Legalized Marijuana and the Hotel Industry

By Dana Kravetz Managing Partner, Michelman & Robinson, LLP | December 03, 2017

The numbers do not lie. As of this writing, 29 states and the District of Columbia have legalized medical marijuana, eight states (plus D.C.) permit its recreational use, and several additional jurisdictions have legislation in the works that may serve to legalize and regulate cannabis in some form. Another number of note – 64, which, according to a recent Gallup survey, is the percentage of adults in the U.S. that support decriminalizing pot. The takeaway for hoteliers: if you have not done so already, the time is now to address the impact of legalized marijuana on your business and the workplace.

The Federal Law

Before taking a deep dive into the issue, hoteliers may ask: “isn’t cannabis illegal under the federal law?” The short answer is yes, but that is a qualified response at best. As the scale tips toward marijuana becoming legal throughout the country, pot continues to be against the law federally. The resulting dichotomy between the relaxed view of cannabis and its extracts at the state level and the current federal position on marijuana is an interesting one. According to the Controlled Substance Act, by which the federal government regulates drugs, there is no recognized difference between cannabis, cocaine, heroin or LSD. Likewise, the CSA does not distinguish between the medical and recreational use of marijuana. So technically, pot is illegal and users (even those with valid prescriptions for the substance) can be arrested, convicted and sentenced to jail under the federal law as it stands.

In practice, however, this is quite unlikely – at least for now – particularly with respect to the consumption of medical marijuana. And that is because the Rohrabacher-Blumenauer Amendment (formerly known as Rohrabacher-Farr) prohibits the U.S. Department of Justice from expending any monetary resources to prosecute medical marijuana users and sellers operating legally under state laws. The net effect of this law, passed during the Obama administration, is that efforts by federal prosecutors or drug enforcement officials to interfere with the sale of medical marijuana in states that have legalized it have been eviscerated.

This is certainly good news for the burgeoning legal marijuana industry, which has achieved annual sales approaching $7 billion, projected by some to balloon to $30 billion by 2021. Yet the changing of the guard in our nation’s capital has many in the space holding their collective breath. Attorney General Jeff Sessions has a history of being ardently anti-marijuana; he has spoken out against its legalization; and he publically seeks to employ all means available to enforce the CSA. That being said, it is unclear if the Trump administration will leave the regulation of cannabis, at least medical cannabis, to the states, as is presently the case under Rohrabacher-Blumenauer – though that is set to expire this month.

Parenthetically, other federal statutes such as the Patriot Act (used primarily to justify the issuance of drug warrants as opposed to fighting terrorism) and the Bank Secrecy Act (with its Anti-Money Laundering rules) also create considerable hurdles for those in the legal marijuana industry, a “budding” sector in the U.S. – made up of retailers, wholesale growers, infused products/concentrates companies, testing labs and ancillary firms – that the Marijuana Fact Book 2017 estimates to employ up to 230,000 full- and part-time workers. Nevertheless, even though Rohrabacher-Blumenauer hangs in the balance, the momentum is undeniable. Despite political uncertainty on the federal level, it seems rather clear that pot is on the road to becoming completely legal, it is just a matter of time. And that is why hotel and resort owners and operators must be equipped to navigate a changing landscape.

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