COLORADO MEDICAL-MARIJUANA BILL DRAWS U.S. ATTORNEY'S WARNING

The U.S. attorney for Colorado warned state lawmakers Tuesday that
pending legislation adjusting rules for medical marijuana would
conflict with federal law and could lead to federal prosecutions.

U.S. Attorney John Walsh's letter was sent to Colorado Attorney
General John Suthers in response to his request for clarification on
how federal treatment of medical marijuana use may conflict with
pending legislation now under consideration in House Bill 1043.

"The Department of Justice remains firmly committed to enforcing the
federal law and the Controlled Substances Act in all states," Walsh
wrote. "Thus, if the provisions of H.B. 1043 are enacted and become
law, the Department will continue to carefully consider all
appropriate civil and criminal legal remedies to prevent manufacture
and distribution of marijuana and other associated violations."

Sen. Pat Steadman, D-Denver, a sponsor of the bill, said that in his
mind the letter only further muddies the federal Department of
Justice's stance on medical marijuana rather than providing clarification.

"We have had mixed messages from the federal government on this,"
Steadman said. "I think this casts a big shadow upon this industry in
Colorado. It does cause some uncertainty and trepidation."

Possession and sale of marijuana are illegal under federal law. But
several states, including Colorado, allow the use of small amounts of
marijuana for medical purposes.

Feds' Two Key Concerns

Colorado's medical-marijuana industry has exploded in the past two
years, partly because of the state constitutional amendment allowing
marijuana for medical use, partly because of prior state court
decisions allowing expanded use based on that amendment, and partly
because of the Justice Department's previous declaration that
targeting medical marijuana usage in states where it was legal would
be a low priority for federal agents.

As the number of marijuana dispensaries, and users, has surged across
the state, the legislature has tried to provide some rules for the
burgeoning industry.

The intent of the current bill, by Steadman and Rep. Tom Massey,
R-Poncha Springs, was to close loopholes and fix portions of the
state's medical-marijuana laws.

But as it has moved through the committee process, it has drawn the
concern of Suthers and others in law enforcement.

Suthers sent his own letter to members of the Colorado General
Assembly on Tuesday, including Walsh's guidance and similar letters
sent by U.S. attorneys to stakeholders in other states.

The Walsh letter restates the federal position that the "Department
of Justice will not focus its resources on seriously ill individuals
who use marijuana as part of a medically recommended treatment regimen."

But Walsh targets two portions of the proposed law - one that has
been removed for now, and another that remains in the bill.

The first is an amendment to the bill that would have allowed the
state to license a marijuana investment fund to help fund commercial
marijuana operations, which struggle to get loans because of the
nature of their business. It did not pass the House.

Walsh wrote that the Department of Justice would consider civil and
criminal action for those who invest in or facilitate marijuana production.

But Steadman said he does not plan to reintroduce the notion of a
state-authorized investment fund in the Senate.

Second, the bill as currently drafted would authorize state licensing
of "medical-marijuana infused product" facilities with up to 500
marijuana plants, along with the possibility of granting waivers to
license even larger facilities.

"The Department would consider civil actions and criminal prosecution
regarding those who set up marijuana growing facilities and
dispensaries, as well as property owners, as they will be acting in
violation of federal law," Walsh wrote.

"Know Our Limitations"

"I don't know that this letter forces us to change the language in
the bill," Steadman said. "It may make it advisable for product
manufacturers to never apply for such waivers."

But Massey said it may be wise to simply restrict the number of
plants a growing facility can have, without providing a waiver
procedure that would allow such a facility to get bigger.

"I think by limiting the size to a degree, it is not a bill-killer,"
Massey said.

"Prior to this, the federal government had been silent, which was
even more confusing because we are trying to craft legislation on how
the federal government would react," he said. "The fact that we are
getting feedback probably lets us know our limitations and
boundaries, and that is a good thing."