Dear Clients and Colleagues:

Today the Tenth Circuit Court of Appeals issued its published decision in Standing Akimbo v. United States. The decision is located here.

It is a 39-page decision. There is a lot of complexity but it is generally unfavorable to the marijuana industry and the Colorado laws and constitution supporting marijuana. Here are some bullet points from the decision:

  • The State of Colorado is bound by this decision. While the State of Colorado, did not answer or defend, the Tenth Circuit Determined that the State was nevertheless a party sufficient to be bound by this decision. 

  • While the Tenth Circuit stopped short of actually declaring the Colorado laws invalid under preemption, it made clear that Colorado was violating federal law. The Court stated:  “[T]he CSA reigns supreme. . . The Supremacy Clause unambiguously provides that if there is any conflict between federal and state law, federal law shall prevail. . .  [S]tate legalization of marijuana cannot overcome federal law. . . So, despite legally operating under Colorado law . . .” such persons are conducting “unlawful activities” under federal law.

  • The Tenth Circuit reaffirmed its position that despite the dissent in the Northern California Business Associates, Section 280E does not violate the Sixteenth Amendment.  The Tenth Circuit stated: “The dissent opined that Congress had exceeded its Sixteenth Amendment authority in enacting § 280E. . . We are unpersuaded by this dissent.  We agree with the majority, which ruled that § 280E falls within Congress’s authority under the Sixteenth Amendment to establish deductions.”

  • The Fourth Amendment does not preclude the federal government from obtaining marijuana information given by dispensaries to the Marijuana Enforcement Division through METRC. The Tenth Circuit stated: “Taxpayers chose to operate a marijuana business under Colorado law and, thus, agreed to provide certain information to the Enforcement Division. As required by law, the METRC database stores this information, constructing reports that the Enforcement Division may access as needed. The METRC reports are the Enforcement Division’s property—the Taxpayers have no ownership, possession, or propriety interest in them. . . So the Taxpayers have no expectation of privacy in these reports. Because the Taxpayers have no Fourth Amendment right at stake, the IRS need not obtain a warrant supported by probable cause to get the records.”

We will provide further information as it becomes available.  

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