Jay Kotzker: United States v. Bilodeau, No. 19-2292 (1st Cir. 2022)

United States v. Bilodeau, No. 19-2292 (1st Cir. 2022)

On January 26, 2022, the First Circuit Court of Appeals affirmed a judgment of the district court from the District of Maine in United States v. Bilodeau.  This appeal required the court to consider whether and under what circumstances a congressional appropriations rider prohibits the Department of Justice (DOJ) from spending federal funds to prosecute criminal defendants for marijuana-related offenses.

After being indicted on various marijuana-related offenses, the defendants (two individuals and three companies) alleged that the DOJ’s prosecution of them under the Controlled Substances Act, 21 U.S.C. 801 et seq., was improper given the prohibition against spending federal funds to prosecute criminal defendants for marijuana-related offenses contained in the Rohrabacher-Farr Amendment (now known as the Joyce-Blumenauer Amendment), a congressional appropriations rider, which has been in place since 2015.

This appropriations rider has played an important role in curtailing federal enforcement of marijuana laws against individuals or entities in compliance with state-legal medical marijuana programs.  This case, one of just a few to address the application of the Rohrabacher-Farr Amendment to criminal prosecutions, provides valuable insight into the defendants’ burden of proof and the degree of compliance required with the respective state’s medical marijuana laws.

Here, the DOJ alleged that that defendants, medical marijuana cultivators licensed by the State of Maine, engaged in “blatantly illegitimate activity”, which allowed them to pursue the criminal prosecutions.  After holding an evidentiary hearing, the district court found that prosecution of the defendants could proceed, reasoning that the defendants did not “engage in marijuana-related conduct for the purposes of assisting qualifying patients but instead were part of a “large- scale . . . black-market marijuana operation.””  Importantly, the district court found that the defendants had not shown by a preponderance of the evidence that they had acted in strict compliance with Maine’s medical marijuana laws.

The parties’ arguments focused on what Congress meant when it prohibited the DOJ from spending money to “prevent” a state from “implementing [its] own laws that authorize” medical marijuana conduct.[1]  To this point, only one Circuit Court of Appeals, the Ninth Circuit, has interpreted the language of the appropriations rider.  In agreeing with the conclusion drawn by the Ninth Circuit, the First Circuit reasoned that the DOJ “may not spend funds to bring prosecutions if doing so prevents a state from giving practical effect to its medical marijuana laws.”  The question then examined by the court is under what circumstances federal prosecution would prevent Maine from giving practical effect to its Medical Marijuana Act.

The court stated that prosecutions of persons “whose conduct fully complied with the Act and its associated regulations would prevent the law from having much practical effect.”  As such, the court noted the real question to be asked is what degree of compliance is necessary to stave off federal prosecution. The DOJ argued that unless a party was in strict compliance with a state’s medical marijuana laws, federal prosecution could proceed.  The court, however, found that a strict compliance standard would not necessarily prevent the Act from having some practical effect, as no matter the risks there would always be “some” participants involved in Maine’s medical marijuana market, but concluded that this is not the kind of medical marijuana market Maine sought to establish.  Indeed, the court noted that “[t]he predictable result would be fewer market entrants and high costs flowing from the expansive efforts required to avoid even tiny, unintentional violations.”  Understanding this reality, the district court even acknowledged that “some sort of technical noncompliance” with Maine’s medical marijuana laws might be tolerated.

The DOJ sought to downplay these valid concerns in arguing that prosecutorial discretion and resource allocation would properly ensure that legitimate market operators would not be subject to criminal prosecution.  However, the court found that it wasn’t whether such market participants will be prosecuted, but rather than they could be prosecuted.  As such, a strict compliance rule “would skew a potential participant’s incentives against entering that market.”

In its ruling, the court also did not accept the defendants’ suggested approach that the DOJ is precluded under most circumstances from prosecuting those who hold valid state licenses to engage in state-lawful marijuana activities.  Rather, the court adopted a middle ground approach without fully defined boundaries, thus making each case fact specific.  Indeed, with the defendants here, the court found that they engaged in cultivation, possession and distribution activities “aimed at supplying persons whom no defendant ever thought were qualifying patients under Maine law” including non-patients and out of state purchasers, clearly in violation of Maine law. Indeed, the court noted Bilodeau did not offer a plausible narrative contradicting this assertion in his appeal briefs.

Key Takeaways:

  • If strict compliance was the standard, Congress would have included this language in the appropriations rider;
  • The potential for technical noncompliance is real enough that strict compliance may be impossible to achieve such that a detailed fact analysis is necessary;
  • The burden of proof lies with the defendant when seeking injunctive relief and there is no reason to deviate from this normal rule in a Rohrabacher-Farr

[1] Consolidated Appropriations Act, 2019 § 537

 

Jay Kotzker

Partner, Cannabis, Intellectual Property and Corporate Business Attorney

Jay is a partner at Parlatore Law Group LLP where he provides high quality legal guidance to clients in the cannabis, intellectual property and corporate business spaces.  He provides trusted counsel to established and emerging businesses and individuals on cannabis business licensing, regulatory and compliance matters, and comprehensive brand protection and enforcement strategies.

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