First Circuit’s Recent Decision Allowing Federal Prosecutions Despite “Rohrabacher-Blumenauer” Far From Red Flag For Legitimate Cannabis Businesses

Indicted by the federal government “for, among other things, [the] knowing and intentional manufacture and possession of marijuana with intent to distribute in violation of the [federal Controlled Substances Act (the ‘CSA’)] and conspiracy to do the same,” Brian Bilodeau and other accused individuals (collectively, the “Defendants”) sought to avoid criminal responsibility by “arguing that the prosecutions were a prohibited use of federal funds to prevent Maine from implementing its medical marijuana laws.” In a recent decision, however, the U.S. Court of Appeals for the First Circuit rejected that argument, allowing the prosecutions to proceed despite the federal budgetary restrictions imposed by the “Rohrabacher-Blumenauer Amendment” (the “Amendment”).

The Amendment, which is also known as the “Rohrabacher-Farr Amendment,” provides: “None of the funds made available under this Act to the Department of Justice [(the ‘DOJ’)] may be used, with respect to [Maine and other states], to prevent any of them from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”

While acknowledging that the Amendment – which, “for each fiscal year since 2015, … Congress has attached as a rider to its annual appropriations bills” – “places a practical limit on federal prosecutors’ ability to enforce the CSA with respect to certain conduct involving medical marijuana,” the First Circuit, in United States v. Bilodeau, Nos. 19-2292, 20-1034, 20-1054 (1st Cir. Jan. 26, 2022), still found that the Amendment did not bar the prosecution of the Defendants.

Nevertheless, this federal appellate court’s recent opinion is unlikely to expose businesses and individuals who, unlike the Defendants, actually are operating consistent with state medical-marijuana laws to any increased risk of federal criminal prosecution.

Background

The Maine Medical Use of Marijuana Act (the “Act”) was enacted in 2009. Thereafter, according to the First Circuit, the Defendants operated multiple sites at which they grew marijuana – each of which “appear[ed] facially complaint with the Act’s requirements.” However, as that court also explained, “[b]etween 2016 and 2018, federal law enforcement officers began investigating Bilodeau and his association with a ‘drug organization’ that ‘grows and distributes hundreds of pounds of marijuana per month under the cover of Maine’s Medical Marijuana program.’” As the First Circuit also reported: “The record in this case amply supports the finding that the defendants were knowingly engaged in ‘a large-scale . . . black-market marijuana operation’ aimed at supplying marijuana to persons known not to be qualifying patients.”

Relying on the Amendment, the Defendants sought to enjoin their prosecutions. The federal district court, however, denied that request, and the Defendants appealed.

The First Circuit’s Opinion

Early in its January 26, 2022 opinion, the First Circuit identified the key question that it had to answer: What did “Congress mean[] when it prohibited the DOJ from spending money to ‘prevent’ a state ‘from implementing [its] own laws that authorize’ medical marijuana activity[?]” Drawing on a previous opinion issued by the U.S. Court of Appeals for the Ninth Circuit, the First Circuit concluded “that the DOJ may not spend funds to bring prosecutions if doing so prevents a state from giving practical effect to its medical marijuana laws.”

The Court next considered “under what circumstances federal prosecution would prevent Maine from giving practical effect to the Act.” It explained: “The line the government would have us draw is between strict compliance and less-than-strict compliance. That is, it would have us rule that persons involved in growing or distributing medical marijuana are safe from federal prosecution only if they comply fully with every stricture imposed by Maine law.”

The First Circuit, however, rejected the government’s approach for a number of reasons. For example, it opined that “if Congress had intended the rider to serve as a bar to spending federal funds on a prosecution only when the defendant was in strict compliance with state law, it would have been very easy for Congress to so state.” Additionally, the Court continued, “the potential for technical noncompliance is real enough that no person through any reasonable effort could always assure strict compliance.”

The Court also rejected the competing test proposed by the Defendants and others, who argued generally that the Amendment bars federal prosecution of anyone who maintains a state-issued medical-marijuana license. That reading, the Court responded, “stretch[es] the rider’s language beyond its ordinary meaning. Congress surely did not intend for the rider to provide a safe harbor to all caregivers with facially valid documents without regard for blatantly illegitimate activity in which those caregivers may be engaged and which the state has itself identified as falling outside its medical marijuana regime” (emphasis added).

