Calif. Pot Regulators Must Give Subpoenaed Docs to DEA: Court

By Hilary Corrigan
Sep 1, 2020

California’s Bureau of Cannabis Control must hand over documents the U.S. Drug Enforcement Administration sought as part of an investigation into marijuana imports from Mexico.

A Monday ruling from U.S. District Court in California’s Southern District granted the U.S. government’s petition to enforce a DEA subpoena. The feds had requested the court order in July, after California cannabis regulators refused to comply with the subpoena from early this year. The DEA’s move sparked concern among industry watchers over federal intervention in the state’s cannabis industry. (Read the ruling here.)

DEA had sought specific documents from the bureau on three business entities and three individuals from January 2018 to January 2020 as part of an investigation into violations of the Controlled Substance Act. The agency sought cannabis license application and shipping manifest information as part of a “legitimate law enforcement inquiry” and asked the bureau not to disclose the request or the investigation.

The bureau—a state agency that regulates retailers, distributors and testing labs—had objected, on grounds that the material is confidential. The bureau had argued that the subpoena didn’t specify the relevancy of the information, and raised concerns about privacy. The bureau also noted that application material sought by the DEA can include personal details, such as loan and revenue disclosures, protected by state law. 

Monday’s ruling notes that to decide on whether to compel the bureau to comply, a court must determine whether Congress has granted authority to investigate, whether procedural requirements were followed and whether the evidence is relevant to the investigation. The ruling states the bureau concedes the first two factors, but not the third.

Request meets standards

The bureau has argued that the U.S. government “has failed to show that the subpoenaed records are relevant to any investigation.” The feds have argued that the subpoena states the information sought is relevant to a federal criminal investigation being conducted, and that they don’t need to show anything else to prove the information is relevant.

The ruling notes that the DEA said in an email to the bureau last year that it sought the documents to investigate “possible importation/transportation of a controlled substance (marijuana ‘crude oil’) from Mexico” by specific licensees.

The ruling finds that the feds showed the relevancy of the subpoena because of that email, and the documents sought are relevant to that referenced investigation. It adds that the subpoena is not too indefinite or broad, saying the “narrow and specific” request seeks three types of documents on three entities and three individuals for a two-year time period.

The ruling also declined to impose any extra restrictions on the DEA, as the bureau sought if the court granted the feds’ petition to enforce the subpoena. The bureau had urged ensuring the records were collected and disseminated only as needed. But existing law already limits the DEA’s use of the records and protects privacy rights, the ruling said. And if any California privacy protections conflict, the CSA preempts state law.

An attorney for the feds did not return a call for comment. Bureau spokesperson Alex Traverso said in an email that “according to our legal counsel, we have no comment.”

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