U.S. Justice Department leaders doubted that a lawsuit to overturn marijuana legalization in Colorado and Washington state would succeed, so they felt they had little choice but to accept the laws, a senior official told the U.S. Senate Judiciary Committee on Tuesday.
Also at the hearing, Deputy Attorney General James Cole said his department is working on a solution to the banking problem that is plaguing marijuana businesses around the country. Because the drug is still illegal under federal law, banks won’t deal with pot shops, forcing them to keep tens of thousands of dollars of cash on hand.
“Obviously, there is a public-safety concern when businesses have a lot of cash laying around,” Cole said.
Justice Department officials are talking with bank regulators about ways that banks could do business with marijuana shops using laws that are on the books today, Cole said.
Cole signed the Justice Department memo last week that said federal officials won’t try to overturn the legalization laws in Colorado and Washington – or target marijuana businesses for prosecution – as long as the states had strict rules that businesses are following.
Federal goals are to keep marijuana away from children, confine it to states where it is legal, and keep criminals out of the pot business, Cole said.
But Sen. Charles Grassley, R-Iowa, hammered Colorado for its failures to enforce medical marijuana regulations. He said about a third of the marijuana in his state can be traced to Colorado.
Grassley also cited state audits that showed the Colorado Department of Revenue botched its enforcement of medical marijuana businesses, while the state health department has been lax about overseeing doctors who recommend pot.
“Why has the department (of Justice) decided to trust Colorado to effectively regulate recreational marijuana when it’s already struggling to regulate medical marijuana?” Grassley asked Cole.
Cole said the federal government probably wouldn’t succeed in a lawsuit that tried to force states to pass a law – in this case, criminalization of marijuana.
The next alternative was to target the states’ enforcement rules as a violation of federal law. But that strategy has big problems, too.
“If we just went after their regulatory scheme, instead of having a bad one, they’d have no regulatory scheme,” Cole said.
Not everyone agrees.
Kevin Sabet, who is a legalization critic and director of the University of Florida Drug Policy Institute, argued in favor of a federal crackdown on Colorado and Washington before more states and businesses get into the pot industry.
“By threatening legal action, the administration can prevent the large-scale commercialization and retail sales of marijuana,” Sabet said.
Jack Finlaw, Gov. John Hickenlooper’s legal adviser, also testified and said the main reason Colorado had such troubles with medical marijuana is that it lacked the money to pay for inspectors.
A tax on the ballot this November should ensure the state has enough money to police recreational pot, Finlaw said.
Finlaw also had high praise for the integrity and entrepreneurial spirit of medical marijuana business owners, comparing them to wine makers and craft distillers in other states.
“These are the same type of folks who have established medical marijuana dispensaries and grow operations in Colorado,” Finlaw said.
