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Marijuana Investments: Where is the Line?

Recent guidance on marijuana related investments raises questions for federal employees who hold security clearances.

The DoD Consolidated Adjudication Facility (DoDCAF) has reiterated their zero-tolerance policy for marijuana and may now include stock holdings in marijuana companies. The big question I have been getting: “Where is the line?”

An email from the Air Combat Command’s (ACC) headquarters stated the DoDCAF considers “investments in marijuana-related companies as ‘involvement,’ which is prohibited. Even in cases where the subject him/herself isn’t directly choosing the stocks, he or she has the responsibility to stay informed and avoid violating the federal law.”

Here is where it gets technical. Federal law considers marijuana illegal, while some states allow medicinal/recreational use, as well as controlled grow farms. Therefore, an investment in Bob’s Weed Farm obviously falls into the zero-tolerance realm for Federal employees.

However, consider alternative companies such as Altria who owns Marlboro. In December 2018 Altria purchased a 45% holding of The Cronos Group (CRON) for $1.8 billion. The Cronos Group is a Canadian company who cultivates marijuana legally. Must we liquidate any holdings in Altria? How about Marlboro since they are indirectly associated? Where is the line?

Consider the pill Epidiolex created by GW Pharmaceuticals (GWPH). Epidolex is the first medication derived from the cannabis plant the FDA has approved to be used to help two seizure disorders. One would assume since the FDA is Federal, investments in the company are legal. But are they—where is the line?

Much more guidance will be needed, and is coming, however a vague release of information can leave many confused on what their next action should entail. The DoDCAF holds individuals not directly choosing stocks accountable. Many people invest in mutual funds because they do not know enough about investing themselves, or they prefer not to manage their own portfolio. Considering a fund may have 100 holdings, a valid question is, “Do I need to vet each one every quarter?” 

From a security standpoint, my guidance is to always be above reproach, and report everything to your security official in order to maintain a pure standing. If you know some of your investments are funding marijuana companies, liquidate to be on the safe side. More guidance will come, but a quick buck from Bob’s Weed Farm will not be worth forfeiting your clearance, career, and possibly retirement benefits.

Shane Cunningham has worked in DoD and IC security for 8 years and specializes in personnel and physical security. He holds a B.S. in Business Management, and Juris Masters in American Legal Studies.