because if they are knowingly helping to set-up equipment for the production of a Class-1 drug, then theoretically the federal government could pursue them for aiding and abetting. Te Cole memo never said ignore federal law and it did not change the illegality of cannabis. Rather the memo accepted that the government has limited resources and would not prioritise enforcement of federal law upon certain entities abiding by state legislation.
When the Cole memo was retracted, the law didn’t change. Any actual change was political. Of much more consequence would have been if the Treasury had changed its stance and prevented banks from processing money from marijuana operators.
Isn’t the Treasury Department compelled to obey the DOJ ruling on the matter?
Generally, I would say you’re right, but this is the strange area of cannabis law. When Jeff Session, as head of the DOJ, withdrew the Cole memo, it’s important to understand that the Attorney General does not control the Treasury Department, which has allowed banks to work with cannabis operators. You would imagine that other agencies would look at the DOJ’s legal position at the federal level and comply with it, however, as long as the federal government is not enforcing federal law at the state level, then banks are able to continue to offer services to marijuana operators.
(cannabis with less than 0.3 per cent THC), which was legalised under the 2018 Farming Bill. Tis is causing a lot of confusion as people are taking hemp/CBD products that come from the cannabis plant, so it’s difficult to tell what’s marijuana and what’s hemp? If someone is using a hemp-based vape pen it’s incredibly difficult to tell the difference - adding to the confusion.
What policies should casinos adopt in relation to marijuana?
Cannabis is illegal under federal law. Casinos must comply with federal law, and in states such as Nevada, where the Gaming Control Board has adopted a zero tolerance policy, they must not allow marijuana on their properties. Other states, such as Illinois and Pennsylvania, which allow medical-use marijuana - those Gaming Control Boards have not spoken out against it. Te big issue for multi-state operators is that they must adopt different policies state-by-state, while also ensuring that they don’t break the rules in Nevada, while adhering to the rules in say, Pennsylvania.
Where do the tribal casino operators fit within this issue?
Many tribal nations are currently involved in marijuana operations. Te problem concerns
tribal gaming statutes when they intersect with federal laws on this issue. While I’m not aware of any tribal gaming entities that are also involved in cannabis operations, it would be interesting to see how the National Indian Gaming Commission deals with that situation.
When states in the US issued licences for casinos, the tribes went to the US Supreme Court to petition for the same rights. Te Supreme Court ruled that if a state prohibits gaming entirely then it can prevent tribes from operating their own casinos, but once states allow gaming licences then they cannot prevent tribes from running their own similar operations. Te parallel argument (putting aside federal illegality of marijuana) would mean that if the state allows cannabis operations then they would have to allows the tribes to offer cannabis too.
When Jeff Sessions was Attorney General, he changed the government’s stance on the Cole memo and the states ignored him. The DOJ has now reinterpreted the Wire Act. Can states just ignore this too?
Decisions like this affect all areas of the business. Look at a supplier of LED lighting or air-conditioning units, for example. If they sell their products to a marijuana dispensary, they need to understand their legal exposure,
If banks are forced to deny these services, operators will be forced to operate purely with cash, which raises the issue of money laundering. If you have vast amounts of cash in your business then you are opening the door to potential illegal activities. It makes the process of storing cash, paying taxes, etc., hugely difficult logistically too. In California, special revenue offices had to be erected in which people could pay their taxes into enormous cash repositories, because some still have issues dealing with banks and have to pay millions of dollars in state taxes - physically over a counter. It would be great if more banks in the US allowed the processing of monies from cannabis operators, and there are various bills in Washington aimed at addressing this issue.
You can understand the reticence from the banks though - it is illegal...
Yes, banks are like casinos in that they are very conservative and they don’t want to lose their government licences. Mixed signals from Washington DC make things very confusing for the banks. You have the Treasury Department allowing transactions, while the DOJ is adamant that it’s illegal. It is a tough decision for a conservative bank official to deal with.
The International Association of Gaming Advisors (IAGA) will hold its 38th Annual International Gaming Summit June 4 - 6 at The Ritz Carlton Half Moon Bay in California
IAGA NEWSWIRE / INTERACTIVE / MARKET DATA P89
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