As many expected with the change of administrations, U.S. Attorney General Jeff Sessions has reversed Obama-era Department of Justice policies respecting marijuana. The reversal came in a January 4 memorandum to all United States Attorneys within the DOJ’s 94 federal districts (the “Memorandum”). This development is of particular concern to financial institutions and other entities that might have seen certain – especially medical-related – marijuana businesses as attractive account holders.

The DOJ’s back-and-forth ultimately traces to the overlay of federal and state law respecting the regulation of marijuana. As stated in Gonzales v. Raich, 545 U.S. 1 (2005), Congress has broad power to regulate marijuana under the U.S. Constitution’s Commerce Clause. As many questions linger whether, or to what extent, federal regulation of marijuana may preempt differing state approaches, decriminalization and legalization efforts are being implemented in an increasing number of states.

State-level efforts toward decriminalization and legalization have, however, left certain marijuana-related businesses in a predicament as to federal law. As summarized in Sessions’ Memorandum, federal statutes “reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime.” The Memorandum specifically cites the Controlled Substances Act, as well as “the money laundering statutes, the unlicensed money transmitter statute, and the Bank Secrecy Act.”

The Department of Justice under the Obama Administration had sought to accommodate differing state-level approaches to marijuana by shifting enforcement priorities. Pertinent guidance provided that, under a variety of factors, otherwise-lawful operations would be unlikely targets of DOJ enforcement. Practical uncertainties and risks remained, but Sessions’ recent reversal removes a degree of ambiguity.

Pursuant to Sessions’ Memorandum, prosecution of any marijuana-related crime is to be weighed using the same factors as any other federal prosecution, to wit: according to the “Principles of Federal Prosecution” found in the U.S. Attorneys’ Manual. As summarized in the Memorandum, “[t]hese principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” As characterized by the DOJ’s accompanying press release, this is “a return of trust and local control to federal prosecutors who know where and how to deploy Justice Department resources most effectively to reduce violent crime, stem the tide of the drug crisis, and dismantle criminal gangs.”

The Memorandum provides some clarity as to the enforcement of marijuana-related crimes, but questions linger. For financial institutions, it remains important to monitor how others – such as the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN), or even the Federal Reserve, Federal Deposit Insurance Corporation, National Credit Union Association, or Office of the Comptroller of Currency – may further approach the marijuana issue under the Trump administration.