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The Cole Memo: From the Horse's Mouth

Posted by Micah Tapman on Jul 29, 2016 6:00:00 AM
Micah Tapman
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MJBizDaily posted a terrific interview with former Deputy Attorney General James Cole regarding his definitive memos in 2011, 2013, and 2014. The most famous of these is the Cole Memo of 2013, which outlined eight priorities for DOJ/law enforcement with regards to state-legal cannabis markets.

The most interesting part of the interview, from my perspectice, lies in this quote:

"The conclusions that we came to were, number one, that we cannot preempt the decriminalization, because the CSA itself says the federal government is not preempting the field here. The states are free to have their own laws [emphasis added]. So the conclusion was we could not force the states to abandon their legalization. Now, in essence, people are going to smoke marijuana in those states."

Let's take a closer look at what is being said here. First, the quote is in reference to the question of whether the federal goverment could use the Controlled Substances Act (the CSA) to invalidate the decriminilization of cannabis by a state, such as Colorado. Second, the conclusion leads to the very real issue that without criminal penalties for cannabis consumption the federal government has no effective lever to prevent use.

Where this led was to the treatment of cannabis as if it were yet another minor issue, such as jaywalking or going five miles over the speed limit. Which leads me to yet another point we often discuss with marijuana investors - the perceived risk of cannabis investing is much higher than the actual risk.

Our job here at Canopy is to make money for our investors by investing in innovative startups that have the potential to become blockbuster success stories as the marijuana industry grows. We do this by assessing risks, allocating capital and resources, and working closely with portfolio companies to adjust as the industry develops.

This inside information from James Cole gives us great confidence that our approach to date is well-grounded and based on logical and thoughtful policies. We expect to see continued acceptance by the federal government as states legalize cannabis, especially following the 2016 elections.

Join us on August 19, 2016 at 11am MT for the next Canopy Investor Outlook webinar.

Canopy Investor Outlook - August 2016

Topics: Investing, Legal