In an inevitable conclusion, the Drug Enforcement Administration (“DEA”) and Department of Justice (“DOJ”) gained their federal courtroom case towards the California Bureau of Cannabis Control (“BCC”) pursuant to which the BCC should now comply with a latest DEA subpoena concerning alleged felony exercise by sure state-licensed distributors hailing out of (what’s in all probability) San Diego (primarily based on the courtroom filings). Namely, it seems like sure Southern California licensed distributors are (allegedly) shifting hashish oil out of Mexico into California.
This summer time, the DOJ and the DEA sued the BCC as a result of the BCC refused to conform with a DEA subpoena concerning the alleged extracurricular drug trafficking above. The DOJ’s July 20th court petition filing states that the DEA and the DOJ are in search of particular data from the BCC about six “entities” (which actually means three firms and every company’s “presumed owner”) that maintain BCC licenses the place the feds are conducting a felony investigation (for violations of the Controlled Substances Act (“CSA”)). The BCC has refused to supply that data to the DEA.
At the tip of final 12 months, the DEA served an administrative subpoena on the BCC (which it later withdrew after which re-issued an an identical subpoena in January of this 12 months) requesting unredacted hashish licenses, hashish license purposes, and delivery manifests for these licensees from January 1, 2018 (when licensing started in California) by January 9, 2020. In the January subpoena (which is normal and boilerplate), the DEA wrote that “the information sought . . . is relevant and material to a legitimate law enforcement inquiry . . .” and nothing else.
In response, the BCC responded (through letter) that it wouldn’t produce the specified paperwork as a result of the subpoena “does not specify the relevancy of the subpoena” and since the requested data is “confidential, protected, and part of pending licensing investigations.” The DEA then, for a matter of months, tried to steer and negotiate with the BCC and the California Attorney General to cooperate, however the BCC wouldn’t budge (despite the fact that the DEA revealed in these “negotiations” extra factual and authorized particulars about its investigation into these licensees). So, the feds took the matter to federal courtroom for enforcement of the subpoena towards the BCC.
In its July submitting, the feds relied on their compliance with their subpoena energy and authority to analyze pursuant to the CSA, and adherence to procedural necessities. The feds argued that each one of this was in line with the Fourth Amendment (which institutes a “reasonableness” requirement primarily based on relevancy and scope of the subpoena, itself). The feds additionally used the Supremacy Clause of their arguments to bypass the appliance of any California hashish or privateness legal guidelines or rules beforehand touted by the BCC in its letter earlier this 12 months.
In response to the DOJ/DEA petition, on the finish of July (as first reported by Marijuana Moment with a copy of the filing), whereas skipping any assault about procedural compliance and with out difficult federal authority to analyze pursuant to the CSA, the California Attorney General argued that the DEA/DOJ did not show both the relevance or reasonableness of the subpoena.
On Monday, August 31, the federal court ruled in favor of the feds (which is not any shock, and we predicted this lead to a earlier submit). Specifically, the federal courtroom famous in its ruling that as a result of the BCC didn’t assault federal authority to analyze or the feds’ compliance with required process, the one challenge left to determine was whether or not the feds failed to indicate that the subpoenaed information have been related to any investigation.
It is nicely established regulation that the relevancy normal is a really low bar and the courtroom’s authorized evaluate is extremely slender. The relevancy normal is at all times met until “the subpoena is plainly incompetent or irrelevant to any lawful purpose of the agency.” At the identical time, the courtroom opined that the subpoena truly doesn’t fulfill the relevancy requirement on its face (the courtroom discovered it to be conclusory in that the DEA solely said that it sought paperwork related to a legit regulation enforcement inquiry primarily based on alleged violations of the CSA and nothing else). According to the courtroom, the final word savior for the feds is the truth that the DEA shed extra gentle on, and info about, their felony investigation with the BCC within the DEA’s dialogue with the company earlier than suing. Translation: the subpoena plus the extra detailed conversations between the BCC and the DEA meet the required relevancy normal underneath federal regulation.
The federal courtroom additionally discovered that the subpoena was not overly broad or indefinite the place it seeks three particular sorts of paperwork about three people/entities over a two 12 months interval. And concerning the BCC’s arguments about defending privateness rights of the licensees, the federal courtroom refused to impose any further restrictions as current federal privateness legal guidelines already restrict what the DEA can do with the subpoenaed information (and the courtroom reminds us that, if California privateness legal guidelines battle with the CSA, the CSA preempts these protections).
This case is a stable reminder to all licensees that the states usually are not in final management in the case of hashish, and that the feds can and do have a look at licensees whether or not the states cooperate or not concerning data sharing. This case additionally tells us (to a sure extent) that the feds are nonetheless paying consideration primarily to allegedly black market drug trafficking that violates the rescinded 2013 Cole Memo rules. Finally, and as at all times, state regulation compliance nonetheless reigns supreme in the case of federal enforcement priorities.