Sessions Archives - Green Market Report

Debra BorchardtNovember 7, 2018

Attorney General Jeff Sessions resigned today at the request of President Donald Trump. “At your request, I am submitting my resignation,” wrote Sessions in an undated letter to the president sources told ABC News. Sessions chief of staff Matthew Whitaker has been named Acting Attorney General.

Cannabis stocks jumped on the news as Sessions has been a thorn in the side of the cannabis industry. He immediately rescinded the Cole Memorandum causing cannabis stocks to plunge. However, Sessions seemed to be more bark than bite and the Justice Department did little in the way of taking real action against the industry. The stocks have recovered throughout the year. His departure sent the North American Index higher by 15 points.

Now the guessing game will begin as to who will replace him. Names that are being bounced around include former New York City Mayor Rudy Giuliani, failed Kansas gubernatorial candidate Kris Kobach and others like Scott Walker. Giuliani had initially been expected to be the AG, but it was rumored that he wanted the Chief of Staff role instead, but then he didn’t receive that title and by then Sessions had taken over as AG.

Last week, former White House spokesman Anthony Scarramuci suggested that President Trump could legalize cannabis following the mid-term elections. This would presumably endear the cannabis industry to President Trump and gain his favor.

“This is the sign that the tide is turning on a federal level and that the holy grail of rescheduling is not far behind,” said Dennis O’Malley, the CEO of Caliva. “Once this happens the economy of cannabis will be part of the American economic fabric. Banking will finally be available to cannabis businesses. Research and medicine can become available to those who need it. ”

The move from Sessions also comes as various pieces of cannabis legislature in numerous states were passed during the midterm elections. Michigan became the tenth state to legalize adult use cannabis, while Utah and Missouri legalized medical cannabis.

“Sessions’ resignation builds momentum toward legalization after yesterday’s successes on the ballots,” said Ryan Smith CEO of LeafLink. “We’re seeing the openness to cannabis that started on the west coast sweeping the country and being increasingly reflected by the people in office.”

“Cannabis legalization wins from yesterday’s election and Sessions’ resignation today are signals of opportunity for the industry,” said Kyle Sherman. CEO of Flowhub. “We could not be better positioned to pass the STATES Act into law during the next Congress.”

Brent BradshawApril 2, 2018

Prison reform has suddenly become the latest subject for a White House and Justice Department battle as advisor Jared Kushner and Attorney General Jeff Sessions are at odds on the matter. Sessions apparently thrives on conflict. He is fighting on many fronts against those who oppose his views regarding drugs, prison reform, and policies to protect the safety of US citizens against criminals and lawless chaos.

The opposition forces are well armed and prepared for a fight. His foes include powerful bipartisan members of the House and Senate, State Governors, Republican Party influencers, and organized faith leaders.

Controversy surrounds Sessions and his position on the Sentencing Reform and Corrections Act (SRA). Introduced by conservative Chairman of the Senate Judiciary Committee Chuck Grassley (R-IA) and leading liberal Senator Dick Durbin, the prison reform bill has 25 Senate co-sponsors, 13 Republicans, and 12 Democrats.

The bill includes clauses which would prohibit many mandatory drug sentencing rules. It also provides for expansion of prison education, workforce training, and drug treatment programs in prisons. Current law often impacts low-level non-narcotic drug offenders, imposing lengthy sentences for violation of federal marijuana statutes and other non-violent crimes.

The day before the Senate Judiciary Committee’s vote to approve the bill, moving it closer to a floor vote, Sessions sent a letter to Grassley adamantly opposing the bill.

Sessions Letter to Grassley SRA

“In recent years, convicted drug traffickers and other violent criminals have received significant sentencing breaks from the federal courts and the United States Sentencing Commission.” Sessions wrote.

“Passing this legislation to further reduce sentences for drug traffickers in the midst of the worst drug crisis in our nation’s history would make it more difficult to achieve our goals and have potentially dire consequences.” The bill was approved by the Committee by a 16-5 margin.

