United States v. Stacy: Tenth Circuit Opens §1292(a)(1) Path to Enjoin DOJ Spending Under the Medical Marijuana Appropriations Rider and Limits Protection to At Least Substantial Compliance with State Law

Introduction

This published Tenth Circuit decision addresses the intersection of federal marijuana prohibition, state medical-marijuana regimes, and Congress’s annual appropriations constraint on the Department of Justice (DOJ) known as the Rohrabacher–Farr/Blumenauer rider. The court resolves threshold jurisdictional questions and clarifies what a federal defendant must show to invoke the rider’s spending bar.

Defendant–Appellant Matthew Alan Stacy, an Oklahoma attorney, was federally indicted for a narcotics conspiracy and maintaining a drug-involved premises, premised on a “ghost-licensing” structure designed to circumvent Oklahoma’s residency and disclosure requirements for medical-marijuana operators. Before trial, Stacy moved to enjoin DOJ from expending funds on his prosecution, invoking the appropriations rider that prohibits DOJ from using appropriated funds “to prevent” states from “implementing” their medical-marijuana laws.

The district court held an evidentiary hearing and denied the injunction, finding Stacy had not shown compliance with Oklahoma law. On interlocutory appeal, the core issues were:

Whether §1292(a)(1) permits an interlocutory appeal in a criminal case from the denial of an injunction enforcing the appropriations rider.
Whether the district court had jurisdiction (ancillary to the criminal case) to entertain a motion to enjoin DOJ spending.
Whether the rider applies to prosecutions of private individuals, not just state officials.
The level of state-law compliance a defendant must show to fall within the rider, and whether Stacy met it.

Summary of the Opinion

The Tenth Circuit affirms the denial of injunctive relief. Its principal holdings are:

Appellate Jurisdiction: The court has jurisdiction under 28 U.S.C. §1292(a)(1) to review interlocutory orders “refusing” injunctions even in a criminal case where the injunction targets DOJ spending under the rider.
District Court Jurisdiction: District courts possess ancillary jurisdiction within the criminal case to adjudicate a motion to enjoin DOJ spending under the rider, given the Appropriations Clause and separation-of-powers implications.
Scope of the Rider: The rider reaches prosecutions of private individuals. DOJ may not spend appropriated funds to prosecute persons whose conduct complies with state medical-marijuana law because such prosecutions “prevent” a state from “implementing” its medical-marijuana regime.
Compliance Threshold: To invoke the rider, a defendant must show at least substantial compliance with state medical-marijuana law by a preponderance of the evidence. The court rejects a “reasonable belief” standard; it reserves whether strict compliance is required because Stacy failed even substantial compliance.
Application to Stacy: The record showed multiple departures from Oklahoma law—concealment of true ownership interests, violation of the 75% Oklahoma-residency rule for license holders, pre-registration cultivation, and knowing rental of premises for unlicensed cultivation. Thus, the rider does not bar DOJ from funding this prosecution.
Other Rulings: The court affirms provisional sealing orders for grand jury and personal identifying information, and denies as moot the government’s request for expedition.

Analysis

Legal Framework

Federal law (the Controlled Substances Act) categorically criminalizes marijuana, 21 U.S.C. §§ 841, 844, while many states, including Oklahoma, authorize medical marijuana. Since 2015, Congress’s annual appropriations acts have contained a rider forbidding DOJ from using appropriated funds “to prevent” states from “implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Consolidated Appropriations Act, 2024, Pub. L. No. 118-42, §531 (extended through Sept. 30, 2025).

Oklahoma’s regime requires both:

OMMA licensing: Applicants must disclose “all ownership interests” and satisfy a 75% Oklahoma-residency requirement for entity owners. Okla. Stat. tit. 63, §§ 422(B)(4), 427.14(E)(7)(c), (E)(7)(e), (E)(4), (K); § 427.2(46) (defining “owner”).
OBN registration: Any manufacturer/distributor must “obtain” OBN registration before activity. Okla. Stat. tit. 63, § 2-302(A); Okla. Admin. Code § 475:10-1-9(c). The OBN “agent” exception does not apply where the agent is itself “required to register” or is acting in the usual course of a business that requires registration. §§ 2-302(H)(1), 2-101(2).

