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Over the last year, there has been a surge in interest in two distinct areas for the average citizen: marijuana and the stock market. Changes in many states’ laws have encouraged people to visit their local dispensaries more frequently as marijuana and cannabis usage becomes normalized culturally. At the same time, the last year has seen a crazy influx in amateur day traders entering the stock market on simple, easy-to-use apps like Robinhood. Perhaps you were one of the “holding the line” on old-school, brick and mortar companies, or riding the wave on cryptocurrency named after a dog. Of course, these two rapidly growing trends were going to converge, and it does not take a genius to realize it may be a good idea to invest in an industry that hasn’t fully taken off yet.
But are you sure you can do that if you are in the military, have a security clearance, or work for the federal government? Can you really invest in a business if the product is considered illegal by the federal government?
The answer depends on a variety of factors. The first thing to know is that Guideline H (Drug Involvement and Substance Misuse) of the National Security Adjudication Guidelines makes it clear that the illegal possession of a controlled substance (yes, marijuana counts) or the cultivation, possession, manufacture, purchase, sale, or distribution of that controlled substance could raise a security concern and may be disqualifying for security clearance applicants. You will see this same language the next time you fill out an SF-86, in section 23, when it asks you these questions directly.
You need to acknowledge the reality of how the federal government views marijuana since for your security clearance, your personal views are irrelevant. Even though some states are beginning to legalize and normalize marijuana use, the federal government still considers it very much illegal. With that being said, investing in a business that is built around the distribution of a Schedule 1 controlled substance can potentially cause issues.
So before you start investing, or if you are already invested in marijuana stock—including ETFs, mutual funds, and index funds—you need to be careful and review your company or Command’s policies. Some agencies require financial disclosures, so be careful to avoid any federally illegal investments. Think about how your investments would look if they were being evaluated by someone who doesn’t know you.
You need to understand that there are degrees of involvement and risk when investing in this sector. The person who never checks a mutual fund that may have a CBD company may be less at risk than the person who is heavily invested in the next hot cannabis stock; however, both are technically involved in the production, sale, or distribution of marijuana. If you do find yourself in question over your investments or are worried about any future portfolio activity, it is important to note that your involvement with these companies is not dispositive. There are many different strategies you can use to mitigate the government’s concerns—one of which I hinted at above—and only through proper advocacy on your part can you navigate this complex situation and receive a favorable outcome.
In any event, it is important that you understand that while times may be changing in certain states—if you are a security clearance holder, military member, or federal employee—the rules regarding drug involvement remain the same.
Marc T. Napolitana, is an Associate with Tully Rinckey PLLC, where he practices in support of clients needing representation in Military Law and National Security Law. Marc possesses years of experience representing military personnel, federal employees, aspiring military service members (i.e. ROTC students), and security clearance applicants in a variety of legal forums. He can be reached at (888) 529-4543 or .