On Jan. 11th Sessions attended a White House listening session to discuss new prison reform legislation. Jared Kushner organized the meeting and most attendees were supportive of new prison reform law. Sessions views are clear in a statement made as he was rescinding the Cole memorandum.

“It is the mission of the Department of Justice to enforce the laws of the United States and the previous issue of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission.” He also wrote in an earlier letter opposing reform that,

“it would reduce sentences for a highly dangerous cohort of criminals, including repeat dangerous drug traffickers and those who use firearms.”

Recently, the White House has sent Congress its guidance for prison reform but declined to fully support the Grassley bill, giving Sessions hope for an ally. The sticking point for the Trump administration is the reform of sentencing guidelines contained in the bill. According to Reuters, a White House official told reporters “The sentencing reform part still does not have a pathway forward to getting done. By doing this in smaller bits and pushing prison reform now, this has a better chance of getting done.”

Sessions has also had recent run-ins with other legislators, specifically Republican Senator Corey Gardner (R-CO) and Senator Mike Rounds (R-SD) over his draconian stances on marijuana.

Sessions is also clearly at odds with a House resolution introduced by Representative Barbara Lee (D-CA) and co-sponsored by 10 additional Reps., 7 Democrats, and 3 Republicans. HR 4779, known as the REFER Act, would protect both medical and recreational cannabis businesses and consumers who are licensed and operate legally in jurisdictions where state cannabis laws and regulations are in effect.

Lee stated, “I’m proud to introduce the REFER Act, which will prevent the Attorney General and others in the administration from stifling the budding cannabis industry. If the federal government chooses to interfere in these state matters, it is up to Congress to prevent this harmful overreach.”

Sessions position on federal enforcement and prosecution of marijuana is quite clear. In a January 4th letter to all US Attorneys, Sessions reiterated his stance, citing the Controlled Substances Act. The CSA was passed in 1970 and signed into law by President Richard Nixon.

“These statutes reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime. In deciding which marijuana activities to prosecute under these laws, with the Department’s finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions” Sessions wrote in the letter.

Marijuana and prison reforms go hand in hand. Publicly traded prison companies like CoreCivic (CXW) saw revenues drop as several states either decriminalized marijuana to some degree or legalized it all together. Stricter laws mean more inmates and more revenues for prisons. CoreCivic almost exclusively donates to Republican candidates in an effort to keep harsh laws. Prison reform also seeks to prevent repeat offenders, yet prisons profit off of repeat offenders as it adds to the inmate population.

Sessions though is losing credibility with many Republicans. He remains at odds with many legislators and Jared Kushner at the White House, and large donors who support many of the policies he disdains. These feuds seem to have no end, it feels like we are watching the Hatfield and McCoy’s fight it out until both families are destroyed.

David FriedmanFebruary 5, 2018

It has been one month after Attorney General Jeff Sessions officially rescinded The Cole Memo (which encouraged local governments to de-prioritize the use of funds to enforce cannabis prohibition under the Controlled Substances Act towards a more laissez-faire, hands-off approach) and the sky hasn’t fallen.

So, what does it really mean for the industry? There are a variety of opinions on this question, but my initial response to investors and financial backers is, “it’s not good but I wouldn’t panic”. Having had a few hours to assess the situation I am even less concerned than before.

Most in the industry and others who follow politics know that Sessions has been systematically repealing policy of previous administrations for several weeks now and the Cole Memo had been spared but was a likely candidate to follow suit. No real surprise here.

This effectively gives powers to the State Attorney General office holders (which they already had
before) to prosecute criminals who violate Federal Law. The Cole Memo was a policy, not a law and as such Attorney’s General was not required to follow it before.

Enforcement of federal crimes still requires funds and resources to implement. Those remain restricted under the Rohrabacher – Blumenauer bill, which is also in Jeopardy but has managed to stay alive in the tax bill and Government funding bill that currently is set to expire January 19. If this bill is not renewed it could be a bigger issue for the industry but still not fatal by any means. If the bill does get renewed the DOJ still has no funds to prosecute crimes.

