Holding The Trump Cards On Industrial Hemp

 Holding The Trump Cards On Industrial Hemp

Story by David Bush

Donald Trump has taken the oath of office. Cannabis entrepreneurs are holding their breaths to see if a resurgence in prohibitionist sentiment is poised to crush the industry. Much ink has been spilt in speculation over what might happen to the minor variant of cannabis we call marijuana. Comparatively little has been said about what Trumpism could mean for the future of the far more significant part of the cannabis business represented by industrial hemp.

The best thing the Trump administration could do for the hemp industry is to legalize it. But if the recent experience of the Obama administration and its allies in Congress is any guide, substantive legal reform will be a slow uphill slog unlikely to yield meaningful results any time soon. Petitions to the Drug Enforcement Administration (DEA) to deschedule or at least reschedule cannabis as a controlled substance have been summarily rejected. Few anticipate that a DEA reinvigorated by conservative prohibitionist politics will treat new scheduling petitions any more favorably.

The Industrial Hemp Farming Act, a legislative proposal to strip industrial hemp out of the Controlled Substances Act (CSA), has been introduced in every session of Congress since 2007 to absolutely no effect. The 2014 Agricultural Act opened up industrial hemp cultivation across the United States—but only by state departments of agriculture and institutions of higher education, and only for purposes of research, not for general commercial activity. Efforts to legalize industrial hemp at the federal level have been more symbolic than real.

But the law is far more than black-letter substance. In the bizarre world of cannabis business, how drug laws are perceived and enforced is often more important than what they actually say. Industrial hemp has been federally illegal in the United States since passage of the Marijuana Tax Act of 1937 and its successor legislation, the Controlled Substances Act of 1970. Yet after 80 years of senseless prohibition, the hemp industry is making a comeback in America.

How is that possible? The substance of federal law has not changed. Industrial hemp is still classified as “marihuana,” an addictive and dangerous drug. Growing, processing and distributing industrial hemp and industrial hemp products without the express permission of the DEA remains a federal crime. What has changed is not the law, but how the law is enforced. The centerpiece of current federal law policy toward cannabis is described in a curious document called the Cole Memorandum.

The Cole Memorandum is a policy guidance memo written by the U.S. Department of Justice in response to recent initiatives undertaken in some states to legalize cannabis production, processing, possession and sale. Authored by Deputy Attorney General James M. Cole and dated August 29, 2013, it provides that federal law enforcement authorities accord low priority to enforcing the CSA against cannabis activities in states that have “strong and effective regulatory and enforcement systems” in place, so long as certain federal law enforcement policies are not implicated. Those federal law enforcement priorities include preventing:

distribution of cannabis to minors

revenue from the sale of cannabis going to criminal enterprises

diversion of cannabis from states where it is legal to states where it is not

state-authorized cannabis activity from being used as a cover for trafficking in other illegal drugs or activities

violence and the use of firearms

drugged driving and other adverse public health consequences, and

the cultivation, possession or use of cannabis on public lands
The Cole Memorandum is the principal reason why no state-legal commerce in cannabis exists in the U.S. today. Cannabis remains federally illegal. But, at least under the Obama administration, the federal government adopted an uneasy policy of grudging tolerance in states that established a regulated legal market. It is unknown what, if anything, the Trump administration might do with respect to industrial hemp under the Cole Memorandum. At least three alternative scenarios are possible.

The first scenario is that the federal government may simply continue the “new normal” reality created by the Cole Memorandum, which is characterized by proliferating islands of state-legal cannabis activities in a sea of federal prohibition. However, the current system, while allowing long-banned hemp industries to begin to return, is rife with problems. Each state that has legalized industrial hemp essentially operates as a mostly closed system. Hemp plants, viable seeds, hemp flowers and leaves cannot legally be placed in interstate commerce. Certified hemp seeds cannot be imported from abroad with a DEA license, something that essentially is never granted to commercial interests. Hemp products that remain federally classified as “marihuana”—in particular, medicines and dietary supplements containing cannabinoids such as cannabidiol (CBD)—are still federal contraband. The growth of state-legal hemp industries is distinctly limited with only the Cole Memorandum to protect them.

A second scenario would be for the Trump administration to withdraw the Cole Memorandum and crack down on states that have allowed industrial hemp. For example, the Trump administration could alert each state that has created a regulatory system for industrial hemp that it is in direct violation of federal law and stands to suffer the consequences if it does not cancel the program forthwith. Given the pervasive nature of federal financial assistance and services provided to every level of state and local government, the opportunities to pressure states into compliance with federal dictates are vast. In addition, or in the alternative, federal law enforcement agents could sweep into rebellious states, ripping up hemp fields, shuttering processing facilities, seizing product and arresting lawbreakers.

An aggressive federal enforcement action against industrial hemp would be unprecedented in scope and cost. Historically, the federal government has never expended significant resources to control cannabis directly, generally deferring to states to enforce their own laws instead. In fact, the main reason that the Cole Memorandum was written was the recognition that the federal government lacks the resources to be cannabis policemen for the country. The price tag to carry out federal enforcement on a grand scale would require vast new funding that the Republican-controlled, fiscally-tight Congress would be hard-pressed to raise. Moreover, a massive federal enforcement action against state-legal cannabis activities would be politically untenable. It could provoke a powerful backlash among stakeholders in the industry, who have grown increasingly influential and vocal. Federal enforcement also could serve to undermine the current commitment of the administration to state’s rights, thereby placing it in direct opposition to core ideals of its own conservative base. Finally, a renewed effort by federal law enforcement could only invite further pushback from Congress, which in the last two federal budgets approved amendments to defund law enforcement activities that would interfere with state-legal medical marijuana sales and industrial hemp research. For all these reasons, a renewed “War on Drugs” to destroy the emerging industrial hemp business seems impractical and unlikely.

Yet a third possibility would be for the Trump administration to maintain the policies of the Cole Memorandum more or less in place, while imposing certain standards to ensure compliance. That would represent a departure from the practices of President Obama, who essentially did little to either help or hurt the cannabis industry. To date, the federal government has largely failed to ensure that the law enforcement priorities articulated in the Cole Memorandum were respected. Among other things, it has all but turned a blind eye to the increasingly open interstate commerce in hemp extracts—essentially allowing the creation of an open air black market. In a heavy-handed effort to control money laundering by organized crime, the federal government has made it difficult or impossible for industrial hemp entrepreneurs to enjoy access to ordinary banking and other financial services. Industrial hemp entrepreneurs often are forced to undertake transactions in cash—hardly an inducement to safe and legal business activity. Allowing industrial hemp to flourish, even within limits, would require the federal government to do precisely what it has studiously avoided doing in the past: regulating and protecting markets and market participants in a fair, consistent and reasonable manner.

Ultimately, the only way to ensure development of a successful and prosperous industrial hemp economy in America is to make it legal. Common sense demands that hemp no longer be treated like a dangerous and addictive drug, as it never was either. Industrial hemp should be regulated and protected just like any other agricultural commodity. Whether the Trump administration and its allies in Congress will demonstrate that that they have the temperament and capacity to abandon the misguided and self-destructive prohibitionist sentiments of the past remains to be seen.

David B. Bush, Esq. is an attorney in the firm of David B. Bush, L.L.C. dba DavidLaw, a business law practice dedicated to furthering the successful development of industrial hemp in Colorado and throughout the United States. His web page is www.davidlawcolorado.com and he may be reached at bush@davidlawcolorado.com.