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Originally published August 29, 2013 at 8:33 PM | Page modified August 29, 2013 at 9:28 PM

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Feds won’t challenge pot laws in Washington, Colorado

In a historic policy shift, the Obama administration announced Thursday it will not sue to stop recreational marijuana legalization laws in Washington and Colorado.

Seattle Times staff reporter

What’s next:

Wednesday: State will issue proposed final rules for recreational pot system.

Oct. 9: Public hearing on proposed final rules

Nov. 18: State begins accepting applications for producer, processor and retailer licenses.

Dec. 1: Rules are completed, state starts issuing licenses.

Spring 2014: Stores expected to open.

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The federal government has decided not to challenge legal pot in Washington state — for now.

In a historic policy shift, the Obama administration announced Thursday it will not sue to stop recreational-marijuana-legalization laws in Washington and Colorado.

But in a long-awaited memo, the Justice Department reminded all its U.S. attorneys that pot is still illegal on the national level and asked them to fight its spread to other states and federal lands, and to minors and criminal organizations, among other priorities.

The department said it would defer to local law enforcement, but aggressively step in if the states do not adopt effective and strict regulatory schemes.

“We have found a path forward,” said Gov. Jay Inslee, who received the news in a Thursday morning phone call with U.S. Attorney General Eric Holder and Colorado Gov. John Hickenlooper.

In a news conference, Inslee thanked Holder and President Obama, and promised to implement Initiative 502 in a responsible manner.

“What I’m hearing from the federal government is that they believe there’s a reason to trust the states of Washington and Colorado,” Inslee said. “We’re going to need to show that this system works.”

The Justice Department’s four-page “update to its federal marijuana-enforcement policy,” delivered months after Holder had promised quick action in response to state-level legalization, set off waves of celebration among supporters across the country but also foreshadowed future issues, including over banking practices and medical marijuana.

The memo laid out eight new priorities the department will focus on preventing: marijuana use by minors; distribution-related violence; driving under the influence; revenue going to criminal enterprises; use of pot as a cover for other illegal activities; cultivation on public lands; use on federal property; and the spread of marijuana to states where it is not legal.

Those priorities — not the size or profitability of the enterprise — will dictate whether the federal government prosecutes pot businesses, according to the memo.

“It’s incredibly exhilarating,” said Alison Holcomb, the campaign manager for state Initiative 502, which passed last November with 55.7 percent of the vote. “I’m very excited for the Washington voters that they now have clarity that they will in fact get to lead the nation in taking a new approach to marijuana.”

From U.S. Rep. Adam Smith to state Sen. Jeanne Kohl-Welles and Seattle Mayor Mike McGinn, many Democratic politicians released statements cheering the news.

But marijuana businessmen and activists were more divided.

Jamen Shively, a former Microsoft manager who is trying to raise $10 million to create a national marijuana brand, said the decision “opens up opportunities to investors.”

“Now that the policy is clear and put in writing, there is no legal risk for investors in responsible cannabis companies operating in compliance with federal policy,” he said.

Longtime pot activist Doug Hiatt, on the other hand, dismissed the memo as “mealy-mouthed,” noting it does not formally prohibit the federal government from doing anything.

“Anybody that relies on this memo to do business is a complete idiot,” Hiatt said.

Western Washington U.S. Attorney Jenny Durkan and Seattle City Attorney Pete Holmes each sent news releases pledging to continue to focus on public safety.

Sharon Foster, who chairs the state Liquor Control Board, said the board was pleased with the news.

Foster said the priorities highlighted in Holder’s memo aligned with the issues the state has tried to address in its rules for marijuana business.

“It’s almost like he knew what we are doing,” she said.

Inslee sounded a similar tune in his news conference. In particular, he said the state will “do everything humanly possible” to stop minors from consuming pot, including by limiting advertising.

The Liquor Control Board is scheduled to release its proposed final rules Wednesday. The first stores are expected to open in spring.

In Colorado and elsewhere across the country, marijuana activists responded to Holder’s announcement with cautious optimism.

Kristi Kelly, a co-founder of three medical-marijuana shops near Denver, called it a step in the right direction.

“We’ve been operating in a gray area for a long time,” she said.

Opponents of legalization described the Justice Department decision as a setback.

“We can look forward to more drugged-driving accidents, more school dropouts, and poorer health outcomes as a new Big Marijuana industry targeting kids and minorities emerges to fuel the flames,” said former U.S. Rep. Patrick Kennedy, co-founder of Smart Approaches to Marijuana, a national anti-legalization group.

For Washington state, the memo ended months of uncertainty as officials worried about federal intervention even as they began implementing Initiative 502.

In February, Inslee sent Holder a letter detailing 21 ways the state would carefully implement the law “with public safety being our paramount responsibility.” He told the attorney general “the world is watching.”

The next month, Holder said at a U.S. Senate Judiciary Committee hearing that he expected to announce a policy on Washington and Colorado’s laws “relatively soon.”

But weeks and months dragged on without an announcement.

Seven congressional Democrats wrote to Holder in June, asking him to assure Washington pot users and sellers that they wouldn’t be “penalized by the federal government for activities legal under state law.”

With no decision announced, U.S. Sen. Patrick Leahy, D-Vt., this week invited Holder to update the Judiciary Committee at a Sept. 10 hearing.

Mark Kleiman, the state’s top pot consultant, said that invitation probably affected the timing of Holder’s announcement.

“I have to believe it had something to do with it,” said Kleiman, a UCLA professor who had predicted the Justice Department would opt for “waffling” instead of outright support or opposition to legalization.

Holder’s Sept. 10 appearance will now come with significantly less drama. But Kleiman and other Washington state officials said many implementation questions remain.

One key issue for aspiring pot entrepreneurs is whether interstate banks will work with recreational marijuana businesses, given the federal marijuana prohibition.

Inslee called that a significant problem in need of creative solutions.

In general, Inslee sought to allay concerns from businesses by arguing the Justice Department’s memo would lay the groundwork for a successful industry.

But he acknowledged it is unlikely the state will strike a formal agreement with the federal government about marijuana.

Inslee signaled in his news conference that another major issue will be the regulation of the state’s medical-marijuana industry in light of the new direction from the federal government.

Durkan called the industry, which is currently a largely unregulated maze of dispensaries, “not tenable.”

Inslee said that “serious changes need to be brought to bear in regard to medical marijuana.”

But during the news conference, Inslee and state Attorney General Bob Ferguson tried to stay focused on the positive news of the day.

“There will be important details to work out in the coming weeks and months,” Ferguson said. “But the key point right now is that there’s a pathway forward.”

Times staff reporter Bob Young contributed to this report, which includes information from The Associated Press.

Brian M. Rosenthal: 206-464-3195 or brosenthal@seattletimes.com. On Twitter @brianmrosenthal

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