A number of recent news articles have discussed the increased activity in the area of technology companies that facilitate the delivery of medical marijuana to patients. For example, according to a recent Forbes Magazine article, a company named Eaze just secured over $10 million dollars in venture capital funding. The article quotes the founder of Eaze, commenting that the fundraising “signals that technology services can be successful service the cannabis category … [and] … [i]t also signals that regulatory landscapes are loosening up, and venture capitalists see the broader market continuing in that direction.” This fundraising is helpful to further the debate around the legality of marijuana related businesses. The purpose of this article is to provide an overview of the legal regulatory landscape confronting technology companies in the medical marijuana space.
The Legal Landscape
As a preliminary matter, medical marijuana is now legal in nearly half of the states, however, it remains illegal under federal law to possess marijuana. Marijuana is currently scheduled as a Schedule I controlled substance under the Controlled Substances Act, 21 U.S.C. §§ 812(b)(1) and (c). To be classified as a Schedule I controlled substance means that Congress has made the express finding that marijuana has no accepted medical use. Someday Congress might change this classification, but currently, the federal government’s view has not changed despite the numerous state laws that now legalize medical marijuana. In fact, in Gonzales v. Raich, 545 U.S. 1, 27-29 (2005), the United States Supreme Court recognized that federal agents could enforce federal laws against a California woman who legally possessed marijuana solely within the state of California.
What Does the Controlled Substances Act Mean for Apps?
In short, even without possessing or touching marijuana, the use of an app to facilitate a delivery or arrange for a sale of medical marijuana could violate federal law. Any communications made in furtherance of Controlled Substances Act violations are also separate violations of federal law. The relevant statutory provision prohibits using “any communication facility in committing or in causing or facilitating the commission of any act or acts constituting a felony. . . .” 21 U.S.C. § 843(b). The law broadly defines a “communication facility” as “any and all public and private instrumentalities used or useful in the transmission of writing, signs, signals, pictures, or sounds of all kinds and includes mail, telephone, wire, radio, and all other means of communication.” 21 U.S.C. § 843(b). The courts have stated that conduct such as attempt and conspiracy, that is not actually possessing or distributing, qualify as drug felonies that may underlie a Section 843(b) offense. See, e.g., United States v. Acosta-Gallardo, 656 F.3d 1109, 1122 (10th Cir.), cert. denied, 132 S.Ct. 540 (2011). Also, nearly every federal drug conviction also carries a count for using a communication facility to further the crime, which are often based on using a telephone. See, e.g., United States v. Myrie, 776 F.3d 1280 (11th Cir. Jan 21, 2015). It would seem a logically inconsistent to enforce the law in one area of cellphone use, but not against those that achieve the same result through an app on their cellphones.
Will The Feds Send Apps Developers To Jail?
While no one can answer that question with certainty, the reality is that the risk of criminal enforcement can be managed. The United States Department of Justice (DOJ) and Drug Enforcement Agency (DEA) have published some guidance applicable to state-legal marijuana businesses, outlining the agencies’ enforcement priorities. These guidelines outline those instances or circumstances where the federal government will continue to prosecute, including the following:
- The distribution of marijuana to minors;
- Revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;
- The diversion of marijuana from states where it is legal under state law in some form to other states;
- State-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
- Violence and the use of firearms in the cultivation and distribution of marijuana;
- Drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
- Growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
- Marijuana possession or use on federal property.
This guidance regarding marijuana enforcement priorities can be reviewed here. While this DOJ guidance is helpful, it provides cold comfort in light of the clear language of the Controlled Substances Act. The DOJ guidance tells industry participants that they are not an enforcement priority, but it is certainly not a promise not to prosecute.
While cannabis related apps might not trigger the federal government’s enforcement priorities, there is some legal risk. There is a degree of uncertainty in all business endeavors, but more so in emerging markets like the medical marijuana industry. Individuals and entities seeking to do business in this space would be well-advised to find holistic advisors in order to navigate this shifting legal landscape.