Page 27 - BusinessWest March, 21, 2022

Risky Business
Recent Case Displays Threats Facing Those in the Cannabis Industry
By Michael Roundy and Scott Foster
MICHAEL ROUNDY
SCOTT FOSTEER
“On most days, the fact that cannabis remains illegal federally is not on the top of the minds of these owners. However, a recent decision by the First Circuit Court of Appeals reminds us that the cannabis industry is not entirely free of the risks of federal prosecution and provides useful guidance on how best to avoid those risks.”
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MARCH 21, 2022 27
Running a business in the legalized cannabis space is something in which hundreds of owners around the
Commonwealth are now engaged. On most days, the fact that cannabis remains illegal federally is not on the top of the minds of these owners. However, a recent decision by the First Circuit Court of Appeals reminds us that the cannabis industry is not entirely free of the risks of federal prosecution and pro- vides useful guidance on how best to avoid those risks.
Maine legalized medical marijuana in 2009, subject to stringent conditions and governed by detailed regulations. While state law permitted the medical use of marijuana, the federal Con-
trolled Substances Act does not. However, each year since 2015, Congress has attached a rider to its annual appropriations bill that prohibits the Department of Justice from using appropriated federal funds to prevent any of the states “from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”
In United States v. Bilodeau and two relat- ed cases, the two individual defendants and the companies they owned operated sites in Auburn, Maine, where they grew marijuana purportedly for use as medical marijuana. The operations were carried out under the color
of facially valid paperwork as a Maine Medi- cal Marijuana operation, and state inspectors
found the site to be in compliance with Maine’s law.
Following an investigation by federal law enforcement, the defendants were indicted for knowing and intentional violation of the Con- trolled Substances Act. The government asserts that the illegal marijuana-distribution opera- tion merely used the Maine Medical Marijuana program as a cover for its illegal, black-market marijuana operations, which included distribu- tion of marijuana to individuals in several other states who were not qualifying medical-mari- juana patients under Maine’s law.
The defendants challenged the prosecution on the grounds that the government was pro- hibited from using federal funds to prosecute