Ackrell Capital Report Summarizes Rohrabacher‑Farr Amendment Legal History

ACKRELL CAPITAL Cannabis Investment Report | December 2017 Rohrabacher-Farr Amendment The Rohrabacher-Farr amendment, first passed by the U.S. Congress and signed into law by President Obama in 2014, prohibits the DOJ from using federal funds to prevent a state from “implementing” state laws that authorize the use, distribution, possession or cultivation of medical marijuana. Following the amendment’s initial 2014 enactment, the DOJ indicated that it did not plan to arrest state regulators for “implementing” a state’s medical marijuana laws but would continue to prosecute individuals involved in state-law compliant medical marijuana activity because, in the DOJ’s view, the amendment did not apply to prosecutions against individuals. The DOJ’s interpretation of the Rohrabacher-Farr amendment was rejected by a Ninth Circuit District Court in its 2015 ruling in United States v. Marin Alliance for Medical Marijuana, and again by the Ninth Circuit Court of Appeals in its 2016 ruling in United States v. McIntosh. The Ninth Circuit Court of Appeals held the Rohrabacher-Farr amendment prohibits DOJ from spending funds subject to the amendment on the prosecution of individuals who fully comply with state medical marijuana laws. The court noted a state’s “implementation” of medical marijuana laws necessarily involves “giving practical effect” to those laws, and that DOJ prosecution of individuals complying with those laws prevents the state from giving the laws practical effect. The Rohrabacher-Farr amendment generally applies only to DOJ funds made available pursu- ant to the federal budget legislation in which the amendment is included, and therefore must be renewed periodically with budget legislation to remain effective. The Rohrabacher-Farr amendment was recently renewed in December 2017 as part of an emergency aid package that remains effective until mid-January 2018. (With the retirement of Representative Samuel Farr from the U.S. Congress in 2016, the Rohrabacher-Farr amendment is now also referred to as the Rohrabacher-Blumenauer amendment; we use this name elsewhere in this report.) Agricultural Act of 2014 The Agricultural Act of 2014 (Farm Bill) authorizes institutions of higher education and state depart- ments of agriculture to cultivate industrial hemp, CSA controls notwithstanding, if (i) the industrial hemp is cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research and (ii) the cultivation is allowed under the laws of the state in which such institution of higher education or state department of agriculture is located and such research occurs. The Farm Bill defines “industrial hemp” as the cannabis plant and any part of such plant, whether growing or not, with a THC concentration of not more than 0.3 percent on a dry weight basis. Industrial hemp, like any cannabis plant, may comprise both marijuana (as defined in the CSA) and non-marijuana. But the Farm Bill creates an exception to CSA controls on marijuana, so cultivation in accordance with the Farm Bill of marijuana that qualifies as industrial hemp does not violate the CSA. The following table summarizes the legal relationship between marijuana (as defined in the CSA) and industrial hemp (as defined in the Farm Bill). 72 © 2017 Ackrell Capital, LLC | Member FINRA/SIPC HOUSE_OVERSIGHT_024708