January 4, 2018 – AG Sessions has arguably moved in a direction many expected – escalating his campaign against legal cannabis by reversing the Cole Memo (see the entire memo here).
Given the majority and ever-increasing number of Americans that believe, at the least, cannabis should be legal for medical purpose and increasing momentum support for recreational / adult-use cannabis is getting, the move doesn’t reconcile with the version of populism Trump espoused on the campaign trail (but then the Tax Bill didn’t either).
But when it comes to the impulse to support public consensus or undo yet another Obama policy, there can’t be any surprise which wins out. Now, US attorneys will be freed up to prosecute cannabis business. Don’t count on Trump to be too concerned about the political consequences. No deliberative, forward-thinking or even practical political calculus can stand up to the emotional satisfaction of acting and reacting in real-time for this administration.
While the move surely will not be the death knell to the cannabis industry, it will have chilling effect on mainstream investment into the market until the administration provides more clarity on just how it intends to allocate resources and support to AG Sessions efforts. It will also have a chilling effect on the banking system, which was starting to warm a bit to serving canna-businesses.
In a recent report published by the Financial Crimes Enforcement Network (FinCEN), the number of financial service providers actively serving canna-businesses increased from 318 in September to 400 in 2017. With no more safe harbor available under the Cole Memo we would expect this trend to come to a halt, if not reverse altogether.
So the immediate impact to canna businesses based on AG Sessions’ rescinding of the Cole Memo:
- Less access to investment capital
- Less access to banking services