Marijuana firms shrug off Sessions’ new drug policy

Photo: Noah Berger

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California State Sen. Scott Weiner, right, celebrates the opening of The Apothecarium for recreational marijuana sales in San Francisco on Saturday, Jan. 6, 2018. Joining him are The Apothecarium co-founder and CEO Ryan Hudson, center, and San Francisco Supervisor Jeff Sheehy. (AP Photo/Noah Berger) less

Photo: Noah Berger

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Gary Diehl shops for cannabis at Medithrive during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $7 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less

Photo: Noah Berger

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Customers wait for the opening of recreational marijuana sales at The Apothecarium on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less

Photo: Noah Berger

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Dominic Rea reads a cannabis menu at The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less

Photo: Noah Berger

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JP Noda stocks cannabis at The Apothecarium shortly before the store opened for its first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less

Photo: Noah Berger

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Customers line up to buy cannabis at The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less

Photo: Noah Berger

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Customers line up outside The Apothecarium during the store’s first day of recreational marijuana sales on Saturday, Jan. 6, 2018, in San Francisco. An announcement that the Department of Justice would no longer adopt a “hands-off” approach to legalized marijuana use sent some in the industry into a tailspin just days after the $1 billion California recreational weed market opened for business. (AP Photo/Noah Berger) less

Photo: Noah Berger

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Photo: Noah Berger

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San Francisco

This week’s announcement that the U.S. Justice Department was ditching its hands-off approach to states that have legalized marijuana initially sent some in the industry into a tailspin, just days after California’s $7 billion recreational marijuana market opened for business.

But for long-term marijuana purveyors accustomed to changing regulatory winds, the decision was just another bump in a long and winding road to proving their business legitimacy.

Many in the industry said they’re keeping a wait-and-see attitude because the effect of Attorney General Jeff Sessions’ announcement depends on whether federal prosecutors crack down on marijuana businesses operating legally under state laws. Sessions provided no details other than saying individual U.S. attorneys are authorized to prosecute marijuana operators as they choose.

Stocks of publicly traded marijuana-related companies plunged Thursday after Sessions announced the Justice Department’s new policy. On Friday, though, many of those stocks recovered.

“The announcement was largely symbolic,” said Patrick Moen, general counsel of Privateer Holdings, a Seattle-based venture capital firm that invests in marijuana businesses. “This kind of stunt will not have a substantial effect on the industry.”

Moen noted Sessions’ action doesn’t change federal law, which includes a congressional provision barring authorities from spending federal money to prosecute medical marijuana operations that abide by state laws.

He conceded that the action would have a “near-term chilling effect” on the industry’s lobbying effort to compel banks and insurance companies to accept its business. Banks and insurance companies refuse to do business with cannabis companies because marijuana is illegal under federal law and most financial institutions are federally insured, forcing marijuana businesses to operate in cash.

Most of Seattle-based Privateer’s $150 million in investments are in companies based outside the United States, and Moen conceded that Sessions’ action Thursday would keep it that way for the short term because of regulatory uncertainty in the United States.

Online news and marijuana information site Leafly is the firm’s biggest U.S. investment.

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