Trump Administration's Possible Cannabis Crackdown Could Backfire With Businesses, Voters

Recent administration comments at the Conservative Political Action Conference (CPAC) in Washington, D.C., have led some to believe the administration will go to war with states over legalization. Federal intrusion into state management of cannabis laws could affect cannabis users and ancillary marijuana industry companies.

"In the short term, it is likely that these comments will have a chilling effect on many in the marijuana industry, particularly those entrepreneurs and businesses in states where voters have only recently decided in favor of marijuana legalization," National Organization for the Reform of Marijuana Laws deputy director Paul Armentano told TheStreet.

Comments made by White House press secretary Sean Spicer during CPAC have suggested the federal government may clash with states over cannabis legalization. Spicer also appeared to make an erroneous correlation between marijuana use and opioid addiction.

Spicer's remarks indicated that President Trump is supportive of medical marijuana use. But Spicer also said the Department of Justice is likely to become more involved in enforcing marijuana laws.

This suggests federal involvement in state lawmaking and enforcement. That would be contrary to the administration's avowed goal of cutting down the federal government and turning over more decision making to the states -- as Trump did by rescinding the former administration's edict on LGBT bathroom regulations.

"It is hard to believe that lawmakers in these jurisdictions will seek to enthusiastically implement these regulations, or that would-be businesses will expend the time and venture capital to abide by them, at the same time that the federal government is threatening to target and take punitive action against them," Armentano said.

To some extent, Spicer's comments may have been influenced by the heady atmosphere of CPAC.

Marijuana Policy Project (MPP) director of communications communications director Mason Tvert told TheStreet that Spicer's remarks were responses to questions, not statements of official policy.

"The administration has not actually adopted a policy," Tvert said, "and we'll wait and see until it does."

Tvert also noted that current regulations prohibit the DOJ from getting involved in state regulation of medicinal use.

MPP also issued a news release with results from a Quinnipiac poll indicating the 71% of U.S. voters are opposed to federal regulation of marijuana use for medical or adult use in general. These numbers break down into anti-regulation majorities for Democrats, Republicans, independents and all age groups.

Numerous political and business figures joined cannabis activists in decrying increased federal enforcement, and Terra Tech (TRTC) chairman, CEO and president Derek Peterson, told TheStreet that actual implementation of enforcement would bring harsh political and economic consequences.

"The administration will be profoundly stunned if it goes forward with this," Peterson said.

Terra Tech focuses on cannabis cultivation and technology. The company has raised $28.76 million in nine private-investment-in-public-equity offerings according to PrivateRaise, TheStreet Inc.'s private placement data service.

Peterson noted that federal intervention would have an effect on tens of thousands of jobs in the cannabis industry. Terra Tech's employees receive at least $13 per hour and full health benefits according to Peterson, who said employees would not appreciate the actions of an administration that cost them both jobs and healthcare insurance.

Peterson said federal intervention would go against the grain of voters. "Most of the legalization efforts started with ballot measures," Peterson said, "and even some of the legislated measures were picked up from grassroots campaigns and modified."

NORML's Armentano also sees increased federal involvement as retrograde in terms of politics, economics and the public will.

"The Trump administration's proposed crackdown not only defies longstanding principles of small government and populism, it's also bad politics," Armentano said.

"Contrary to claims made by this administration, marijuana regulations in these states are largely working as intended. There has been no increase in crime or youth use in these jurisdictions, and tax revenues from the marijuana market have greatly exceeded expectations."

Spicer's claim that marijuana use is linked to opioid abuse has received criticism from a variety of angles.

Some evidence points to a reverse correlation.

"In states where it is legal to use medical marijuana to manage chronic pain and other conditions, the annual number of deaths from prescription drug overdose is 25 percent lower than in states where medical marijuana remains illegal, new research suggests," according to a study by the Johns Hopkins Bloomberg School of Public Health and the Philadelphia Veterans Affairs Medical Center.

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