Guest post: "First Circuit Splits with Ninth Circuit Over Meaning of Rohrabacher-Farr Amendment"

I was very pleased to have received this morning following terrific guest post content from Professor Scott Bloomberg of the University of Maine School of Law about a notable recent federal circuit court ruling:

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Since December 2014, Congress has included a rider in its annual appropriations acts that prohibits the Department of Justice (“DOJ”) from expending funds to prevent states from “implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Consolidated Appropriations Act, 2019, Pub. L. No. 116-6, § 537, 133 Stat. 13, 138 (2019).  The rider — most commonly known as the Rohrabacher-Farr Amendment — is an important source of protection from federal prosecution for medical marijuana businesses and users.

Until recently, the only federal circuit court to interpret the Rohrabacher-Farr Amendment was the Ninth Circuit.  In 2016 in United States v. McIntosh, the court held that the amendment only prohibited the DOJ from prosecuting marijuana businesses that strictly complied with their states medical marijuana rules.  This strict compliance standard meant that if a business stepped out of line — including, in theory, if it only extended a toe over the line — the DOJ could prosecute the business for federal drug crimes.

I have never been a fan of the McIntosh court’s strict compliance standard.  I don’t think it is workable in practice and I find it to be a rather unsound interpretation of the Rohrabacher-Farr Amendment.  So, when the First Circuit had an opportunity to interpret the Amendment in United States v. Bilodeau, I decided to submit an amicus brief arguing as much.

The brief explains that the strict compliance standard offers little real protection for marijuana businesses given the complex state regulatory codes with which they must comply. What’s more, even if the compliance standard were loosened (say, companies only had to remain in “material compliance” rather than “strict compliance” to avoid the risk of prosecution) tethering the DOJ’s ability to prosecute medical marijuana businesses to a business’s non-compliance with state law creates an inherent problem.  Under a standard that bases the DOJ’s authority to prosecute businesses on whether that business has complied with state medical marijuana rules, the best way for a state to shield its medical marijuana businesses from federal prosecution is to not have any medical marijuana rules.  The more carefully a state regulates medical marijuana, the more likely its businesses are to be subject to federal prosecution.  That incentive structure may not only prevent states from “implementing their own State laws that authorize” medical marijuana, it also flies in the face of the DOJ’s Cole Memo, which instructs states to regulate marijuana closely.

The McIntosh court’s strict compliance standard also relies on an artificial distinction between a state’s “laws that authorize” medical marijuana and a state’s enforcement of such laws.  According to the court, when the DOJ prosecutes medical marijuana businesses that fail to comply with a state’s medical marijuana rules, the DOJ does not prevent the state from implementing the “laws that authorize” medical marijuana because the business’s conduct was not authorized by those laws. But laws authorizing states to enforce violations of their “laws that authorize” medical marijuana cannot be so easily divorced from the underlying laws.  Enforcement rules are intertwined with the underlying laws for many reasons. Most significantly, a looming threat of federal prosecution would deter many businesses from ever entering the state’s marketplace.  The threat would also undermine the state’s enforcement authority over those businesses that do—after all, what rational business would admit to even the most menial of regulatory violations if doing so would open a risk of federal prosecution?

In light of these problems with the strict compliance standard, my amicus brief urged the First Circuit to adopt a more expansive interpretation of the Rohrabacher-Farr Amendment. I argued that the Amendment creates a blanket prohibition on the DOJ’s authority to prosecute state-licensed medical marijuana businesses for marijuana-related offenses (with some limited exceptions).

The First Circuit last week handed down its opinion in Bilodeau, which departed from the McIntosh court’s strict compliance standard but did not go quite as far as I urged.  As Judge Kayatta explained, the Ninth Circuit’s strict compliance standard affords the DOJ more power to undermine states’ medical marijuana laws than Congress could have intended.

With federal prosecution hanging as a sword of Damocles, ready to drop on account of any noncompliance with Maine law, many potential participants in Maine's medical marijuana market would fasten fearful attention on that threat.  The predictable result would be fewer market entrants and higher costs flowing from the expansive efforts required to avoid even tiny, unintentional violations.  Maine, in turn, would feel pressure to water down its regulatory requirements to avoid increasing the risk of noncompliance by legitimate market participants.

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[Moreover, Maine’s medical marijuana] rules were not drafted to mark the line between lawful activity and cause for imprisonment.  Rather, as with most every regulated market, Maine declined to mandate severe punishments (such as, for example, the loss of a license) on participants in the market for each and every infraction, no matter how small or unwitting….  To turn each and every infraction into a basis for federal criminal prosecution would upend that decision in a manner likely to deter the degree of participation in Maine's market that the state seeks to achieve.

After departing from the strict compliance standard, the court declined to clearly demarcate when the DOJ can (and cannot) prosecute medical marijuana businesses.  Instead, the court reasoned that, under the facts of this case, the DOJ could subject the defendants to federal criminal punishment because their alleged conduct also constitute a crime under Maine’s marijuana laws.

The First Circuit’s interpretation of the Rohrabacher-Farr Amendment in Bilodeau should bring some comfort to medical marijuana businesses in the First Circuit.  The interpretation gives the DOJ less discretion to prosecute medical marijuana businesses than does the Ninth Circuit’s strict compliance standard.  This increased protection could become all the more important if a Presidential administration less friendly to marijuana takes power.  (And, for marijuana law professors, Bilodeau and McIntosh present an excellent opportunity for a class exercise on statutory interpretation!)