Modern Era2013
The Cole Memorandum: Federal Non-Enforcement Policy
How the Cole Memorandum established federal non-enforcement of state marijuana laws, enabling the legal cannabis industry to grow — and what happened when it was rescinded.
2013
Time Period
Historical era
4
Key Figures
Historical actors
6
Sections
In-depth coverage
4
FAQs
Common questions
00
Overview
On August 29, 2013, Deputy Attorney General James Cole issued a memorandum that would become the most important document in the development of the legal cannabis industry. The Cole Memo directed federal prosecutors to deprioritize marijuana enforcement in states with robust regulatory systems, provided those states addressed eight federal priorities including preventing distribution to minors, preventing revenue from flowing to criminal enterprises, and preventing diversion to states where marijuana remained illegal.
The Cole Memo did not change federal law — marijuana remained a Schedule I substance — but it created a practical framework of federal tolerance that allowed state-legal cannabis markets to operate with reduced fear of federal intervention. This policy certainty, however imperfect, enabled billions of dollars in investment, the creation of hundreds of thousands of jobs, and the development of sophisticated regulatory frameworks across multiple states.
The memo's significance became most apparent when it was rescinded. In January 2018, Attorney General Jeff Sessions revoked the Cole Memo, creating a crisis of uncertainty in the cannabis industry. The fact that no major federal crackdown materialized — largely due to bipartisan congressional opposition — demonstrated that the industry had grown too large and too popular to be easily dismantled.
01
The Cole Memo emerged from the political challenge created by Colorado and Washington's 2012 legalization votes. The Obama administration faced a dilemma: enforce federal law and override the democratic will of two states, or find a way to accommodate state-level legalization within the existing federal framework. The Cole Memo represented a pragmatic middle path — not endorsing legalization but establishing conditions under which federal prosecutors would generally leave state-legal operations alone.
02
The memo outlined eight enforcement priorities that states were expected to address: preventing distribution to minors; preventing revenue from going to criminal enterprises; preventing diversion to other states; preventing marijuana activity from being used as a cover for trafficking other illegal drugs; preventing violence and firearms in marijuana cultivation and distribution; preventing drugged driving; preventing growing on public lands; and preventing marijuana possession or use on federal property.
03
The practical impact of the Cole Memo was enormous. Before its issuance, investors, banks, and entrepreneurs faced significant uncertainty about whether the federal government would crack down on state-legal operations. The memo provided enough assurance — though never a guarantee — to unlock investment capital. Cannabis companies raised hundreds of millions of dollars in private investment, professional management teams joined the industry, and states felt confident enough to expand their regulatory frameworks.
04
The Cole Memo also influenced the FinCEN guidance issued in February 2014, which provided a pathway for banks and credit unions to serve marijuana businesses. While the guidance imposed significant compliance burdens, it enabled some financial institutions to cautiously enter the space. The number of banks and credit unions serving cannabis businesses grew from a handful to several hundred over the following years, though banking access remained far more limited than in any other legal industry.
05
The limitations of the Cole Memo were significant and often underappreciated. It was a prosecutorial guidance document, not legislation or regulation. It could be revoked by any subsequent Attorney General without Congressional approval, public comment, or judicial review. It did not protect individuals or businesses from prosecution — it merely directed prosecutors to focus elsewhere. And it explicitly stated that enforcement discretion could change in response to federal priorities.
06
Despite its limitations, the Cole Memo created the conditions for the cannabis industry's rapid growth between 2013 and 2018. Annual legal cannabis sales grew from approximately $1.5 billion in 2013 to over $10 billion by 2018. Multiple states enacted new legalization measures, confident that the federal government would not intervene. The memo demonstrated that a policy of federal accommodation — even one as legally fragile as a prosecutorial guidance document — could enable an entire industry.
Key Figures
James Cole
Deputy Attorney General who authored the landmark memo
Eric Holder
Attorney General under whom the memo was issued
Barack Obama
President whose administration adopted the non-enforcement approach
Jennifer Shasky Calvery
FinCEN director who issued complementary banking guidance
Historical Significance
The Cole Memorandum established federal non-enforcement of state marijuana laws, creating the policy conditions that enabled the legal cannabis industry to grow from $1.5 billion to over $10 billion in annual sales between 2013 and 2018.
Frequently Asked Questions
What was the Cole Memorandum?
The Cole Memo was a 2013 directive from Deputy AG James Cole instructing federal prosecutors to deprioritize marijuana enforcement in states with robust regulatory systems. It didn't change federal law but created practical conditions for state-legal cannabis markets to operate with reduced federal interference.
Did the Cole Memo legalize marijuana?
No. The Cole Memo did not change any federal law. Marijuana remained Schedule I. The memo was prosecutorial guidance that could be (and was) revoked at any time. It directed prosecutors to focus on eight federal priorities rather than broadly targeting state-legal operations.
How did the Cole Memo affect cannabis investment?
The Cole Memo provided enough policy certainty to unlock significant investment capital. Cannabis companies raised hundreds of millions in private investment, professional management teams entered the industry, and legal cannabis sales grew from about $1.5 billion in 2013 to over $10 billion by 2018.
What happened when the Cole Memo was rescinded?
Attorney General Jeff Sessions rescinded the Cole Memo in January 2018, creating industry-wide uncertainty. However, no major federal crackdown materialized, partly due to bipartisan congressional opposition. The episode demonstrated the industry's political resilience but highlighted the fragility of policy built on prosecutorial discretion.