Medical Cannabis in a Balkanized Legal Landscape

By Jerry S. Goldman and Ethan W. Middlebrooks

As a result of the conflicting laws and policies of the federal government and the various states, users of medical cannabis are faced with a host of practical challenges.

The Federal Controlled Substances Act places cannabis (including CBD, a constituent chemical) in Schedule I, the most tightly restricted category, with substantial criminal penalties for its sale and distribution and adverse implications for banking, taxation, intellectual property, and litigation. State law is subject to the primacy of federal law. For most of the 20th century, states mirrored the federal policy. Over the past two decades, however, a large majority of states have permitted the regulated distribution and possession of cannabis for medical and/or adult-use purposes. Some states permit such uses only for CBD; 21 other states (along with D.C., Guam and Puerto Rico) have comprehensive medical cannabis programs; and 8 states have authorized adult-use cannabis programs.

There are currently limited exceptions to the federal ban that help states maintain cannabis programs. Through the Cole Memoranda, a series of Department of Justice guidances, the federal government, in an exercise of its discretion, has advised that it will not prosecute cannabis offenses under the CSA if (i) the offense relates to medical cannabis; (ii) it takes place in a state which has a robust medical cannabis regulatory regime in accord with certain DOJ requirements; and (iii) the alleged offender operates in accordance with state law. If a distributor violates state law, e.g., by shipping cannabis out of state, it loses this protection.

Further, Congress has enacted a series of amendments to the federal budget authorization acts for fiscal years 2015, 2016, and 2017 that prohibit the use of congressionally allocated funds by the DOJ to prosecute alleged violators of the CSA, if they acted in compliance with the laws of certain enumerated states.

The Impact on the Medical Cannabis Patients

These administrative and Congressional actions have minimized the possibility of federal prosecution of operators of medical cannabis programs who comply with the varying regulatory requirements. Risks nonetheless remain to state programs and persons who use medical cannabis. The Cole Memoranda are subject to being rescinded, and each budget act has an end date with no guarantee that a similar amendment will be enacted. The real remedy is a structural amendment to the CSA—an action Congress has not yet been able to achieve.

The federal government’s nominal “hands off” approach leaves states free to develop a patchwork of laws regarding cannabis. Each state’s program is limited to its own borders and differs—often radically—from other states. And cannabis cannot be transported across state lines.

Each state has different conditions for lawfully obtaining a prescription for cannabis. The legal means of ingestion may also differ. In New Jersey, one may only ingest cannabis by smoking ‘flower’; in New York, that means of consumption is prohibited—as are edibles in both states, in contrast to Colorado. States differ significantly in the amount of excise or sales taxes charged, who can ‘write’ prescriptions, whether THC-based cannabis (as opposed to CBD) is available, and the frequency and quantities that one may purchase at a dispensary. Some states permit consumers to grow their own cannabis; others do not. There are differing regulations as to where one may consume cannabis (although, generally, one may not consume it while walking around in public, and all states sensibly prohibit the use of cannabis if one is operating a motor vehicle). Laws differ as to who may own a dispensary, how many dispensaries are permitted in a state and where they may be located. These varying requirements create seemingly unnecessary difficulties for both medical cannabis businesses and consumers. However, given that this is a new legal industry, this legislative experimentation hopefully will ultimately lead to the implementation of best practices legislation.

One of the greatest present obstacles to medical cannabis patients is the restriction on interstate activity and access to legal cannabis. Even with the Cole Memoranda and federal budget act amendments, the federal government strictly prohibits any interstate transportation of cannabis. This prohibits those in the medical cannabis business from shipping the product, which can impair product quality and uniformity, and can result in product shortages, higher prices, and adverse environmental impacts (e.g., in a northern state in the winter, where cannabis must be grown indoors using artificial lighting and supplemental heating).

A patient cannot travel across state lines possessing medical cannabis; the patient will not be able to fill an out-of-state prescription in another state (with the exception of Nevada which has a reciprocity program), and the patient will generally be ineligible to register in order to obtain an in-state prescription. Thus, because of residency requirements, a patient will be deprived of her or his cannabis when travelling. The “work-around” for a patient who cannot easily forgo the treatment is to restrict travel to states which have adult-use programs.

Since California’s initial attempts at reform, the industry and the ability of patients to obtain help has radically changed. We can reasonably expect to see additional changes in the coming years as the industry matures, state governments see what works best, and public (and political) attitudes develop. Ultimately, in order for medical cannabis to work best for those who need it, at least modest federal legislative relief is needed. Until then, patients and cannabis providers should learn how to adapt to these challenges and opportunities.

Disclaimer: The views expressed herein are those of the author and do not necessarily reflect the views or positions of Anderson Kill PC, any of its affiliates or other attorneys, or any of its clients. This article is for general information purposes only, in a changing legal environment. It is not intended to be, nor should it be construed as legal advice to any person or entity for any particular factual content.