Precedents Cited and Their Influence

United States v. McVeigh, 157 F.3d 809 (10th Cir. 1998)
Establishes that §1292(a)(1) can support interlocutory jurisdiction over criminal orders with injunctive effect. The panel relies on McVeigh to reject a categorical bar on §1292(a)(1) in criminal cases.
Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988)
Distinguishes non-appealable case-management stays from appealable orders “granting or denying injunctions.” The panel uses Gulfstream to confirm that an order denying an injunction is reviewable.
United States v. McIntosh, 833 F.3d 1163 (9th Cir. 2016)
Found §1292(a)(1) jurisdiction to review the denial of injunctions enforcing the rider; held the rider bars DOJ from funding prosecutions of individuals strictly complying with state law. The Tenth Circuit adopts McIntosh’s jurisdictional/scope logic and its separation-of-powers emphasis.
United States v. Bilodeau, 24 F.4th 705 (1st Cir. 2022); United States v. Sirois, 119 F.4th 143 (1st Cir. 2024)
First Circuit decisions endorsing §1292(a)(1) jurisdiction and interpreting the rider to protect prosecutions of compliant individuals; rejects Ninth Circuit “strict” compliance in Bilodeau but applies “substantial compliance” in Sirois. The Tenth Circuit follows their §1292(a)(1) and rider-scope analyses and uses “at least substantial compliance” as a floor.
Off. of Pers. Mgmt. v. Richmond, 496 U.S. 414 (1990)
Appropriations Clause baseline: executive spending must be authorized by statute. Supports judicial enforcement of a congressional spending restriction.
United States v. Wingfield, 822 F.2d 1466 (10th Cir. 1987); United States v. Sumner, 226 F.3d 1005 (9th Cir. 2000)
Ancillary jurisdiction in criminal cases to resolve matters incidental to the main case. Underpins district courts’ authority to adjudicate rider-based injunction motions inside the criminal docket.
Green Solution Retail, Inc. v. United States, 855 F.3d 1111 (10th Cir. 2017); Sandusky v. Goetz, 944 F.3d 1240 (10th Cir. 2019)
Tenth Circuit characterizations of the rider as defunding DOJ prosecutions of state-legal medical marijuana. The panel harmonizes its holding with these earlier descriptions.
Bowsher v. Synar, 478 U.S. 714 (1986)
Government cited Bowsher to argue only state actors “implement” state law. The panel rejects that narrow reading, noting “implement” also ordinarily means “give practical effect,” consistent with McIntosh.

Legal Reasoning

1) Appellate Jurisdiction under §1292(a)(1)

The court holds the order is “injunctive in nature” and thus immediately appealable. It rejects arguments that §1292(a)(1) is unavailable in criminal cases, citing McVeigh and alignment with McIntosh and Bilodeau. The need for immediate review is acute: if the rider is violated, “funds will be spent and cannot be unspent.” The court distinguishes Gulfstream (case-management stays) and emphasizes that this order squarely denies an injunction.

2) District Court Ancillary Jurisdiction

Invoking the Appropriations Clause and separation-of-powers concerns, the court confirms district courts may adjudicate motions within criminal cases to enforce Congress’s spending restriction. Without such authority, the rider would be effectively unenforceable. The court rejects the suggestion that defendants must file a separate civil action or rely on Rule 48(b) dismissal as an indirect mechanism—those would cede enforcement to DOJ’s unilateral funding choices and risk nullifying Congress’s spending command.

3) Scope of the Rider: It Covers Private Individuals

Parsing the rider’s text, the court gives ordinary meaning to “prevent” and “implement,” concluding that prosecuting state-law-compliant private actors deters and cumulatively prevents a state from “giving practical effect” to its medical-marijuana laws. The rider thus bars DOJ spending on such prosecutions. The government’s argument that “implement” refers only to official state actors is rejected as contrary to the text and purpose; direct interference with state officials is not the rider’s only target. The court aligns with the First and Ninth Circuits.

4) Compliance Threshold to Invoke the Rider

Burden and Standard: The defendant bears the burden to show compliance by a preponderance of the evidence.
Level of Compliance: The court rejects a “reasonable belief” standard as too lenient. It declines to decide whether “strict” compliance is necessary because Stacy fails “even” substantial compliance. This sets a floor: at least substantial compliance is required in the Tenth Circuit to trigger the rider’s spending bar.

