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Carol Thompson, a partner at The Federal Practice Group, speaks with Federal News Network on marijuana stocks and your security clearance

Written by: Federal Practice Group
Written by: Federal Practice Group

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Owning marijuana stocks may skunk your security clearance or chances of getting one

The DoD Consolidated Adjudications Facility’s current legal position is that ownership of marijuana stocks is considered involvement in drug-related activities, and would be a “reportable incident” under the continuous evaluation process. Potentially, it could lead to the loss of security clearances for service members, contractors and DoD civilians.

Owning the stocks could prevent someone from gaining a security clearance as well.

The policy was first publicly circulated in a recent post by the Facebook group Air Force amn/nco/snco. A Pentagon spokeswoman later confirmed its accuracy to Federal News Network. The post included an email sent from Air Combat Command’s headquarters, quoting answers it had been sent by the DoDCAF. The policy in the email affects all DoD employees and contractors, not just airmen, a DoD spokeswoman told Federal News Network.

The ACC email said DoDCAF treats “investments in marijuana-related companies as ‘involvement,’ which is prohibited. Even in cases where the subject him/herself isn’t directly choosing the stocks, he or she has the responsibility to stay informed and avoid violating the federal law.”

The email goes on to say that “stock ownership must be reported and the DoDCAF will determine if the ‘involvement raises questions about the individual’s judgement, reliability, trustworthiness and willingness to comply with the laws, rules and regulations, including federal laws,” the email said.

Marijuana stocks are all the buzz on Wall Street. Companies involved in marijuana products are showing big gains in the stock market, as they continue to make deals with companies like Constellation Brands Inc., the parent company of Corona beer, and the Altria Group Inc., owner of a handful of cigarette brands.

The reaffirmation of policy may force DoD employees to look harder at their financial statements. Marijuana stocks are finding their way into some mutual funds. For example, Vanguard’s Developed Markets Index Fund owns shares in Aurora Cannabis, Canopy Growth and other marijuana-affiliated companies.

“Recognizing that many states have legalized marijuana, it is still something that is prohibited under federal law,” Carol Thompson, partner at The Federal Practice Group, told Federal News Network. “Holding a federal security clearance with one of the adjudicated guidelines being involvement with drugs or drug use, then purchasing any kind of stock of that nature — especially if it’s intentional or knowing — could be seen as supporting something, under federal law, that is still illegal.”

Thompson said any individual with a security clearance or who is applying for one will have to make their financial information readily available to the government.

“You are supposed to disclose all of your financials,” Thompson said. “If you do have specific stocks, you do have the obligation to disclose them when filling out the security clearance application. You’re probably going to be asked about it during the background investigation phase.”

While all of those materials are required, a U.S. government official told Federal News Network that it would be tough for DoD to enforce the policy for every stock in a mutual fund. The official said DoD would be more likely to enforce the policy on someone who is directly involved with a marijuana dispensary or farm.

It also may not be high on DoD’s list of offenses considering the military needs people with clearances quickly, and at the end of 2018 the security clearance backlog stood at nearly 600,000.

Still, if you do hold a security clearance or are apply for one, Thompson said it is wise to go through your investments and understand what you’re investing in.

“I would advise against knowingly investing,” Thompson said. “If there is a situation where an investment is made, you don’t know about it, but once you do know about it you take certain steps to eradicate or fix that, then certainly that would be something in your favor.”

To discuss your options with a security clearance lawyer DC believes in, contact The Federal Practice Group today.

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