Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board

How new blood in Washington, DC could impact the marijuana industry

April 24, 2015, 11:16 PM UTC
Ontario Closer Than Ever To Legalization Of Marijuana
A woman smokes a marijuana cigarette in Toronto, Ontario, Canada, on Wednesday, Oct. 26, 2011.Ontario is one step closer to the legalization of marijuana after the Ontario Superior Court struck down two key parts of the Controlled Drugs and Substances Act that prohibit the possession and production of pot in April, according to the National Post. Photographer: Brent Lewin/Bloomberg via Getty Images
Photograph by Brent Lewin — Bloomberg via Getty Images

Comings and goings by two top federal officials this week could have big repercussions for the burgeoning marijuana industry.

On Thursday, the Senate confirmed Loretta Lynch as U.S. Attorney General, five months after her nomination by President Barack Obama. Meanwhile, the Justice Department said Tuesday that Michele Leonhart will step down from her role as head of the Drug Enforcement Administration next month.

Leonhart, who is leaving amid a scandal over DEA agents engaging in sex parties with prostitutes supplied by drug cartels, is known to be a steadfast opponent of marijuana legalization who once refused to say whether or not she believed marijuana to be safer than crack cocaine or heroin. While Leonhart’s successor is unknown, her departure on its own is likely to be cheered by the emerging cannabis industry and proponents for the drug’s widespread legalization.

Meanwhile, Lynch, who will succeed Eric Holder as head of the Justice Department and the nation’s top law enforcement officer, is known to be politically liberal. But she is not expected to be as open-minded as Holder when it comes to marijuana legalization.

Holder has mostly stayed out-of-the-way of the 23 states that have legalized medical marijuana (four states and D.C. legalized recreational pot). He had also expressed a willingness to consider removing marijuana from the list of Schedule 1 drugs, the designation for those that are considered the most dangerous.

Lynch, on the other hand, is apparently not in favor of marijuana legalization and she disagreed with recent statements by President Obama about the relative safety of the drug.

“Marijuana is still a criminal substance under federal law. And it is still a crime not only to possess, but to distribute under federal law,” Lynch said during a Senate confirmation hearing earlier this year. She went on to add that, as Attorney General, she would try to work with states where marijuana is legal in some form to continue enforcing federal marijuana laws in certain cases. They include child endangerment and trafficking across state lines — even when the drug is bought legally under state law.

Lynch also indicated that she would maintain the federal government’s strict stance when it comes to money laundering laws, which have prevented big financial institutions from catering to legally-operated businesses in the marijuana industry. Federal drug laws have created a shortage of banking options for marijuana dispensaries and other businesses when it comes to depositing their proceeds, doling out payroll, paying taxes and other important operations.

The Senate’s confirmation hearings also revealed signs of discord between Lynch and Obama when it comes to the marijuana issue. Lynch said she disagreed with comments the president made in an interview last year with The New Yorker about his own marijuana use as a youth and stated his opinion that the drug is no more dangerous than alcohol. When asked about the president’s comments, Lynch told a panel of senators “I certainly don’t hold that view and don’t agree with that view of marijuana as a substance.”

Realistically, it is unlikely that Lynch’s less-than-progressive views on marijuana legalization will result in any major policy changes during her tenure with the Justice Department. Lynch is taking over the Attorney General role at a time when much of the federal government’s attention is soon to shift toward the upcoming presidential election — the result of which could determine the length of Lynch’s stay in her new job.

Meanwhile, there is a growing bipartisan effort in Washington, D.C. to reclassify marijuana on the federal level — an action that would remove many of the obstacles the pot industry faces on the federal level. The Compassionate Access, Research Expansion, and Respect States (CARERS) Act, which was introduced last month, looks to remove federal restrictions on medical marijuana in states where it is already legal. That bill is awaiting a vote in the Senate while a companion bill exists in the House of Representatives.

For more about the marijuana industry, watch this Fortune video: