusade against cannabis has lit a fire under both political parties. Recently, President Trump suggested that he'd likely support legislation that would give states the right to regulate their own marijuana industries. In April, former House Speaker John Boehner announced in a tweet that he was "convinced de-scheduling the drug is needed so we can do research, help our veterans, and reverse the opioid epidemic ravaging our communities." And then there are Senators Elizabeth Warren (D-Mass.) and Cory Gardner (R-Colo.), who introduced the bipartisan States Act, which is designed to allow states the right to govern their legal cannabis industries without fear of federal interference. 

A judge's gavel next to dried cannabis buds.

Image source: Getty Images.

The interesting thing about marijuana is that while Republicans and Democrats disagree on legalizing the drug for recreational purposes, there is no disagreement when it comes to physicians' ability to offer patients medical cannabis. An April 2018 poll from Quinnipiac University showed that support for medical marijuana was an overwhelming 93%, with 86% of self-identified Republicans favoring the idea of physicians being able to prescribe medical weed. Even with this strong support, a federal discussion on marijuana probably wouldn't be possible had Sessions not continually gone against public opinion with his cannabis policy proposals over the past year and change.

Truth be told, there's still no guarantee that the heightened discussion on weed at the federal level amounts to any material changes in its scheduling. Any opportunity for change may have to wait until lawmakers with a more positive view on the drug are in office. But the simple fact that any discussion is ongoing is a considerable step in the right direction for the legal cannabis industry and hopeful investors -- and as odd as it might seem, Sessions' going against the grain is largely to thank for it.

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