Proposed REFER Act extends marijuana protections

The U.S. Department of Justice's tough stance against marijuana may have unintentionally sparked a backlash among legislators and cannabis industry lobbyists. Reaction was swift when Attorney General Jeff Sessions rescinded the Obama-era Cole memo, which recommended not prosecuting marijuana-related activities in states where the practices were legal. Days after Sessions' Jan. 4, 2018, memo that reinstated the Controlled Substances Act of 1970, a movement was underway to protect medical and recreational marijuana usage across the United States.

On Jan. 11, the House of Representatives introduced the Restraining Excessive Federal Enforcement and Regulations of Cannabis Act (REFER). Currently under review by the Subcommittee on Crime, Terrorism, Homeland Security and Investigations, the act would protect individuals and companies from federal prosecution for marijuana crimes in states that have decriminalized these activities.

"Unfortunately for Sessions, both Democratic and Republican members of Congress have spoken out against his rescinding actions and threatened to restrict funding and hold up future nominations made by the Department of Justice," stated Brett Husak, Managing Partner at Deft Payment Systems. "The DOJ's actions have taken the cannabis industry off the backburner and back in the spotlight, empowering U.S. District Attorneys to continue to rule by state law and do what they are doing."

Rohrabacher-Farr protections extended

The Rohrabacher-Farr Amendment was originally voted into law December 2014, as part of an omnibus spending plan. The amendment, which expires annually, protects medical marijuana dispensaries by preventing the DOJ from using federal funds to prosecute cannabis activities in jurisdictions where state-specific medical marijuana laws are in force. The House of Representatives renewed the amendment Jan. 20, 2018, renaming it Rohrabacher-Blumenauer following Rep. Samuel Farr's retirement.

In addition to the proven health benefits of medical marijuana, dispensaries contribute millions in state taxes, Husak noted. Erik Altieri, Executive Director at NORML, a cannabis advocacy group, agreed, stating the cannabis industry has created more than 150,000 jobs and countless millions in state tax revenue. "[Rescinding the Cole memo] will only push consumer dollars away from these state sanctioned businesses and back into the hands of criminal elements," he said. "With over 60 percent of Americans, including a majority of Republicans, supporting marijuana legalization, this is not just bad policy, but awful politics, and the Trump Administration should brace itself for the public backlash it will no doubt generate."

Medical marijuana is legal in 29 states, eight of which have sanctioned recreational use, Husak noted. "Cannabis grew into a $7.9 billion industry in 2017 [and is] poised to deliver billions more in future state tax revenues," he added. "We need consistent federal guidelines, beyond the Cole memo's informal suggestions or recent DOJ declarations that are out of step with popular opinion."

Until such guidelines are in place, the cannabis value chain will continue to struggle with payment acceptance, because most financial institutions will not accept deposits from marijuana-based businesses. Only about 400 U.S. banks and credit unions in the United States will work with the cannabis industry, which forces many cannabis merchants to operate cash-only businesses. Fortunately, the REFER Act would prevent the federal government from penalizing financial institutions that service cannabis-related businesses operating within state laws, he said.

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