Friendlier Feds Change the Game for Cannabis Stocks

Until last week, the most important news to date for the cannabis industry, in my view, was the 2013 Cole Memorandum, which gave the green light to Colorado and Washington to move forward with cannabis legalization.

The memorandum specified eight priorities for Department of Justice attorneys with respect to enforcement of the Controlled Substances Act and created a safe harbor for regulators and businesses in states that permitted adult access to cannabis. With that guidance from the government, cannabis businesses invested with confidence that they wouldn’t wake up to asset forfeitures or even arrest, and we have seen rapid growth in these states and others subsequently.

The Cole Memorandum’s fundamental flaw of being only guidance became very clear with the change in the Presidency in late 2016.

By early 2018, the Cole Memorandum was ripped up, leaving the industry technically facing a great deal of uncertainty, as Attorney General Jeff Sessions opened the door to prosecution at the discretion of individual department attorneys.

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