- Posted by Ryan Reaves
- On August 30, 2017
- administrative, ATF, cannabis, civil asset forfeiture, corruption, criminal, DEA, equitable sharing, Eric Holder, Federal, Jeff Sessions, law, prohibition, seizures, state, war on drugs
Will Sessions’ rollback of Obama Era Policies Increase Civil Asset Forfeiture Risk for CA Cultivators?
Attorney General Order No. 3946-2017 released by Jeff Sessions on July 19, 2017 shows that he is clearly in favor of law enforcement using civil asset forfeiture as “an effective tool to reduce crime” and that “its use should be encouraged where appropriate.” There is some confusion however, over this recent order which rolls back Obama era policies. Policy Directive 17-1 provides some protections for individuals faced with civil asset forfeiture which were not previously in place while simultaneously encouraging agencies to prioritize the seizure of assets that will “advance the Attorney General’s Violent Crime Reduction Strategy” by repealing an order produced by former Attorney General Holder which sought to limit certain federal adoptions. This article attempts to frame civil asset forfeiture directives from the perspective of commercial cannabis business owners in California who have been vulnerable to abuse by local, state, and federal law enforcement agencies.
Law enforcement use of civil asset forfeiture has been widespread and criticized for incentivizing agencies to police for profit throughout the country. Law enforcement officers have the authority to seize and forfeit cash or property without independent judicial oversight and without charging the owner or possessor of the cash or property with a crime. Law enforcement officers may legally seize assets by requesting a seizure warrant from a federal judge if, prior to a seizure, the officer can establish that there is probable cause that an asset is subject to forfeiture. A law enforcement officer may also seize assets pursuant to a lawful arrest or search, or when another exception to the Fourth Amendment warrant requirement applies and there is probable cause to believe that the property is subject to forfeiture.
If a police officer simply believes that your cash or property is associated with a crime, that cash or property may be seized subject to state and federal laws. If the state or local agency turns the forfeiture over to a federal agency, the case may be federally adopted allowing “the forfeiture [to be] processed in federal court, under federal forfeiture law, using federal standards, even if the forfeiture would be illegal under state law” (Grantland, Brenda) with up to 80% of the proceeds given back to the state or local agency under the Equitable Sharing Program.
Forfeitures include many different types of assets, including cash, jewelry, vehicles, real property, financial instruments, firearms, and ammunition. A review of cash seizure and forfeiture activities by the Office of the Inspector General in March 2017 found that from 2007 to 2016 DEA seizures which resulted in forfeiture, 81% were forfeited administratively and totaled approximately $3.2 billion (Click Here to Download Full Report). Civil and administrative forfeiture do not require the owner to be arrested or convicted of a crime and in administrative forfeiture only an agency finding is required as opposed to a court finding. For this period, the DEA seized cash 80,141 times which is significant when compared to the 14,708 and 4,749 cash seizures by the FBI and ATF respectively. The approximate total value of all cash seizures by the DEA that may have resulted in criminal, civil, and administrative forfeiture for 2007 to 2016 was approximately $4.15 billion.
To put simply, the DEA seizes a tremendous amount of cash, assets, and property with most of these seizures conducted administratively which do not require an arrest or conviction. In an analysis of 100 DEA seizures in the report by the Office of the Inspector General, only 44, “had (1) advanced or been related to ongoing investigations, (2) resulted in the initiation of new investigations, (3) led to arrests, or (4) led to prosecutions.” According to the DOJ, the Equitable Sharing Program has distributed more than $6 billion in forfeiture proceeds to state and local law enforcement since 2000.
Sessions Rollback Isn’t Good but, the Policies He Revoked Were Not Great Either
Sessions Order No. 3946-2017 repeals A.G. Order No. 3488-2015 put into effect by Obama era Attorney General, Eric Holder. Order 3488-2015 was significant in that it placed specific limitations on federal adoptions. The order titled “Prohibition on Certain Federal Adoptions of Seizures by State and Local Law Enforcement Agencies” prohibited federal adoption on seizures by state or local law enforcement of, but not limited to, vehicles, valuables, and cash. This order fell short in effectively prohibiting civil asset forfeiture as it had loopholes written into the policy. The order did not apply to “(1) seizures by state and local authorities working together with federal authorities in a joint task force; (2) seizures by state and local authorities that are the result of joint federal-state investigations or that are coordinated with federal authorities as part of ongoing federal investigations; or (3) seizures pursuant to federal seizure warrants, obtained from federal courts to take custody of assets originally seized under state law… [and] does not affect the ability of state and local agencies to pursue the forfeiture of assets pursuant to their respective state laws.” (Grantland, Brenda)
Despite the flaws in A.G. Order No 3488-2015, the report by the Office of the Inspector General found that there was a “strong correlation between the issuance of the Attorney General’s Order in January 2015 and the reduction in overall DEA cash seizures.” The report describes that by the end of fiscal year 2016 the number of DEA cash seizures had fallen 51% since 2012. Included below are graphs provided by the Inspector General report. Figure 3 shows the approximate value of ATF, DEA, and FBI cash seizures for 2007 to 2016 and Figure 4 shows the reduction in DEA cash seizures after A.G. Order No 3488-2015 was issued.
Although former Attorney General Holder’s Order 3488-2015 made a possible impact in reducing civil asset forfeiture abuses, it had certain flaws which prevented it from doing more. Sessions’ rollback on this policy however, removes whatever limitations or protections Order 3488 established, once again allowing for the direct federal adoption of vehicles, valuables, and cash without having to go through the trouble of creating a joint task force or getting a federal seizure warrant.
Policy Directive 17-1 May Reduce Civil Asset Forfeiture in Cases Involving $10,000 or Less
A memo by Deborah Connor, Acting Chief of the Money Laundering and Asset Recovery Section of the Criminal Division of the DOJ describes how the new policy provides additional safeguards for some civil asset forfeiture cases. In cases where cash in amount of $10,000 or less is seized, the case can only be federally adopted if the seizure was conducted (1) pursuant to a state warrant, (2) incident to arrest for an offence relevant to the forfeiture, (3) at the same time as a seizure of contraband relevant to the forfeiture or (4) where the owner or person from whom the property is seized makes admissions regarding the criminally derived nature of the property. The directive also requires legal counsel to review the legal compliance of all seizures at the federal agency adopting seized property to ensure that adoptions only involve property which has been seized lawfully.
In the context of commercial cannabis cultivation, these new safeguards likely mean very little. As cannabis business owners have limited or no access to banking, some operations are forced to keep a significant amount of cash on hand, or in instances where a cultivation site is linked to a cultivators private dwelling, both properties may be subject to search and seizure. Additionally, seizures made as part of a joint federal-state investigation or pursuant to federal seizure warrants are not considered adoptions and will not be subject to the new safeguards introduced under Policy Directive 17-1.
Excerpt from the March 2017 Office of Inspector General report:
“Federal law enforcement officers may make probable cause seizures as a result of a federal investigation or through federal involvement in a joint investigation. Joint investigations are investigations in which federal law enforcement officers work with state and local law enforcement agencies, other federal agencies, or foreign countries to enforce federal laws. Seizures may originate from a joint federal, state, or local task force investigation or from state or local investigation that become state or federal cases.”
However, “In a budget appropriations rider Congress prohibited the DOJ from spending any money from its budget to thwart the implementation of state medical marijuana laws… which no Attorney General can override… Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 538, 128 Stat. 2130, 2217 (2014). The Ninth Circuit interpreted this statute to preclude [federal agencies] from prosecuting medical marijuana providers who were in full compliance with state law legalizing and regulating medical marijuana. United States v. McIntosh, 833 F.3d 1063 (2016). That limit on prosecutions would bar federal forfeiture prosecutions as well.” (Grantland, Brenda)
What this means for cultivators and cannabis business owners seeking recreational adult-use licenses in 2018 is still unclear. This may also be a factor in why so many California cities and counties are choosing only to permit medicinal cannabis activities or, commercial cannabis businesses who would be seeking medicinal state licenses.
