The importance of compliance in the post-Cole Memo era

/ Cannabis Law, ComplianceLeave a Comment

Attorney General Jeff Sessions rescinds Cole Memo

The entire cannabis industry received a bit of a shock on January 4, when U.S. Attorney General Jeff Sessions rescinded the Cole Memo and four other similar memos that had guided Department of Justice enforcement priorities related to cannabis since 2009. These memos had set forth a policy under which the Department would not prioritize enforcement actions against individuals and businesses that were acting in compliance with state law. (One of the memos also signaled to financial institutions that the Department would not prioritize actions against them if they served customers engaged in the state-legal cannabis industry.)

In their place, Attorney General Sessions issued a new memo, directing U.S. Attorneys to follow the more general Principles of Federal Prosecution. In practice, what this shift in policy means is that the U.S. Attorneys will have somewhat greater flexibility in determining whether to pursue enforcement actions against those engaged in state-legal marijuana-related activity. While we, like other companies in the cannabis space, are hoping the rescinding of the Cole Memo will not result in any significant change in enforcement policy, it is
nevertheless a time for extra diligence.

Apparently, we are not the only ones who believe this. Shortly after the issuance of the new memo, a writer for Forbes.com penned an article entitled, 3 Things Marijuana Businesses Need To Do To Prepare For A More Hostile Department Of Justice. Of particular interest to us – and to state-legal cannabis companies – is the following section of that article:

“I offer three general recommendations for industry participants. They are to establish or enhance your compliance program, improve documentation, and monitor closely statements of local federal prosecutors to determine their likely enforcement postures. These recommendations are worth heeding outside the cannabis industry too.

“The first, rooted in the Principles of Federal Prosecutions of Business Organizations adopted and followed by DOJ, is, regardless of industry segment, industry participants should review with competent counsel all elements of their company compliance programs. To be clear, compliance programs offer no guarantees, particularly where the marijuana-related businesses by definition presumptively violate federal law. 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.” [emphasis added]

As you review your compliance program, this is a great time to consider adding Simplifya to the program. There is no better way to ensure that your managers and employees are carrying out the tasks and responsibilities necessary to keep your entire company compliant. Click here to learn more!

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