Revised March 2017
Marijuana 2016 Update: The McIntosh Decision
and Federal Enforcement
A number of significant developments affect
marijuana business owners, operators and investors, as well as companies that do
business with the cannabis industry.
This update summarizes a
number of significant developments, both in Arizona and nationally, since our
initial article on marijuana business ownership and investment issues was
published in April 2016 (see Marijuana
2016: Dance with the Angels or Swim with the Sharks) and subsequently
Of particular significance
is the U.S. Ninth Circuit Court of Appeals’ August decision, in
United States v. McIntosh,
regarding limitations under current law on marijuana prosecutions by federal
authorities in connection with activities that are legal under state laws.
decision is particularly important to anyone who is involved in any aspect of a
marijuana business and is concerned about the conflict between federal and state
marijuana laws. If you’re not already aware of it, you should be.
In addition to the
McIntosh decision (discussed below), other notable developments since
include the following:
Decriminalization of non-medical marijuana in
four other states –
California, Maine, Massachusetts and Nevada.
The Arizona Department of Health Services has accepted, but not yet
acted upon, more than 750 applications for 31 additional dispensary certificates
for issuance under existing law.
As many predicted, the federal Drug Enforcement Administration (DEA)
declined to reclassify marijuana from its Schedule 1 substance categorization
(i.e., a drug determined to have a high potential for abuse and no accepted
medical efficacy and safety) under the federal Controlled Substances Act.
However, in a potentially significant development, the DEA did substantially
liberalize its policy regarding marijuana medical research and testing.
The McIntosh Decision
On August 16, 2016, the
Ninth Circuit narrowly ruled that Congressional appropriations bills for fiscal
years 2014 and 2015 prevented the U.S. Department of Justice (DOJ) from
prosecuting individuals whose
“conduct was completely authorized by state law, by which we mean that they
strictly complied with all relevant conditions imposed by state law on the use,
distribution, possession and cultivation of medical marijuana.” (Emphasis
The Ninth Circuit has
appellate jurisdiction over the federal district courts of nine states,
including Arizona, California and five other states that have decriminalized
marijuana to some degree. Of those seven states,
five have already decriminalized non-medical
The McIntosh case
consolidated interlocutory appeals and petitions for writs of mandamus from 10
separate federal district court cases involving three district courts in two
states. The defendants in these cases had been indicted for various infractions
of the Controlled Substances Act, including the operation of dispensaries and
the cultivation and possession of marijuana. The defendants were seeking to
either dismiss their indictments or enjoin their prosecutions on the grounds
that the DOJ was prohibited from spending funds to prosecute them.
To place the McIntosh case
in context, individuals and businesses engaged directly in the cultivation,
processing, distribution and sale of marijuana and marijuana products (oils,
extracts, ingestibles, etc.), as well as businesses providing goods and services
to the industry, have done so largely in reliance on a series of advisory
memoranda initially issued by the DOJ to federal prosecutors and subsequently
released to the public.
In substance, these
advisories, while reaffirming the illegality of marijuana activities and the
authority of the DOJ to enforce U.S. laws, have (i) recognized that various
states have decriminalized certain marijuana-related activities that are
prohibited under federal law, and (ii) indicated that, as a matter of
“prosecutorial discretion,” enforcement will be a “low priority” in
circumstances in which activities are conducted in compliance with state law and
do not involve an articulated list of activities or behaviors.
In a memorandum dated
February 27, 2015, the DOJ took the position that the 2014 appropriations bill
did not preclude expenditures to enforce federal criminal laws concerning
marijuana against private individuals and entities, regardless of state
marijuana laws. This interpretation appears to have been firmly rejected by the
Ninth Circuit in McIntosh.
As was noted in
article, what would advice from a lawyer be without caveats? Against the
background of the developments since our April 21, 2016, article and the
McIntosh case, it is important to keep the following in mind:
Notwithstanding the McIntosh decision and the DOJ’s policy guidance, the cultivation, processing,
distribution, sale and possession of marijuana remain illegal under federal law.
Neither the DOJ releases nor the McIntosh decision creates an immunity from
prosecution and other possible enforcement actions. In addition, neither
necessarily provides any defense if such a prosecution is brought or other
enforcement action is taken.
The DOJ guidance is
just that: guidance. The policy position is subject to change or modification at
The Ninth Circuit’s
decision is based on the language in the appropriations bills for 2015 and 2016.
There can be no assurance that similar language will be included in the
appropriations bills for 2017 or subsequent years. In this regard, the McIntosh
decision is subject to reconsideration by the Ninth Circuit and to review and
possible reversal or substantial modification by the U.S. Supreme Court.
Moreover, while the Ninth Circuit’s decision creates a precedent, presumably
persuasive, it is not binding on federal courts in other circuits.
language on which the McIntosh decision is based specifically addresses “medical
marijuana” but does not reference non-medical marijuana. There can be no
assurance that the FY 2017 appropriations bill, even if it continues to include
the 2014 and 2015 language regarding medical marijuana, will include language
specifically extending the prohibition against expenditures to enforce federal
laws with respect to non-medical marijuana. If it does not, there can likewise
be no assurance that federal courts will apply that prohibition against
expenditures to non-medical marijuana enforcement actions.
With regard to both the
DOJ policy guidance and the appropriations language on which the McIntosh
decision was based, it is important to note that 2016 is a general election year
and a new President or Congress could dramatically alter the landscape by
changing the DOJ policy, modifying the appropriations language, or adopting new
or amending existing federal law.
The information set
forth herein is limited to a review and discussion of the current conflict
between state and federal law. It does not provide legal advice with respect to
the laws of any particular state nor with respect to any other legal issues.
This review and
discussion should not be regarded as a legal opinion or legal advice with
respect to any particular set of circumstance, nor with respect to any
particular activity, individual or business. Individuals or businesses
considering becoming involved in any aspect of the marijuana industry in the
U.S., including as investors or suppliers of goods and/or services, should
consult with their own legal counsel with respect to the implications of federal
or state law.
United States v. McIntosh, No. 15-10117, 2016 WL 4363168, at 32 (9th
Cir. Aug. 16, 2016).