California officials and the marijuana industry prepare to fight a federal crackdown

Reporting from Sacramento —  Warned of a possible federal crackdown on marijuana, California elected officials and cannabis industry leaders said Friday they were preparing for a potential showdown in the courts and Congress to protect the legalization measure approved by state voters in November.

The flashpoint that set off a scramble in California was a news conference Thursday at which White House Press Secretary Sean Spicer told reporters that the administration had no plans to continue the Obama administration’s permissive approach in states that have legalized marijuana for recreational use.

“I do believe that you’ll see greater enforcement,” he said, adding that the administration would continue to allow states to regulate the sale of marijuana for medical use.

The latest development could force California officials and marijuana industry leaders into an unusual alliance against the federal government, with billions of dollars in profits for businesses and taxes for state coffers at stake.

The state agency responsible for drafting regulations said Friday it was going ahead with its plans to start issuing licenses to growers and sellers in January.

“Until we see any sort of formal plan from the federal government, it’s full speed ahead for us,” said Alex Traverso, a spokesman for the California Bureau of Medical Cannabis Regulation.

In Congress, Rep. Dana Rohrabacher (R-Costa Mesa) plans to introduce legislation that could blunt Spicer’s threat by preventing the Department of Justice from enforcing federal laws against the recreational use of marijuana in states that have legalized it, a spokesman said Friday.

And industry officials warn that any federal crackdown in California and other states will result in many growers and sellers continuing to operate, but on the black market.

California Atty. Gen. Xavier Becerra says he is ready to safeguard the rights approved by 57% of voters in Proposition 64, which allows California adults to possess, transport and buy up to an ounce of marijuana for recreational use.

“I took an oath to enforce the laws that California has passed,” Becerra said in a statement Thursday after Spicer’s comments. “If there is action from the federal government on this subject, I will respond in an appropriate way to protect the interests of California.”

State lawmakers also say California should do what it can to preserve Proposition 64.

“We will support and honor the laws that California voters have democratically enacted,” said Assemblyman Rob Bonta (D-Oakland), an author of legislation creating the licensing system for medical marijuana dispensaries.

Becerra would likely be joined in any defense of the state’s marijuana policy by attorneys general in other parts of the country. Recreational use has also been legalized in Washington state, Colorado, Oregon, Alaska, Maine, Massachusetts and Nevada, home to a combined 68 million Americans.

Washington Atty. Gen. Bob Ferguson, who has worked with Becerra on opposing President Trump’s travel ban, said he and Democratic Gov. Jay Inslee last week asked for a meeting with U.S. Atty. Gen. Jeff Sessions to discuss how the recreational marijuana use system is working in their state.

California Lt. Gov. Gavin Newsom, a leading supporter of Proposition 64, took a similar approach, sending a letter Friday to Trump urging him not to carry through with threats to launch a federal enforcement effort.

“I urge you and your administration to work in partnership with California and the other … states that have legalized recreational marijuana for adult use in a way that will let us enforce our state laws that protect the public and our children, while targeting the bad actors,” the Democrat wrote.

If the Justice Department starts arresting licensed marijuana sellers, the multibillion-dollar industry would join forces with the states that issue permits to challenge the action in court, said Amy Margolis, an attorney whose law firm has more than 200 clients in the marijuana industry, including businesses in California.

“This industry is so mature and it’s so far along that I have no doubt that if the Department of Justice started true enforcement actions against cannabis businesses, that they would go to court,” Margolis said. “I see joint actions between the states and the industry hoping to prevent those type of actions.”

Margolis would argue that it is a states’ rights issue.

“The argument would be that this is a situation where the states have the right to regulate and tax an industry the way they want,” she said, adding that states are gaining tax revenue to pay for government programs.

Although federal law does not outline a medicinal use for marijuana, Trump administration officials have made public statements indicating they recognize that such a benefit exists, which could help the industry in a potential court case, Margolis said.

However, the states may find their hands tied legally if they try to keep federal agents from raiding and shutting down marijuana growing and sales operations, according to Adam Winkler, a professor at UCLA School of Law.

“I imagine that California will mount a legal challenge to any crackdown on recreational marijuana,” Winkler said. “Yet there is not much California can do. Federal law is supreme over conflicting state law. Federal agents are entitled to enforce federal law anywhere in the country, including California.”

He said there are limits to federal power, but the courts have held that the federal government does have the authority to enforce federal drug laws.

Aaron Herzberg, an attorney for the industry, agreed that the state would face a tough fight. He cited the 2005 case Gonzales vs. Raich, in which the U.S. Supreme Court found that under the commerce clause of the U.S. Constitution, Congress may criminalize the production and use of homegrown marijuana even if states approve its use for medical purposes.

“Let’s face it: If the federal government wants to shut down recreational marijuana, they could quite easily accomplish it using federal law enforcement and taxation tools,” Herzberg said.

Others say one basis for legal action would be an argument that enforcing laws against marijuana would damage states that have put regulations in place and are depending on hundreds of millions of dollars in taxes to pay for government programs.

States are too far down the path of regulating, licensing and taxing those who are making big investments in the sanctioned marijuana industry to pull the rug out now, said Richard Miadich, an attorney who co-wrote Proposition 64.

Updates from Sacramento »

“Given the strict regulatory structure set forth in Proposition 64, that medical and adult-use regulations are being developed in concert, and that public opinion is squarely on the side of states’ rights on this issue, I think it is impractical for the federal government to reverse course now,” he said. “Not to mention the potential for great harm to individual states.”

Supporters of Proposition 64 say there is also a potential political solution.

In recent years, Rohrabacher and former Rep. Sam Farr (D-Carmel) won congressional approval of a rider to the federal budget that prohibited federal funds from being used to prosecute medical marijuana businesses that are in compliance with state laws.

Rohrabacher plans to introduce legislation that would expand the protection to businesses that comply with state laws allowing the growing and sale of marijuana for recreational use, according to spokesman Ken Grubbs.

The congressman is planning the legislation “because recreational use is an issue of individual freedom and should be dealt with legally according to the principle of federalism, a bedrock conservative belief,” Grubbs said.

Rep. Ted Lieu (D-Torrance) is also “reviewing options to counteract whatever the Trump administration’s plans” are for state marijuana laws, said senior advisor Jack d’Annibale.

Another option, though a long shot, would be for Congress to attempt to change the federal Controlled Substances Act to decriminalize the use of marijuana nationally.

Herzberg said reinstituting federal raids would be “a major setback for the industry.”

But the state could still go ahead with a licensing system for medical marijuana growing and sales in spite of a federal crackdown on recreational use, according to Hezekiah Allen, head of the California Growers Assn.

“A vast majority of California growers and cannabis business owners would choose to participate only in the medical marketplace if given the option, and some would choose to avoid licensure entirely if they were unable to distinguish themselves from adult-use businesses,” Allen said.

Because Spicer did not provide details on what an enforcement effort might look like, many in the industry hope it will focus on the illegal exporting of marijuana to other states, leaving alone state-licensed firms that grow and sell pot.

“The biggest crackdown we may see is on the increase of cannabis being illegally exported out of recreational states,” said Nate Bradley, executive director of the California Cannabis Industry Assn.

State Sen. Mike McGuire (D-Healdsburg) said any change in federal enforcement policy on states that have legalized recreational use would be misguided.

“You can’t put the genie back into the bottle — marijuana regulation and enforcement can’t and shouldn’t go backwards,” he said.

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Twitter: @mcgreevy99

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