Is Trump Tipping His Hand - How Should Insurance Companies Interpret the Trump Administration’s Latest Statements On Marijuana?

Is Trump Tipping His Hand - How Should Insurance Companies Interpret the Trump Administration’s Latest Statements On Marijuana?

June 28, 2017

President Donald Trump and his top law enforcement official, Attorney General Jeff Sessions, have recently provided public statements regarding the federal prosecution of marijuana suppliers in states with legalized medical marijuana. These statements have already triggered responses from state governments, including Pennsylvania, indicating a potential future legal battle between state and federal governments over the legalized production of marijuana.

Medical marijuana is one of the fastest growing markets in the United States, with some speculating that it could surpass the organic food industry if made legal in all 50 states. More than 25 states have comprehensive public medical marijuana programs. Most of these state programs require that licensed medical marijuana growers and dispensaries carry certain insurance for their businesses. While this new market presents opportunities for insurance companies, an uncertain legal landscape has forced many carriers to the sidelines. For example, in May 2015, Lloyd’s of London announced it would no longer take on risk for U.S. marijuana-related businesses until the sale of medicinal marijuana is formally recognized by the federal government as legal.

Legalized marijuana creates a friction between federal and state laws. While several states have legalized marijuana-related enterprises in various forms, at the federal level, marijuana is a Schedule 1 controlled substance under the Controlled Substance Act. Given this conflict, the focus has been on the enforcement priorities of the federal government. Under the Obama Administration, the federal government issued a series of memoranda intended to provide guidance about the interplay between the federal restrictions and activities that are lawful under state law and to outline certain targeted enforcement priorities under the Obama Administration. The change in administrations has brought even more uncertainty to the area.

Under the Trump Administration, until recently, there have been mixed signals as to the direction of federal enforcement of marijuana-related activities in states with legalized programs. However, in a May 1, 2017 letter to Congressional leaders (which was recently released to the public), Attorney General Sessions clarified the Trump Administration’s stance on medical marijuana programs. The letter related to a rider which prevents the Department of Justice from using any of its funds made available through the appropriations bill to enforce federal prohibitions involving the use or cultivation of medical marijuana that are permitted under state law. This rider has appeared in each appropriations bill since 2014.

Prior to the passage of the most recent appropriations bill, Attorney General Sessions made a plea to Congress to not include the rider in the bill. Attorney General Sessions opined that “[d]rug traffickers already cultivate and distribute marijuana inside the United States under the guise of state medical marijuana laws.” Specifically, “[t]he individuals in these [marijuana] organizations often find a place for themselves within state regulatory systems.” Attorney General Sessions also highlighted the significant negative health effects caused by smoking marijuana and concluded his letter with a request to Congressional leaders to oppose the inclusion of the rider in the Department of Justice appropriations.

Congress was not persuaded by the Attorney General’s letter, and the rider was included in the final version of the appropriations bill that was passed by Congress, and signed by the President. However, President Trump weighed in on the issue in his signing statements to the bill. In relation to the rider, President Trump stated:

Division B, section 537 provides that the Department of Justice may not use any funds to prevent implementation of medical marijuana laws by various States and territories. I will treat this provision consistently with my constitutional responsibility to take care that the laws be faithfully executed.

The meaning and implications of this statement are not entirely clear. However, with the strong stance in Attorney General Sessions’ letter, a sea change in enforcement priorities may be on the horizon.

The appropriations bill expires in September of 2017, at which point Congress will have to again decide whether to include the rider. Once again, all eyes will be on President Trump and Attorney General Sessions to see if they provide more insight on the enforcement priorities under the Trump Administration.

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