“Instead,” the Court continued, “we adopt an approach that falls between the parties’ positions.” It declined, however, to “fully define [the] precise boundaries” of its middle-ground approach.

That said, based on the relevant facts, the Court, in Bilodeau, easily concluded that the federal prosecutions of the Defendants, who had knowingly violated Maine’s medical-marijuana laws, could go forward without violating the Amendment or interfering with Maine’s medical-marijuana program:

Maine’s medical marijuana regulations themselves expressly anticipated that a cardholder could be “convicted of selling, furnishing, or giving marijuana to a person who is not allowed to possess marijuana for medical purposes in accordance with [the rules promulgated under the Act].” Accordingly, convicting someone under [the CSA] who knowingly engages in such conduct would likely have no effect unwelcomed by Maine, much less prevent Maine’s medical marijuana laws from having their intended practical effect (citations omitted) (footnote omitted).

Effect on State-Compliant Businesses

Technically, the Court’s opinion is only controlling within the First Circuit, which includes Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island. However, its effects still could be felt beyond those jurisdictions.

Regardless, it appears unlikely that the opinion will have significant effect on businesses and individuals operating consistent with state medical-marijuana laws (whether within or outside the First Circuit).

Indeed, the First Circuit did not in any way neuter, or even call into question, the Amendment. Rather, it found that the prosecutions of the Defendants were consistent with, or at least did not conflict, with the Amendment. The prosecutions, the Court held, would not impede Maine from giving practical effect to its medical-marijuana laws.

To the contrary, focusing on the relevant facts, the Court found that the prosecutions would be consistent with state law and goals. For example, the Court recounted that federal authorities had seized hundreds of pounds of marijuana, “several handwritten documents recording payments to marijuana ‘trimmers,’” and a notebook that “listed quantities of different types of marijuana, noted cash payments of more than $50,000, and used what appeared to be abbreviations for states such as ‘MD,’ ‘NY,’ and ’GA’ as headers.” The Court also stated: “Agents also found marijuana and marijuana concentrate at Bilodeau’s home. A search of a safe room in the house revealed marijuana, a money-counting machine, a loaded handgun, and several documents.” Importantly, the Court viewed the Defendants to be violating both federal and state law.

It was this unwelcome, “black-market” activity – and the violation of state law too –that appears to have led to the outcome here. Little, if anything, in the Court’s opinion would suggest that the Court would have permitted federal prosecution of a business or individual acting consistent with state medical-marijuana law. Indeed, the Court even refused to require “strict compliance” with those laws as a condition for avoiding prosecution.

As such – although the relevant facts and circumstance are likely to be important, if not determinative, in future cases – the restrictions imposed by the Amendment would seem to still protect compliant businesses and individuals from federal prosecution.

An Important Caveat

That said, the Amendment still does not forever immunize even compliant businesses and individuals.

As the Ninth Circuit observed in United States v. McIntosh, 833 F.3d 1163 (9th Cir. 2016):

The CSA prohibits the manufacture, distribution, and possession of marijuana. Anyone in any state who possesses, distributes, or manufactures marijuana for medical or recreational purposes (or attempts or conspires to do so) is committing a federal crime. The federal government can prosecute such offenses for up to five years after they occur. Congress currently restricts the government from spending certain funds to prosecute certain individuals. But Congress could restore funding tomorrow, a year from now, or four years from now, and the government could then prosecute individuals who committed offenses while the government lacked funding (emphasis added).

In other words, the Amendment – which, notably, still does not apply to “adult-use,” or “recreational,” cannabis – does not alter marijuana’s status under federal law. It only constrains the federal government’s ability to pursue certain prosecutions at this time.

For questions about the First Circuit’s opinion, the Rohrabacher-Blumenauer Amendment, marijuana’s status under federal and state law, or related topics, please contact Leech Tishman partner Michael H. Sampson, who co-leads Leech Tishman’s Cannabis Industry Group. He can be reached at msampson@leechtishman.com or 412.261.1600.

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