MadisonJay provides the solution

Federal Cannabis Regulation Overview

The looming presence post-Cole Memo


The federal Controlled Substances Act makes the sale, distribution, and possession of marijuana illegal.  That prohibition is clearly in tension with the laws passed in recent years in Alaska, California, Colorado, Massachusetts, Maine, Nevada, Oregon, and Washington to legalize and regulate the sale of marijuana to individuals over the age of 21 ("adult-use" or "recreational" marijuana), as well as the laws in Vermont and Washington D.C. that legalize possession under local law, but do not create a regulated marketplace.

There are a handful of key items that everyone studying the industry should be familiar with:

The Cole Memorandum - Prior Criminal Law Cannabis Guidance

This guidance is no longer operative, but should be weighed by savvy players nonetheless.  Issued by then-US Deputy Attorney General James Cole in 2013, this memo laid out the Department of Justice's priorities that could be implicated by marijuana-related activities.  Since the Department of Justice conducts federal criminal prosecutions, this guidance provided crucial information to the states and state-legal businesses on conduct that would draw the ire of federal prosecutors.  It identified 8 factors (sometimes called the Cole Factors):  (1) preventing the distribution of marijuana to minors; (2) preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; (3) preventing the diversion of marijuana from states where it had been legalized to other states; (4) preventing state-legal marijuana activity from serving as a cover or pretext for trafficking other drugs or illegal conduct; (5) preventing violence and the use of firearms in the cultivation and distribution of marijuana; (6) preventing drugged driving and the exacerbation of other adverse public health consequences; (7) preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers; and (8) preventing marijuana possession or use on federal property.

The Sessions Memorandum - Current Criminal Law Cannabis Guidance

On January 4, 2018, the current US Attorney General Jeff Sessions withdrew the Cole Memo in a one-page memo of his own (the "Sessions Memo").  The Sessions Memo declared that "previous nationwide guidance specific to marijuana enforcement is unnecessary" in light of the Department of Justice's "well-established general principles" of how prosecutors should decide whether a specific prosecution is a prudent use of the Department's finite prosecutorial resources. 

Of note, the Sessions Memo never stated that any of the Cole Factors did not continue to serve as enforcement priorities for the federal government.  Observers would be ill-served to assume, for example, that the withdrawal of the Cole Memo means that the federal government cares any less about preventing the distribution of marijuana to minors.

The FINCEN Release - Banking Cannabis Guidance

In 2014, recognizing that states had begun legalizing and regulating cannabis, the Department of the Treasury's FINCEN provided guidance that was explicitly intended "to enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses."  This guidance laid out a framework of reports for banks and credit unions to file in order to provide banking services to marijuana businesses.  This included red flags that such institutions should consider when evaluating marijuana businesses. 

Rohrabacher-Blumenauer Amendment - Budgetary Provision re: Medical Marijuana Criminal Enforcement

Since 2014, federal budgets have included a bipartisan spending amendment that is now known as Rohrabacher-Blumenauer after its lead House of Representatives sponsors.  This amendment effectively prevents federal prosecutors from spending any money to conduct prosecutions of state-legal medical marijuana businesses that are in compliance with those local laws.  Notably, the effectiveness of this prohibition was upheld by the US Court of Appeals for the Ninth Circuit in US v. McIntosh in 2016.

To date, a related amendment that would extend those same protections to adult-use cannabis operators (the "McClintock-Polis amendment") has garnered significant bipartisan support, but has not been passed into law.  


Since the 2014 Farm Bill, federal law has carved out an exception to cannabis law regarding a subset of cannabis. As a result, low THC strains of cannabis grown pursuant to specific state rules are exempted from the general prohibitions on cannabis.

The 2018 Farm Bill significantly expands the breadth of this “Farm Bill hemp” exception.