5) Application to Stacy

The evidentiary record showed multiple, compounding departures from Oklahoma law:

Ownership/Disclosure Failures: Oklahoma law requires disclosure of “all ownership interests,” including any person holding an interest in “any entity which owns, operates or manages a licensed facility.” Okla. Stat. tit. 63, § 427.14(E)(7)(e); § 427.2(46). Stacy’s two-entity structure (a “licensing company” with putative 75% resident ownership and an “operating company” owned by non-residents that actually managed and profited from the grow) concealed true operational control and the operating companies’ ownership interests from OMMA/OBN. Recycling nominal resident “owners” who had no operational role reinforced non-disclosure.
OBN Registration Violations: Oklahoma law requires an entity to “obtain” OBN registration before manufacture/distribution. § 2-302(A). Stacy’s clients cultivated before registration; operating companies never even sought OBN registrations and were ineligible because they lacked OMMA licenses and did not satisfy residency requirements. The “agent” exception (§ 2-302(H)(1)) did not apply: the management agreements expressly disclaimed agency, and the operating companies’ “usual course of business” (growing cannabis) required registration, excluding them from the agent definition. § 2-101(2).
Pre-Registration Cultivation: Evidence showed cultivation before OBN registration at multiple sites, despite OBN’s general counsel specifically advising Stacy the practice was unlawful.
Maintaining Drug-Involved Premises: Testimony indicated Stacy knowingly rented his Blanchard property to tenants cultivating without required licenses and took substantial monthly payments tied to legal assistance—supporting non-compliance with Oklahoma law prohibiting maintaining premises for controlled-substances activity. See Okla. Stat. tit. 63, §§ 2-401, 2-404(A)(6); Okla. Stat. tit. 21, § 172.

Stacy’s counterarguments were rejected:

“We fully disclosed by listing non-residents as 25% owners.” The court found the two-entity arrangement masked true operational control and failed the statute’s “complete and accurate” disclosure mandate. §§ 427.14(E)(7)(e), (E)(4), (K).
“Only ‘submission,’ not ‘obtaining,’ of OBN registration was required.” The court harmonized § 427.14 (OMMA licensing prerequisites) with § 2-302(A) (must obtain OBN registration before manufacturing), finding no conflict: applicants must submit registration materials for licensing, but cannot lawfully grow until they obtain the registration.
“Lax enforcement created reasonable reliance.” Ignorance or inconsistent enforcement does not excuse non-compliance. See Sirois; general criminal law principles.
“Agency exception covers the operating companies.” The contracts disclaim agency; the operating companies conducted regulated activity requiring registration; and the statutory definition excludes entities required to register.

Because Stacy did not substantially comply with Oklahoma law, DOJ spending on his prosecution does not “prevent” Oklahoma from implementing its medical-marijuana laws within the rider’s meaning, and the denial of injunctive relief stands.

Impact

Enforcement of the Rider in the Tenth Circuit:
The rider is now fully judicially enforceable here through motions for injunctive relief inside the criminal case and immediate §1292(a)(1) appeals when denied. This helps ensure Congress’s spending restriction is not a dead letter and gives defendants a concrete mechanism to halt unlawful DOJ expenditures.
Scope: Protection for Individuals—But Only for Compliant Ones:
The court squarely holds the rider reaches prosecutions of private actors whose conduct complies with state law. That aligns with the First and Ninth Circuits and will likely standardize rider litigation nationally. However, the “at least substantial compliance” threshold is significant; clever structuring that undermines core state safeguards (residency, ownership disclosure, pre-registration bans) will not qualify.
Compliance Standard Trajectory:
The Tenth Circuit did not decide between strict and substantial compliance, but it rejected “reasonable belief” and set substantial compliance as a floor. Litigants should expect rigorous, fact-intensive hearings, with the burden squarely on the defendant and a premium on contemporaneous documentary proof of compliance.
Structuring and Professional Responsibility:
Two-entity “ghost-licensing” models designed to circumvent ownership/residency/disclosure mandates are now high-risk in this circuit. The opinion underscores that legal advice, contracts disclaiming agency, and “paper compliance” will not substitute for full, truthful disclosure of true beneficial ownership and operational control. Attorneys counseling cannabis clients should treat this as a cautionary decision.
State–Federal Dynamic:
By enforcing the rider, the court respects state medical-marijuana implementation choices while reaffirming federal supremacy where state-law prerequisites are not met. The decision also confirms that DOJ may proceed with prosecutions when defendants fall short of state-law compliance, even if state enforcement was previously uneven.
Appellate Practice in Criminal Cases:
United States v. Stacy strengthens a narrow but important corridor for interlocutory review in criminal matters where congressional spending limits are at stake. It may modestly increase interlocutory appeals in rider cases, but the demanding compliance standard will limit the number of meritorious appeals.
Budgetary Context:
The panel notes the rider’s continued force through Sept. 30, 2025 and distinguishes other DOJ appropriations lacking a rider constraint. Until Congress changes the rider’s text or scope, DOJ must ensure spending decisions in medical-marijuana cases respect the rider’s limits in circuits recognizing this enforcement pathway.