The other element that is often overlooked is that in order for federal prosecutors to act they need a lot of cooperation from state and local governments, which are outwardly refusing to help in any way where it is legal. Even if the RB amendment does get repealed the funds to prosecute are still unlikely to get allocated anytime soon and once they are the meager resources will likely only fund a few small actions. Federal raids have continued during the last 3-4 years and have primarily been directed toward bad actors or those who are overly promotional about their practices. The industry understands the fine line between marketing and showboating. I hear about Federal raids all the time and none of them are businesses we would ever consider investing in.

Kevin Sabet of Smart Approaches to Marijuana was quick to point to institutional investors and warn them that staying away from marijuana is a prudent move. What Mr. Sabet fails to note is that the industry has been funded for the last 10 years without any real participation from institutional investors.

It is still an opportunity for the average investor to take advantage of the future or the maverick
institutional investor (Peter Theil, Scott’s Miracle Grow, and Constellation Brands) to secure large
long-term profits for their investors. Sabet’s actions and those of Sessions are only extending the
opportunity before the mass invasion of institutions come in and run up the prices.
Peter Theil said that “if you want to predict the future, find something inevitable.”

Marijuana is inevitable. The train has left the station and at times it will careen along at 100 miles an hour with the wind at its back, other times it will slow down for a street crossing or a track repair. Lawmakers have already begun threatening repercussions. One of Colorado’s Republican lawmakers, Senator Corey Gardner, has already said he will hold up all DOJ confirmations until Sessions relents. California having just gone recreational on Monday will create a sanctuary for legal businesses as will Washington, Oregon, and Nevada among others.

It is entirely possible that marijuana might be the first issue to bring Democrats and Republicans
together and the actions by Sessions might actually speed up legislation around marijuana laws in orderto remove the authority to act unilaterally from the Attorney General’s hands.

Regardless of the outcome the continued discussion around the topic of legalization only moves us
closer to what is ultimately inevitable so my advice to Sessions, keep pissing people off. In the end,
marijuana is more popular than Congress, than Trump and Hillary combined. Put that in your bong and smoke it Jeff!

Debra BorchardtJanuary 4, 2018

The Justice Department issued a memo on Thursday rescinding the Cole Amendment and announcing a “return to the rule of law.” In the memorandum, Attorney General Jeff Sessions directs all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities.

The cannabis industry had always been aware that Sessions hated marijuana and the Cole Memorandum, yet his inaction in the first year of the Trump presidency lulled many into believing he would remain on the sidelines. Instead, he responded to his conservative base by making the move. Smart Approaches to Marijuana’s Kevin Sabet tweeted, “Rescinding Cole slows down today’s version if Big Tobacco. It’s a good thing. Not about going after individual users” and a simple “BOOM.”

The rescinding of the Cole Memorandum though doesn’t necessarily change the situation for the cannabis industry. Sessions put the onus on the state attorney generals to act and if a state AG like say Xavier Becerra in California supports the laws, he may choose to not act. It also doesn’t change the Rohrabacher-Blumenauer amendment that keeps funds away from the Justice Department to enforce the laws. If this amendment continues to be renewed, the Justice still has no teeth to bite the industry with.

The Effect On Stocks

Marijuana stocks had been on a strong rally leading up to the legalization of adult use marijuana in California. November results had stocks rising 40% in anticipation of strong sales. Those transactions began on January 1 and they did not disappoint. Yet, as soon as the word got out cannabis stocks began to tumble.

Across the board, these stocks dropped as investors saw no difference between pharmaceutical companies or real estate companies. MassRoots (MSRT) declined a whopping 26%, biotech company Insys Therapeutics (INSY) also plunged 26% and Innovative Industrial Properties (IIPR) dropped 18%. GW Pharmaceuticals (GWPH) seemed to fare the best as it only declined by 0.36%.

