US backtracks on legalised marijuana policy, causing confusion and affecting stocks

US Attorney General Jeff Sessions is rescinding the Obama-era policy that had paved the way for legalised marijuana to flourish across the United States, it has emerged.

The changes instituted by Obama said that federal agencies would not implement the long-standing countrywide ban on marijuana in states where it was legalised, provided certain conditions were met.

But Sessions will now let federal prosecutors where pot is legal decide how aggressively to enforce the federal law, two people with knowledge of the decision said.

That will likely add to confusion about whether it’s acceptable to grow, buy or use marijuana in states where pot is legal.

The people familiar with the plan spoke on condition of anonymity because they were not authorised to discuss it.

The decision comes days after pot shops opened in California, launching what is expected to become the world’s largest market for legal recreational marijuana.

It also comes despite polls showing a solid majority of Americans believe the drug should be legal.

While Sessions has been carrying out a Justice Department agenda that follows President Donald Trump’s top priorities on such issues as immigration and opioids, the changes to pot policy reflect his own concerns. Trump’s personal views on marijuana remain largely unknown.

After the news emerged, stocks for Canadian cannabis companies including Canopy Growth Corp, Aphria and MedReleaf fell, with ETFMG Alternative Harvest ETF, the first pure-play pot exchange-traded fund to be listed in the US, dropping almost 5 per cent.

Canopy Growth, the world’s largest medical marijuana producer, fell 10 per cent to C$32.21 (US$25.76, HK$201.39) while Aphria slid almost 13 per cent to C$18.73 (US$14.98, HK$117.11), the most since October 17. MedReleaf fell 6.5 per cent to C$28.01 (US$22.40, HK$175.31), its biggest decline since November 14.

Sessions, who has likened marijuana to heroin, and some law enforcement officials in states such as Colorado, blame legalisation for a number of problems.

They include drug traffickers that have taken advantage of lax marijuana laws to hide in plain sight, illegally growing and shipping the drug across state lines, where it can sell for much more.

Pot advocates argue that legalising the drug eliminates the need for a black market and would likely reduce violence, since criminals would no longer control the marijuana trade.

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The Obama administration in 2013 announced it would not stand in the way of states that legalise marijuana, so long as officials acted to keep it from migrating to places where it remained outlawed and out of the hands of criminal gangs and children.

The pot business has since become a sophisticated, multimillion-dollar industry that helps fund schools, educational programmes and law enforcement.

Eight states and the District of Columbia have legalised marijuana for recreational use, and California’s sales alone are projected to bring in US$1 billion annually in tax revenue within several years.

The decision was a win for pot opponents who had been urging Sessions to take action.

“There is no more safe haven with regard to the federal government and marijuana, but it’s also the beginning of the story and not the end,” said Kevin Sabet, president and CEO of Smart Approaches to Marijuana, who was among several anti-marijuana advocates who met with Sessions last month.

“This is a victory. It’s going to dry up a lot of the institutional investment that has gone toward marijuana in the last five years.”

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Threats of a federal crackdown have united liberals who object to the human costs of a war on pot with conservatives who see it as a states’ rights issue.

Some in law enforcement support a tougher approach, but a bipartisan group of senators in March urged Sessions to uphold existing marijuana policy. Others in Congress have been seeking ways to protect and promote legal pot businesses.

Marijuana advocates quickly condemned Sessions’ move as a return to outdated drug-war policies that unduly affected minorities.

Sessions “wants to maintain a system that has led to tremendous injustice … and that has wasted federal resources on a huge scale,” said Maria McFarland Sanchez-Moreno, executive director of the Drug Policy Alliance.

“If Sessions thinks that makes sense in terms of prosecutorial priorities, he is in a very bizarre ideological state, or a deeply problematic one.”