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Banks Caught in State/Federal Cannabis Conflict By William Bogot and Joshua Horn



awyers must counsel clients in the nascent industry of state-legalized cannabis that their routine business affairs violate federal law, a situation that new Attorney General William Barr calls “untenable.” It does not exist in any other area of law, and presents opportunities and challenges for lawyers who advise cannabis industry clients. Below we provide an overview of the legal issues surrounding this dichotomy. The Controlled Substances Act (CSA) is the legal foundation of the federal government’s fight against illegal drugs. Cannabis is classified as a Schedule 1 controlled substance under

the CSA. As such, it is considered to have a high potential for abuse. Under federal law, it is illegal to possess, manufacture, distribute, dispense cannabis or conspire to do so. State laws to the contrary notwithstanding, persons who violate the CSA are subject to federal criminal prosecution, and businesses that assist them risk conspiring to violate federal law. OGDEN AND COLE MEMOS

In October 2009, Department of Justice Deputy Attorney General David Ogden issued a memorandum providing guidance to federal prosecutors in states that

had passed medical marijuana laws. The Ogden Memo reiterated the DOJ’s commitment to enforcing the CSA, but also acknowledged a rational use of limited resources. Although the prosecution and disruption of illegal drug manufacturing and trafficking activity is a core federal priority, the Ogden Memo stated that, as a general matter, pursuit of these priorities should not focus federal resources on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana. Accordingly, the prosecution of an

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Today's General Counsel, Spring 2019