Canada Caught By Surprise

“The attorney general’s letter to federal prosecutors leaves the decision to prosecute up to the individual prosecutor, which creates a highly uncertain environment for cannabis companies,” said Jonathan Sherman, a marijuana securities lawyer at Cassels Brock, a Canadian law firm specializing in cannabis legalization. He added, “If the Cole Memo no longer applies, the CSA (Canadian Securities Administrators) policy, with respect to U.S. cannabis operations, may be reversed as the Cole Memo was part of the reason why the CSA was comfortable to allow cannabis companies with U.S. operations to be listed. The CSA staff notice in October indicated that the policy may be re-evaluated if there was a change in the federal government’s approach. This change now appears imminent, although the implications are uncertain. This would be of significant concern to Canadian cannabis companies with U.S. operations.”

The Toronto Stock Exchange (TSE) had warned companies in October about acquiring or doing business with American cannabis companies. The TSE had said that it recognized cannabis to be federally illegal in the U.S. and as such did not want its listed companies to engage in such activity. The Canadian Stock Exchange seemed a little more lenient. Many Canadian companies loaded with cash raised in the public markets had been aggressively acquiring and taking big stakes in U.S. cannabis companies. Canada’s Horizons Marijuana Life Sciences ETF closed down 8.7% after today’s news.

Debra BorchardtJanuary 4, 2018

Attorney General Jeff Sessions rescinded the Cole Memorandum on Thursday when the Justice Department issued a new memo stating that previous guidance was rescinded effective immediately. He called it a return to the rule of law.

“It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission,” said Attorney General Jeff Sessions. “Therefore, today’s memo on federal marijuana enforcement simply directs all U.S. Attorneys to use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country.”

Sessions has bounced back and forth with regards to the Cole Memorandum. Alternating between being very vocal that he planned to enforce the current law, but then not taking any real action. Not long ago, he did rescind several guidance issues from the Justice Department but neglected to include the Cole Memorandum in that list.

“This move represents a broken campaign promise by the president,” said Tom Angell of Marijuana Moment. “He clearly and repeatedly pledged that he would respect state marijuana laws if elected. With polls showing that marijuana legalization is way more popular than the president is, this will likely turn out to be a huge political disaster for the administration. Either way, it’s not going to stop even more states from modernizing their cannabis laws.”

The National Cannabis Industry Association said, “The rescinding of this memo does not necessarily mean that any major change in enforcement policy is on the horizon. This has been, and still will be, a matter of prosecutorial discretion.” This is true. Sessions basically put the onus on state attorney generals to choose whether they want to prosecute the law. Some state AG’s support legalization, while others do not. So in some states like California, the state AG supports legalization and is unlikely to take action.

“Rescinding the Cole Memorandum makes it easier for federal prosecutors to commence criminal actions against companies and individuals in the cannabis industry,” said Stanley Jutkowitz, senior counsel in the Washington, D.C. office of law firm Seyfarth Shaw. Mr. Jutkowitz pointed out that even with yesterday’s appointment of 17 new U.S. Attorneys, it remains to be seen whether federal enforcement of marijuana laws will increase as a result of the recession of the Cole Memorandum. “Whether or not federal prosecutions increase, the rescission of the Cole Memorandum is sure to cause many businesses and investors in the cannabis industry to rethink their strategies,” he added.

The Rohrabacher-Blumenauer Amendment

While the Cole Memorandum was be rescinded, this doesn’t affect the Rohrabacher-Blumenauer amendment that denies funds for the Justice Department to enforce the law. However, it does remove an umbrella of protection from all the businesses that have begun operating in the industry.

“If Rohrabacher-Blumenauer is re-authorized, which is likely but not certain, then Session’s pronouncement today will be more bark than bite—regardless of the change in Policy the Federal government won’t permitted to pursue medical marijuana prosecutions unless there are gross violations by a marijuana operator, such as diversion of cannabis across state lines,” said the Puzzle Group Law firm. “If Rohrabacher-Blumenauer is not reauthorized then in theory the Department of Justice could institute a complete crackdown on marijuana. As this amendment has been extended by Congress 7 times I am cautiously optimistic that it will be re-authorized and things will be business as usual.”