Pub. 8 2018 Issue 1

10 www.azbankers.org What Does Rescission of the Cole Memorandum Mean for Banks? Arthur A. Coren, Partner, Duane Morris LLP O N JANUARY 4, 2018, U.S. ATTORNEY GENERAL JEFFERY B. SESSIONS ISSUED A MEMORANDUM FOR ALL UNITED STATES ATTORNEYS RESCINDING PREVIOUS GUIDANCE TO FEDERAL PROSECUTORS ON THE PROSECUTION OF MARIJUANA ACTIVITIES PURSUANT TO STATE MARIJUANA LEGISLATION, INCLUDING THE MEMORANDUM ISSUED BY DEPUTY ATTORNEY GENERAL JAMES M. COLE IN AUGUST 2013 (THE “COLE MEMO”). THE GUIDANCE IN THE COLE MEMO PROVIDED DIRECTION TO FEDERAL PROSECUTORS CONCERNING THE ENFORCEMENT OF FEDERAL LAWS UNDER THE CONTROLLED SUBSTANCES ACT (THE “CSA”) OF 1970 PROHIBITING THE CULTIVATION, DISTRIBUTION AND POSSESSION OF MARIJUANA. In his Memorandum, Attorney General Ses- sions called the Cole Memo guidance “unnec- essary,” instructing U.S. Attorneys to “follow the well-established principles that govern all federal prosecutors” originally enumerated by Attorney General Benjamin Civiletti in 1980 and refined over time in “deciding which marijuana activities to prosecute….” Citing Congress’ “determination that marijuana is a dangerous drug and that marijuana activity is a serious crime,” under the CSA, Attorney Gen- eral Sessions stated that 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” the Justice Department’s mission to enforce the law. The Attorney General’s position was foreshadowed by his letter to the Governor of the State of Washington (as well as the governors of Alaska, Colorado and Oregon) earlier in 2017 where he reminded Governor Inslee that the Cole Memo does not inhibit the Department of Justice’s ability to enforce marijuana laws and chal- lenged him to explain how his state plans to ensure that all marijuana activity is compliant with federal criminal law objectives. The rescission of this guidance does at least two things. First, it sends a notice that the uniform guidance sup- plied by the Cole Memo in connection with enforcing federal criminal mari- juana laws in effect during the Obama Administration is no longer in effect. Second, it indicates that unless some other uniform policy is put into place, U.S. Attorneys will now have greater discretion to determine what conduct to prosecute in connection with this new, quickly growing multi-billion dollar industry. This discretion gives financial institutions – trying to decide whether to bank marijuana related business (MRBs) or which al- ready do so – less clarity as to how to design, implement and maintain their programs to avoid criminal exposure – which may naturally cause them to re-evaluate how to proceed. There are 93 U.S. Attorneys across the United States. The U.S. Attorneys for 46 of those districts were nominat- ed by President Trump and confirmed by the Senate. As of this writing, another 17 nominated await approv- al. Some of those U.S. Attorneys, including those in Alaska, Colorado, Oregon and western Washington, suggested continuation of the Cole Memo standards for prosecution in their respective districts, while others have endorsed Sessions’ action. And Cole Memorandum w Continued on page 12