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Nize Nylen shops for cannabis products at Herban Legends on Thursday in Seattle. Washington is one of the states that has said it has no intention of changing course in response to U.S. Attorney-General Jeff Sessions announcement about marijuana this past week.Elaine Thompson/The Associated Press

The Trump administration's shift in policy on marijuana enforcement plunged the country's nascent legalized cannabis industry into confusion this week, stoking some Republican outrage in Congress and prompting states that have legalized the drug to vow to defend their industries from a federal crackdown.

U.S. Attorney-General Jeff Sessions said he will rescind an Obama-era policy that limited how federal prosecutors would investigate state-licensed marijuana operations. The move sets the stage for a showdown ahead of this year's mid-term elections between Washington and the growing number of states that have legalized recreational marijuana.

In California, which began allowing recreational marijuana sales on Monday, Attorney-General Xavier Becerra promised to defend his state from a federal crackdown on legal growers and sellers. State assemblyman Reggie Jones-Sawyer announced plans to revive a bill proposed last year that would bar local law enforcement agencies from co-operating with federal drug enforcement investigations of state-licensed marijuana operations, turning California into a so-called "sanctuary state" for the legal cannabis industry.

The White House policy shift has also stoked the anger of some Republicans, including Senator Rand Paul. He denounced the move on Twitter, saying marijuana legalization is an issue of states' rights and that "the federal government has better things to focus on."

Cory Gardner, a Republican Senator from Colorado, where recreational marijuana brings in an estimated $1-billion (U.S.) a year, accused Mr. Sessions of reneging on a promise not to prioritize federal marijuana investigations, and threatened to withhold support for judicial nominees.

Lawmakers in Vermont and Massachusetts confirmed they are pushing ahead on their own recreational marijuana proposals, and several states that have legalized the drug, including Oregon, Washington and Nevada, said they had no plans to change course.

Marijuana cultivation and possession remain illegal under federal law even as voters in eight states and Washington D.C. have voted in favour of legalizing recreational use of the drug. Nearly 30 states allow marijuana for medical use.

The directive by Mr. Sessions rescinds a 2013 memo by then-deputy U.S. attorney-general James Cole, which laid out specific priorities for prosecutors and signalled that the federal government would take a hands-off approach to enforcement so long as states strictly regulated their marijuana industries.

Mr. Sessions said the memo had "created a safe harbor for the marijuana industry," and directed local U.S. attorneys across the country to decide for themselves how to enforce federal marijuana laws in their districts.

In an interview, Mr. Cole said the memo was not intended to create a haven for marijuana, but to address public safety concerns and to encourage states to adopt strong regulatory regimes at a time when people in Washington and Colorado were voting to support legalizing recreational marijuana.

"If you don't have a regulatory scheme in place that allows a legitimate business to exist and controls how marijuana is produced, processed and distributed, people are going to be buying it from the cartels and criminal gangs," he said. "And that's not good for public safety."

He anticipated the marijuana industry may face some confusion as it adjusts to new rules, which give the country's 93 local U.S. attorneys, who are appointed by the president, broad discretion on whether to prioritize marijuana enforcement. "I think it's just going to be a question of waiting to see what the different U.S. attorneys are going to do at this point. They may not change their approach to marijuana at all."

Industry players said the change in policy was not a surprise given Mr. Sessions has been an outspoken opponent of legalized marijuana and last year warned a handful of states their regulations might not comply with federal laws. But most said they do not expect a large-scale federal crackdown on growers and dispensaries that already have state licences.

"I did not lose a wink of sleep over this, because I know that a San Francisco jury is not going to convict me," said Steve DeAngelo, who runs one of the country's largest marijuana dispensaries, in Oakland, Calif. Mr. DeAngelo fought a four-year battle with the federal government over medical marijuana until the case against his dispensary was dropped last year.

However, some warned the policy shift will slow the growth of the legal marijuana industry by deterring large investors, banks and other companies from expanding into the sector for fear of federal prosecution.

Hours after Mr. Sessions's announcement on Thursday, one of Los Angeles lawyer Hilary Bricken's marijuana distributor clients told her the company had been dropped by its credit card processor and evicted by its landlord. She spent Thursday fielding calls from banks and investment funds that were scrambling to understand the implications.

The change in federal policy "is not a death knell, but it's not something that can be ignored," she said. "And it's not a false alarm for people who are actively participating, because it remains federally illegal."

Michael Weiner, a corporate transactions lawyer in Denver who has represented marijuana clients, said he expects a slowdown in investment after this week's announcement, and anticipated some marijuana operations might move to Canada. "One of my concerns is that, come July, many businesses will move to Canada and work on developing the industry up there rather than dealing with other issues down here."

Mr. Sessions's policy shift comes at an inconvenient time for President Donald Trump, who said on the campaign trail that marijuana legalization should be left to the states.

Republicans are fighting to retain a slim majority in Congress ahead of elections in November, and a hard-line stand on marijuana won't help curry favour in states that have legalized the drug, particularly among younger voters, said Colorado political analyst Floyd Ciruli.

Mr. Ciruli said he expects many Colorado politicians will oppose the policy change. "The problem out here is that it's now deeply embedded into the commercial life of numerous cities," he said. Even those conservative lawmakers who were initially opposed to legal cannabis are now reluctant to come out against an industry that has the support of about 60 per cent of the state's voters. "Whether you were all that enamoured with it or not, you feel that it's now the law of the state by vote and we should leave it alone."

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