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On July 10, 2020, the Ninth Circuit issued an unusual 2-1 <a href="https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/10/17-10428.pdf" target="_self" rel="noopener">decision</a>&nbsp;affirming a California federal district court’s injunction against the further prosecution of two California marijuana growers, Anthony Pisarski and Sonny Moore. United States v. Pisarski, 2020 U.S. App. LEXIS 21564 (9th Cir. 2020). These defendants had pleaded guilty to federal possession and distribution charges after federal agents found multiple firearms, hundreds of unharvested marijuana plants, over $420,000 in cash, “and a treasure trove of gold and silver bars and coins” at a rural California grow site.

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Medical Marijuana Appropriations Rider

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Despite pleading guilty in 2012, the defendants argued that the government was precluded from proceeding with their sentencing by the terms of the 2015 Consolidated and Further Continuing Appropriations Act (“Appropriations Act”). The Appropriations Act contained a rider that prohibited the Department of Justice from using funds made available thereunder in a manner that prevents “States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Essentially, the rider bars the Justice Department from using any congressionally allocated funds to prevent the lawful exercise of rights granted under state medical marijuana statutes. The rider has been renewed every year since 2015.

The Defendants’ McIntosh Hearing in the District Court

In <a href="https://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/16/15-10117.pdf" target="_self" rel="noopener">United States v. McIntosh</a>, 833 F.3d 1163 (9th Cir. 2016), the Ninth Circuit held that the Appropriations Act riders precluded federal marijuana-related prosecutions against persons acting pursuant to state marijuana laws. Even though Pisarski and Moore had pleaded guilty and were convicted prior to the initial Appropriations Act rider, they argued that, under McIntosh, the rider precluded the government from pursuing their subsequent sentencing because their marijuana growing operations were in strict compliance with California’s medical marijuana statutes. Those statutes allow growers to sell marijuana to certain qualified patients, caregivers, and collectives of qualified patients so long as the sales are not part of a “profit-making enterprise.”

The federal prosecutors argued that the weapons, large sums of cash, and precious metals found at the defendants’ grow site were “suspicious” and that, as described in guidance issued by the California Attorney General, they were indicia of the defendants’ profit-making motive. Therefore, argued the government, the defendants were not in strict compliance with California’s medical marijuana statutes.

The district court disagreed, explaining that the presence of guns, money, and silver and gold at the defendants’ grow site was “equally consistent with the operation of a rural, cash-intensive enterprise as it was with an unlawful marijuana operation.” The district court further found that the evidence presented at the McIntosh hearing showed that the defendants were planning to limit their sales to qualified medical marijuana collectives and only sought reimbursement of costs in return. In enjoining the government from spending any money in furtherance of the defendants’ sentencing, the district court further noted that there was no evidence that the defendants had made impermissible marijuana sales in the past.

The Ninth Circuit’s Decision

In the Ninth Circuit appeal, the majority saw the defendants’ strict compliance with the California medical marijuana statutes as a purely factual matter. As such, it gave great deference to the district court’s findings of fact at the McIntosh hearing and affirmed the injunction because the government had failed to establish that the district court’s decision was clearly erroneous.

The dissenter argued that the district court misapplied California’s medical marijuana statutes and that the case accordingly deserved de novo review. The dissenter took particular issue with the fact that the record demonstrated that some of the potential customers were “unidentified patients and collectives” for whom no evidence had been produced establishing their qualified status under California’s medical marijuana statutes.

Nonetheless, the majority seemed to be persuaded by the district court’s finding that the defendants had not even harvested any marijuana plants at the time of their arrest and, therefore, “any potential marijuana sale was sufficiently far into the future that, by the time of such sale, the defendants would have had ample time to ensure every aspect of it complied with [California’s medical marijuana statutes].”

The government may seek rehearing, rehearing en banc, and even Supreme Court review of the panel’s decision. But if it does not, or if the panel’s decision is not overturned, the import of this result is unmistakable – the Appropriations Act riders can be used to create insuperable obstacles to federal marijuana prosecutions in the numerous states where medical marijuana production and sales are legal.

Jamar King 937.443.6852<a href="mailto:Jamar.King@ThompsonHine.com" target="_self" rel="noopener"> Jamar.King@ThompsonHine.com</a>