The sale of cannabis is illegal under federal law in all 50 states, U.S. territories and U.S. possessions. Yet, as of May 1, 29 states, the District of Columbia, and Guam and Puerto Rico recognized the legality of marijuana in some form (raw or processed) and for some purpose (medicinal or adult-use/recreational). The federal Drug Enforcement Administration (DEA) lists cannabis as a Schedule I Substance, lacking any beneficial or medical value. However, under a federal funding statute, popularly called the Rohrabacher-Farr Amendment, the DEA is barred from prosecuting any person or entity that participates in or operates a medical marijuana program that is legal under state law. This budget limitation functionally extends to every medical marijuana entity that simultaneously participates in a “state-legal” medical and adult-use market (i.e., almost every state-legal adult-use market participant).

“State-Legal” cannabis operations rely on a shifting landscape of regulations and directives issued by federal enforcement agencies. Two memoranda issued in 2013 and 2014 by then Deputy Attorney General James M. Cole (Cole Memo) directed federal prosecutors to refrain from pursuing charges against companies that operated in accordance with state-authorized medical marijuana programs, so long as those state laws and programs advanced federal priorities to prevent distribution to minors, funding of criminal enterprises, transfer of monies to states where cannabis remained illegal, violence associated with illegal cultivation, drugged driving, and related offenses and use/possession/cultivation on public lands and federal property. On Jan. 4, U.S. Attorney General Jeff Sessions revoked the Cole Memo. The Department of Justice has not (yet) prosecuted any business that relied on the policies established by Cole. Other federal agencies, most notably the Department of the Treasury, have not repudiated statements and guidance that were issued in reliance on or in conjunction with the Cole Memo.