Complex Concepts Simplified

The Appropriations Rider:
A yearly footnote in DOJ’s budget that forbids spending money to hinder states from making their medical-marijuana laws effective. It does not legalize marijuana federally; it restricts DOJ’s ability to pay for certain actions.
“Preventing States from Implementing Their Laws”:
Prosecuting people who are following state medical-marijuana laws deters that conduct and, in the aggregate, blocks the state’s program. The rider stops DOJ from spending money on those prosecutions.
Ancillary Jurisdiction:
A court’s power in a case to decide related issues necessary to honor other legal commands. Here, it lets the criminal court hear a motion to enforce Congress’s spending limit without requiring a separate civil lawsuit.
§1292(a)(1) Interlocutory Appeal:
A narrow exception to the rule against piecemeal appeals. If the district court denies an injunction, the party can immediately appeal that denial—even in a criminal case when the target is DOJ spending.
Substantial Compliance:
Meeting the essence of legal requirements even if there are minor, technical defects. It is more demanding than “reasonable belief” and may be less demanding than “strict” compliance—but the Tenth Circuit did not decide whether strict compliance is ultimately required.
Oklahoma’s Ownership and Registration Rules:
To grow/distribute medical marijuana legally: (1) the licensed entity must be at least 75% owned by Oklahoma residents, and (2) the entity actually growing/distributing must obtain OBN registration before activity. “All ownership interests” must be fully and truthfully disclosed—this includes beneficial and operational control through other entities.
The “Agent” Exception:
Narrow and inapplicable if the “agent” is itself doing regulated activity as its usual business or is required to register; contract disclaimers of agency cut against this exception.

Practical Guidance and Takeaways

Expect a hearing and a defendant’s burden: Be prepared to prove, with documents and testimony, that the actual operating entity met all state prerequisites, including truthful, complete ownership disclosure and pre-activity registration.
Avoid “ghost-licensing”: Structures that put nominal resident owners on paper while ceding operational control and economic benefit to non-residents are likely non-compliant if undisclosed.
Do not cultivate before OBN registration: “Submission” of an application is not enough; the registration must be granted before any cultivation/manufacture/distribution.
Disclose beneficial and operational control: Disclose all persons/entities that “own, operate, or manage” the licensed facility, not just equity holders of the licensing entity.
Agency exception is narrow: If a company’s usual course of business is cultivation/processing/sales, it likely must register; boilerplate contract terms disclaiming agency undermine any claim to the exception.
Lawyer involvement does not insulate: Legal advice and fee structures tied to operations can become evidence; professional roles do not shield conduct that facilitates non-compliance.
Property owners beware: Renting premises for unlicensed grows can trigger liability under state controlled-substances premises statutes.
Rider litigation timing matters: Seek injunctive relief early; §1292(a)(1) is available for a prompt appeal if denied.

Conclusion

United States v. Stacy is a significant Tenth Circuit articulation of how the medical-marijuana appropriations rider operates in criminal cases. It establishes that criminal defendants can ask the district court, within the criminal case, to enjoin DOJ spending that violates the rider and can immediately appeal a denial under §1292(a)(1). Substantively, the court confirms that the rider protects prosecutions of private individuals, but only when their conduct satisfies at least substantial compliance with state medical-marijuana laws—a demanding, evidence-driven standard that Stacy did not meet.

Going forward, this decision will shape both defense strategy and government charging in the Tenth Circuit. It empowers courts to enforce congressional spending limits while preserving federal prosecutions where defendants fail state compliance. For industry participants and counsel, the opinion is a cautionary roadmap: full, faithful, and accurate compliance with state licensing, disclosure, residency, and registration regimes is indispensable if one hopes to invoke the rider’s shield against federal prosecution funding.