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Legal Insider: Investing in Marijuana Stocks Can Cause Loss of Security Clearance

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By John V. Berry, Esq.

If you hold or are seeking a security clearance, and you own or work in the ever-growing marijuana industry, you are likely to have difficulties obtaining or keeping a security clearance.

We have been counseling clients about this issue since at least 2010. This principle also applies to individuals that work part-time or are otherwise involved in marijuana-related businesses.

Owning stock or working for a marijuana enterprise is a reportable clearance activity when holding a security clearance and can lead to the loss of a security clearance or in one obtaining a clearance. The current marijuana policy comes from the Director of National Intelligence (DNI), by way of an October 2014 memorandum which explains current government policy.

Investments in marijuana-related companies can constitute involvement in illegal drug activities. This can be the case even where the individual does not directly choose their individual stocks and even in states where marijuana businesses are completely legal. The federal government’s current view is that an individual has a duty to know about their investments and to be knowledgeable about federal drug laws.

2014 Memorandum and Other Federal Directives

The 2014 memorandum led to Security Executive Agent Directive (SEAD) 4 in June of 2017 which provides the current basis for not granting or revoking a security clearance based on drug involvement, including investments in marijuana under Guideline H:

  1. Conditions that could raise a security concern and may be disqualifying include:

. . .

(c) illegal possession of a controlled substance, including cultivation, processing, manufacture, purchase, sale, or distribution; or possession of drug paraphernalia;

. . . .

Marijuana stocks have been touted as the new Amazon investment, according to a number of articles. However, the problem is that until the federal government changes federal drug laws or creates a caveat for marijuana businesses, individuals that invest or otherwise become involved in marijuana investments can put their security clearance (and career) at risk.

We have seen a lot of confusion on this issue since at least 2012 when a number of states started legalizing the use of marijuana. We have represented many clearance holders who have traveled to Colorado or elsewhere, where marijuana is legal, to simply try it. In some of these cases, the experimentation has cost the individual their security clearance.

It is advisable that individuals seeking to hold or obtain a security clearance refrain from investing in marijuana stocks until federal law changes. Eventually, we believe that the federal government will change their position on this issue, but for the moment investing in companies or stocks that are involved in the dispensing of marijuana can cause one to lose a security clearance.

Conclusion

If you are in need of security clearance representation, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook or Twitter.

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