SB 443 Provides Some Protections for (Compliant) California Cultivators
Senate Bill 443 became law in California on January 1, 2017 and seeks to limit the capacity of state and local law enforcement agencies to pursue federal adoptions of forfeited assets. Existing law allows police officers, under specified circumstances, to seize property that is subject to forfeiture, including controlled substances and equipment used to process controlled substances. Existing law authorizes specified public agencies to bring an action to recover expenses of seizing, eradicating, destroying, or taking remedial action with respect to any controlled substance. In a forfeiture action with regards to cash or assets worth at least $25,000 but not more than $40,000, SB443 raises the burden of proof to succeed in a forfeiture action from “clear and convincing” to “beyond a reasonable doubt”. SB443 requires prosecutors to seek or obtain a criminal conviction for the unlawful manufacture or cultivation of any controlled substance before seeking the recovery of expenses of seizing, eradicating, or destroying any controlled substance. The most significant protection produced by SB443 is the prohibition of state or local law enforcement agencies from transferring seized property to a federal agency seeking adoption and the prohibition of state or local agencies from receiving an equitable share from a federal agency of seized property if a conviction for the underlying offenses is not obtained
SB 443: Legislative Counsel’s Digest Excerpt
Existing law subjects certain property to forfeiture, such as controlled substances and equipment used to process controlled substances. Existing law allows peace officers, under specified circumstances, to seize property that is subject to forfeiture. Existing law authorizes specified public agencies to bring an action to recover expenses of seizing, eradicating, destroying, or taking remedial action with respect to any controlled substance. In a forfeiture action with regards to cash or negotiable instruments of a value of not less than $25,000, existing law requires the state or local agency to prove by clear and convincing evidence that the property is subject to forfeiture. Existing law requires seized property or the proceeds from the sale of that property to be distributed among specified entities. Existing law requires the Attorney General to publish an annual report on forfeiture within the state. This bill would require a prosecuting agency to seek or obtain a criminal conviction for the unlawful manufacture or cultivation of any controlled substance or its precursors prior to an entry of judgment for recovery of expenses of seizing, eradicating, destroying, or taking remedial action with respect to any controlled substance. The bill would prohibit maintaining an action for recovery of expenses against a person who has been acquitted of the underlying criminal charges. The bill would prohibit state or local law enforcement agencies from transferring seized property to a federal agency seeking adoption by the federal agency of the seized property. The bill would further prohibit state or local agencies from receiving an equitable share from a federal agency of specified seized property if a conviction for the underlying offenses is not obtained, except as specified. The bill would require notices of a forfeiture action to contain additional details, such as the rights of an interested party at a forfeiture hearing. The bill would change the burden of proof that a state or local law enforcement agency must meet to succeed in a forfeiture action with regards to cash or negotiable instruments of a value not less than $25,000, but not more than $40,000, from a clear and convincing standard to beyond a reasonable doubt.
Non-Compliant Cannabis Activities Most at Risk
Sessions rollback of AG Order No. 3488-2015 and the inclusion of added safeguards of forfeitures under $10,000 in policy directive 17-1, may be an indicator of a possible future increase in the use of civil asset forfeiture by law enforcement agencies generally through the country. He has endorsed the use of civil asset forfeiture, made it easier for federal adoptions to occur, with the added safeguards presumably having only been included to help weed out less significant adoptions in anticipation for an upcoming influx of civil asset forfeiture cases where federal adoption is used. This theory is unverifiable without data and it is too soon to effectively measure the impact of this policy change. California’s SB443 which attempts to limit state and local use of federal adoptions, does not prevent law enforcement from seizing assets or property but, does prevent them from seeking a federal adoption of that forfeiture. SB443 does not prevent the forming of a state-federal joint task force which does not require federal adoption to occur for assets to be seized under federal law.
Commercial cannabis cultivation and manufacturing is only legally compliant in California when it meets all local and state level regulatory requirements. The constantly changing policies which regulate cannabis in California put cultivators at risk of unknowingly operating in non-compliance, or willfully operating in non-compliance while regulations are being produced. Many growers in regions that have been slow to regulate locally may be relying on the limited protections still in place under the soon to be debunked collective system established under Prop-215 and SB420. The endorsement of the use of civil asset forfeiture by the Department of Justice, and the emerging legal distinctions between medicinal, adult use, and illicit cultivation, may result in an increased risk for non-compliant cultivators to be targeted and for these individuals to feel the full impact of civil asset forfeiture.
Grantland, Brenda. “What you need to know about AG Sessions’ new forfeiture policy”. July 23, 2017. https://brendagrantland.com/ag_sessions_federal_adoption/
Grantland, Brenda. “Attorney General Holder’s Asset Forfeiture Policy Limiting Federal Adoption Will Not Stop the Abuses”. January 17, 2015. https://brendagrantland.com/holders-policy-will-not-stop-abuses/
U.S. Department of Justice: Office of the Inspector General. “Review of the Department’s Oversight of Cash Seizure and Forfeiture Activities”. Evaluation and Inspections Division 1 7-02. March 2017. (Click Here to Download)
Ryan Reaves is a Public Policy Analyst for CannaBusiness Law and Master of Public Policy candidate at Mills College in Oakland, California.