March 2019 — Investing in commercial companies that produce marijuana and security clearances.

This month I read news articles and posts by attorneys who take security clearance cases that the Department of Defense Consolidated Clearance Authority (DODCAF) says investing in the stocks of marijuana companies will lose your clearance.   I am not so sure. And I have not found specific guidance from DOD. If you have such guidance, please contact me.

The issue arises because some commercial marijuana entities have issued publicly traded stock. These entities would need to be located in States where marijuana cultivation and sale is legal.

The issue, accordingly, is whether persons holding clearances could invest in the stock of these commercial marijuana entities.

The original source of the news articles about DODCAF policy may have been a Facebook post of a February 7, 2019 email from an Air Force Staff Judge Advocate (SJA). The SJA reported a DODCAF decision concerning a General Officer (GO) who invested, through an investment broker, in marijuana industries. The post was that DODCAF indicated, in the decision on the GO’s case, that passive investments in commercial industries that own, sell, and distribute marijuana will be considered a security issue. I note that the AF SJA writes about a decision on one case of a General Officer. The SJA also does not proclaim that this is DOD policy. It is helpful and normal for attorneys to share experiences and decisions.

Some later news articles, and attorney posts, however, indicated that DODCAF policy was do not invest in the commercial marijuana industries. Inconsistent with that view, in other news articles, it was reported that the DODCAF decision was not official DOD policy and official policy on investment in marijuana companies would be issued through normal DOD channels.

Under present policies, State law does not control federal employees. Federal employees must obey Federal law and under Federal law cannabis remains an illegal controlled substance.

More specifically, National Security Adjudicative Guidelines (Effective: 08 June 2017) provide, in Security Executive Agent Directive (SEAD) 4, that the illegal use of “controlled substances” can raise questions about an individual’s reliability and trustworthiness, both because such behavior may lead to physical or psychological impairment and because it raises questions about a person’s ability or willingness to comply with laws, rules, and regulations. SEAD 4 defines “controlled substance” as defined in 21 U.S.C. 802. Section 802 definitions of illegal controlled substances include “marihuana,” and derivatives of the plant, and other definitions which we need not discuss now.

But also and in regard to passive investments, say in a Thrift Savings Plan, a SEAD 4 mitigating condition is the conduct happened under such circumstances that it is unlikely to recur or does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment.

And, as I said above, I have not found a DOD official policy that explicitly states service members or U.S. federal employees may not buy stock in companies that manufacture or sell marijuana. I await such policies.

For now, do not panic. Security clearance cases are decided based on the person and the facts of each case. I can imagine that a military leader choosing to invest in marijuana may not be the best example for his or her service members.   I also can imagine a service member who takes a part time job with a commercial marijuana company having issues under personal conduct guidelines or association with users of illegal substances. I also have had cases where the person holding the clearance did not use marijuana but because of their marriages and friendships were alleged to have associations with “criminals,” meaning people who did use marijuana, and the clearance was revoked. Degrees of separation attend such cases and the facts of the particular case matter.

For example, if the holder of a clearance owns a Thrift Savings Plan or money market fund and the Plan or fund invests in marijuana stocks, unbeknownst to the holder of the clearance, I would hope there would be no issue or at least the clearance holder could explain the circumstances in mitigation.

Bottom line, and just my opinion for purposes of discussion: I await a published policy. In the interim, any holder of a security clearance or someone who wants a clearance, should use common sense. For example, do not get close to marijuana cultivators and their profits, nor allow a perception of closeness to such companies or their profits. Consult an attorney experienced in security clearance with any questions or “close calls.” And if any of you have a memorandum from DOD on investments, do contact me. Interesting issue, right?

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