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Since Washington and Colorado voters passed ballot initiatives in November that legalized marijuana in their states, the shadow of the federal government has loomed large. As the months went by and each state went about setting up systems of regulation to determine the minutiae of the policies, there was no word from the Department of Justice (DOJ) on how-if at all-it would respond to these new state laws that directly violate the Controlled Substances Act. Most pressing was whether the DOJ would challenge the laws in court.

Both states could finally breathe a metaphorical sigh of relief last week when the Department released a series of guidelines, more than nine months after the initiatives passed, and it became clear the DOJ would not take the states to court. In a memo to U.S. attorneys, Deputy Attorney General James Cole wrote that so long as the state policies did not interfere with federal priorities, U.S. attorneys should not focus on prosecuting those buying or selling marijuana through the state-regulated systems. The directives applied not just to Washington and Colorado, but to the 20 states with medical marijuana programs as well. "The initial reaction was break out the champagne and Cheetos," said Sanho Tree, the director of Drug Policy Project at the left-wing Institute for Policy Studies.

Then came the questions.

Federal law on marijuana hasn't actually changed, so U.S. attorneys can still prosecute anyone breaking it, regardless of the guidelines laid out in the new memo. While University of California law professor Mark Kleiman, a leading expert on marijuana policy and a consultant to Washington state's program, has suggested the DOJ give waivers to the states, which would give pot cultivators more legal standing, the Department opted to stop short. This memo cannot be used to defend those selling or buying marijuana in court and at any point, this administration or a new one can write a new memo changing the rules. Meanwhile, the memo itself leaves significant leeway, because the list of federal priorities is broad, ranging from preventing marijuana distribution to minors to interstate drug trafficking to preventing "adverse public health consequences."

But despite the question marks, the administration's position still marks a turning point in American drug policy-and carries some major implications. "For the first time ever, the Justice Department has clearly stated that it will allow states to move forward with regulating the cultivation and sale of marijuana," says Mason Tvert, spokesman for the pro-legalization Marijuana Policy Project. "This is not the be all end all of marijuana reform but it is a significant milestone."

Regulation is Now King

Tucked away on the third page of the memo, Cole, the author, goes so far as to suggest that if a state has a strong regulatory system, legalization might actually help the Department of Justice pursue its priorities:

Indeed, a robust system may affirmatively address those priorities by, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states, prohibiting access to marijuana by minors and replacing an illicit marijuana trade that funds criminal enterprises with a tightly regulated market which revenues are tracked and accounted for.

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The message of the memo is clear: If states have a strong regulation system, the feds won't need to get involved. But if growers and sellers can easily find loopholes in the states, then watch out.

The idea is that setting up a regulated system for marijuana creates a series of incentives. While legalization will likely bring the price of marijuana down, vendors who choose to sell marijuana can stop risking jail time by engaging in illegal activities. Furthermore, by creating a legal market, the state can better prevent sales to kids-while drug dealers often don't worry about selling to minors because they're already breaking the law, dispensaries won't want to risk losing their license. Similarly, vendors won't want to risk selling across state lines.

While they take different approaches, both Washington and Colorado have put quite a bit of effort into creating clear and strong regulations on the sale of pot. Colorado converted a strict medical marijuana program into its legalization program, allowing those who already have licenses to dispense medical pot to get first dibs on general licenses. Colorado also requires venders to grow 70 percent of what they sell, a system of "vertical integration" meant to limit drugs coming from the black market. Washington, which had a loose medical marijuana program with little oversight, has started more from scratch, basing its pot policies on the alcohol regulation system.

The emphasis on regulation also applies to the dozens of states that allow medical marijuana-which range from the tightly controlled, like Maine, to the famously lax, like California. Tvert says the memo makes explicit what's already been a practice for the DOJ. "The federal government interference in state marijuana laws over the last few years has really been directed at states without strong regulatory systems," he says, noting that while pot dispensaries in California and Nevada have faced federal raids, those in tightly regulated states, like Arizona and Maine, have not.

Advocates in loosely-regulated medical marijuana states, like California, may now choose to push harder for a tighter system of regulations. Already, in response to the DOJ memo, U.S. Attorney for western Washington, Jenny Durkan, made a statement noting that, "The continued operation and proliferation of unregulated, for-profit entities outside of the state's regulatory and licensing scheme is not tenable and violates both state and federal law." The statement-a direct reference to the largely unregulated medical marijuana facilities in the state-will likely pressure more dispensaries to submit to the state's legalization system.

Big Is Fine

The DOJ memo also repeals one of its past priorities-targeting large and for-profit marijuana dispensaries. Shortly after the Obama administration came into office, the Attorney General's Office put out a memo authorizing U.S. attorneys to target commercial enterprises. The assumption was that large-scale operations were more likely to be violating some of the priorities, like allowing money to make its way to drug cartels or encouraging increased marijuana use. That assumption has helped determine which dispensaries get raided.

Last week, the DOJ reversed its position and instructed U.S. attorneys to "not consider the size or commercial nature of a marijuana operation alone as a proxy for assessing whether marijuana trafficking implicates the Department's enforcement priorities". That further encourages vendors to push for stronger regulations in their states; if the regulations are stronger, companies will be able to grow with less fear of a federal raid or a prison sentence.

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Notably, however, the memo did not address banking laws, one of the key hurdles for vendors looking to start legitimate marijuana businesses. No one can get banking services for their pot-growing company-it would violate federal banking laws which bar banks from working with illicit businesses. Congress isn't likely to amend such laws any time soon, and in the meantime, vendors are stuck finding tricks and loopholes to conduct their business, leaving them open to lawsuits or stuck operating in cash with a higher likelihood of getting robbed.

Other Countries Are Freed Up

While other nations, most notably the Netherlands, have decriminalized marijuana possession, the drug is still technically illegal, banned in international treaties and United Nations agreements. With the U.S. as the big booster for punitive drug policies, Tree, an expert on international drug law, says plenty of countries ravaged by drug wars were hesitant to consider legalization, despite the possibility it would stem some of the violence.

"This [memo] creates tremendous political space in Latin America and other places," he says. "Finally the bull dogs have backed off."

Uruguay was already on its way to legalizing marijuana with a state monopoly on cannabis. But across the region, countries are considering similar maneuvers-political leaders in Guatemala, Costa Rica and Panama, including those on the right, have considered the perks of a legalized system.

The DOJ memo left many questions unanswered, but it also left the door wide open for widespread efforts to create a strictly regulated and legal way to buy and use marijuana.