Despite widespread legalization at the state level, marijuana is currently classified as an illegal Schedule I substance under federal law. It is recommended that individuals seeking or currently holding a Security Clearance cut any and all ties to Marijuana-related business ventures and/or investments to avoid any potential denial or revocation action under Guideline H (Drug Involvement and Substance Misuse), Guideline E (Personal Conduct), or Guideline J (Criminal Conduct).

Will Investing in Marijuana-related Business Ventures Negatively Impact Your Eligibility for a National Security Clearance?

The short answer is: yes! Under the Security Executive Agent Directive (SEAD) 4, involvement with marijuana raises security concerns above and beyond drug consumption. Even for those who themselves never use cannabis, other forms of involvement can raise questions about an individual’s judgment, reliability and trustworthiness.

Involvement in marijuana-related business ventures or other financial investments casts doubt upon a person’s ability or willingness to comply with laws, rules, and regulations. This may trigger security concern under multiple adjudicative guidelines, including:

• Guideline H, Drug Involvement and Substance Misuse
• Guideline E, Personal Conduct
• Guideline J, Criminal Conduct

What Counts as a Drug for Security Clearance Purposes?

The security concerns underlying drug involvement include the physical, mental, and emotional impairment drugs can create in the individual, as well as potential violations of law, rules, and guidelines that accompany any illegal drug involvement.

Substance misuse is the generic term adopted in Guideline H to describe the misuse of prescription and non-prescription drugs, and the use of other substances that cause physical or mental impairment or are used in a manner inconsistent with their intended purpose.

Controlled substance is the term most pertinent to concerns of illegality; it means a drug or substance (as well as its immediate precursor or derivatives) that has been included in Schedule I, II, II, IV, or V under the Controlled Substances Act (CSA) (21 U.S.C. 802). This does not include alcohol and tobacco products, unless they contain another controlled substance (e.g. cocktails containing THC).

Does Guideline H Apply to More than Using Drugs?

Yes. The security clearance application asks whether an individual has been involved in the illegal purchase, manufacture, cultivation, trafficking, production, transfer, shipping, receiving, handling, or sale of any drug or controlled substance within the last seven (7) years. Ownership in stocks or other Marijuana-related assets could qualify as one of those activities.

Under the SEAD 4, the Guideline H disqualifying conditions cover not only the illegal use or possession of a controlled substance, but also:

• Cultivation
• Processing
• Manufacture
• Purchase
• Sale
• Distribution
• Possession of drug paraphernalia.

Marijuana (THC) products are considered a controlled substance and Schedule I drug under the federal laws of the United States. Though there has been discussion of reclassifying cannabis to Schedule III, it is a Schedule I drug at this time. Thus, any use and/or involvement with marijuana (THC products) can be a disqualifying condition for eligibility to obtain or maintain access to classified information.

Certain CBD products are excluded from the Controlled Substances Act (CSA), but not if they contain a certain amount of THC (.3%). The FDA does not regulate these products, so it is not unheard of for CBD products labeled below .3% THC concentration to contain enough THC to qualify as marijuana, thereby making such “CBD” product a Schedule I substance.

Can Cannabis-Related Investments or Business Involvement Result in Security Clearance Denial or Revocation?

Yes, cannabis-related investments or business involvement could result in security clearance denial or revocation: not only under Guideline H (Drug Involvement and Substance Misuse), but also Guideline E (Personal Conduct) and/or Guideline J (Criminal Conduct).

Guideline E, Personal Conduct: Marijuana is Schedule I substance; involvement in financial activity or businesses dealing in the unlawful production and distribution of marijuana is a federal crime under the Controlled Substances Act (CSA). If an individual knowingly gets involved in illegal activity, this raises serious questions about their judgment and willingness to comply with laws, rules, and regulations.

Guideline J, Criminal Conduct: Because marijuana is a Schedule I substance, some financial activities and investments are themselves illegal. Federal anti-money laundering law (18 U.S.C. § 1956(a)) prohibits handling funds connected to a federal crime. This includes transactions and investments involving unlawful production and distribution of Schedule I drugs like marijuana.

Exercise Caution with Any Investments

It is critical for those who must obtain or maintain a Security Clearance to carefully review any companies or businesses they invest in.

Example: Investing in a Brewery or Liquor Store that Distributes or Produces Beverages Containing THC

THC beverages that have arguably become popular across the United States and are legal under many U.S. state laws, yet they are still considered illegal THC products under Federal law. Therefore, if an individual has ownership of or investments in a brewery, liquor store, or other business that either manufactures and/ sells THC beverages or other products—even if not the primary product—they may be involved in unlawful activity without their knowledge.

Such investments would trigger the following Guideline concerns under SEAD 4:

Guideline H, Drug Involvement

The Government could consider the ownership, financial support, and/or financial gains from that business to be directly involved with either the cultivation or sale of illegal drugs under Guideline H.

Guideline E, Personal Conduct

Producing, possessing, and dispensing a Schedule I substance, including alcohol containing THC, is a federal crime. Knowing engagement with an unlawful activity raises concerns for one’s judgment under Guideline E.

Guideline J, Criminal Conduct

It is a federal crime to handle money related to or invest in illegal activities, including producing and selling THC products like cannabis-infused cocktails. Knowingly committing a federal crime raises serious concerns under Guideline J regarding one’s willingness to obey laws, rules, and regulations.

Is it Possible to Mitigate Security Concerns Resulting from Marijuana-Related Investments?

In many cases, yes; Guideline E, Guideline J, and Guideline H violations involving marijuana-related business or investment can be mitigated. Adjudicators may consider such factors as:

Awareness of Cannabis Involvement: If you were unaware that the business or company you invested in was producing THC product, this may mitigate concerns regarding your judgment and willingness to comply with rules, laws, and regulations.

Indirect Investment: If one has invested in a marijuana-related publicly-traded business as part of an indirect, diversified mutual fund, adjudicators may assume ignorance on the part of the investor.

Divestment and Disassociation: If an individual did directly invest stocks in a marijuana-related company but fully divested, this may help mitigate Guideline J concerns.

Consult a Security Clearance Attorney to Discuss Any Marijuana Involvement

It is highly advised to speak with a national security attorney to evaluate your individual situation and work through your options. A carefully prepared mitigation strategy can make all the difference in security clearance adjudications.

Tully Rinckey attorneys understand that issues involving security clearances and drug use can be challenging, and they will handle your matter with the attention and tact it deserves. If you have additional questions, our team of dedicated security clearance attorneys is available to assist you today. Please call 8885294543, or schedule a consultation online.

Brittany D. Forrester, Esq., is a Senior Associate at Tully Rinckey PLLC, where she focuses her practice primarily on national security law with experience in federal employment matters. Brittany represents clients who have security clearance issues with agencies such as the FBI, CIA, NSA, DIA, DOD, NRO, NGA, and DOE. She has represented numerous clients in security clearance revocation proceedings and has a proven record of saving clients’ jobs as well as anticipating and resolving potential future issues with their security clearances.