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UPDATE: DEA (sort of ) Explains Why It’s Demanding Confidential State Licensing Records

Posted by on Saturday, August 8, 2020 in News, Updates.

As I blogged back in July 2020, the DEA has subpoenaed the California Bureau of Cannabis Control (BCC), demanding records the agency has gathered on a handful of state-licensed cannabis companies. See DEA Subpoena of California BCC Licensing Records is Probably Unconstitutional. The records include cannabis inventory reports submitted by the licensees. Not surprisingly, California considers such records confidential.

Back in January, the BCC declined to comply with the DEA’s demand, because the DEA had not explained why it wanted the records. Under federal law, the information sought by an administrative subpoena must be relevant to the functions the agency performs (e.g., it must be relevant to an ongoing criminal investigation). This requirement helps prevent the agency from abusing its subpoena power (e.g., by going on a fishing expedition).

The DEA recently petitioned the Southern District of California to enforce the subpoena (i.e., the agency wants a court to order the BCC to turn over the documents). California has opposed that petition. In a recent filing post-dating by last post, the state reiterated its relevancy objections (h/t to Lara DeCaro for calling my attention to this filing). The state’s full filing is here: CA opposition to subpoena.

As reported elsewhere, the DEA has now responded to California’s opposition. See, e.g., Marijuana Moment’s coverage here. The DEA’s full reply can be found here: DEA reply to opposition. The DEA’s reply emphasizes that the showing the federal agency must make to enforce the subpoena is (very) low. The DEA claims the subpoena itself demonstrated relevance when it stated that “[t]he information sought . . . is relevant and material to a legitimate law enforcement inquiry”, and also, when it added the enlightening disclosure that there is a “criminal investigation being conducted.” Reply, page 3. Although the DEA insists it need not make any particularized declaration as to why the records are relevant, it did provide a few more details in its reply (which it claimed to have already shared with the BCC). Namely, the DEA stated that it was “looking into the possible importation/transportation of a controlled substance from Mexico by specific licencees.” Id. at 8.

As I noted in my earlier post, I think California cannot successfully resist the subpoena on relevancy / reasonableness grounds (given the very low bar the DEA must meet to demonstrate relevancy / reasonableness). If the BCC wants to resist the subpoena, it should make the constitutional objection I outlined in my previous post. Namely, the BCC should explain that forcing the state agency to share information it has gathered in its sovereign capacity, for use by a federal agency in a federal criminal investigation, is impermissible commandeering, The subpoena plainly forces the state to help “administer a federal regulatory program”, in violation of Printz v. United States. I was far too modest in titling that earlier post — the subpoena IS UNCONSTITUTIONAL.

Of course, the state may decide that it no longer wants to resist the subpoena. After all, if the licensees covered by the subpoena are importing marijuana from Mexico, they are probably violating state law, and not just federal law. And states do voluntarily cooperate with federal agencies when the interests of both governments align. But I think it would be a mistake for the state to turn over these  – at the very least, without more information about the case the DEA is pursuing and whether that case actually aligns with state interests. Turning over the documents would set a bad precedent. As I discuss in my article, Can the States Keep Secrets from the Federal Government?, sharing confidential information with the federal government today makes it more difficult for the states to collect similar information from private citizens in the future. For example, marijuana licensees will be less willing to share all of the gritty details of their businesses – how many plants they’ve grown, how many kilograms they’ve sold, etc. – if they think the state will just hand that information over to federal authorities on a silver platter, to build a federal criminal prosecution against them.

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