Politics & Policy

Leaving Marijuana Policy to the States

A customer shops for marijuana at the MedMen store in West Hollywood, Calif., January 2, 2018. (Lucy Nicholson/Reuters)
A new bill would reconcile federal law with reality on the ground.

In the nine states where recreational marijuana is legal, industrial-scale growers distribute huge quantities of weed to product manufacturers, dispensaries are as common as banks in strip malls, and anyone over 21 can buy weed in all sorts of forms — edibles, CBD oils, cookies that contain ten milligrams of THC apiece, a good old-fashioned joint.

And everyone involved is breaking federal law. The possession, manufacture, and distribution of marijuana violates the Controlled Substances Act, which defines the drug as a Schedule I substance and doesn’t allow an exception for medical use, which another 20 states have legalized. With a new bill called the Marijuana STATES Act, lawmakers are trying to change that.

Thus far, legal weed has flourished only because federal law hasn’t been enforced. The medical-marijuana business, still small, been protected for years by a rider to appropriations bills that bars federal money from funding their prosecution. Recreational-pot businesses, meanwhile, are protected mainly by the executive branch’s unwillingness to treat them as though they were cartels.

Under the Obama administration, Department of Justice policy was defined by the “Cole Memo,” which directed federal prosecutors to deprioritize marijuana prosecutions in states that had legalized the drug. That arguably represented an attempt to change the law by fiat, and the Trump DOJ, led by Jeff Sessions, rescinded the memo on those grounds. But while Sessions made noise early on about ramping up enforcement, there hasn’t been a crackdown. Going after the weed industry would mean raids on huge farms and confiscations of enormous amounts of money, and it would set off a political firestorm. An uneasy status quo persists.

Enter the STATES Act. A bipartisan group of senators, led by Cory Gardner (R., Colo.) and Elizabeth Warren (D., Mass.), introduced the bill last week. It would amend the Controlled Substances Act to conform to the policies of individual states: Phat Panda Farms, based in Spokane, Wash., would be vulnerable to federal prosecution if it tried to open up a branch in Jackson, Miss., but otherwise would be phree to pharm away.

The bill would also allow marijuana businesses to take tax deductions and amend money-laundering statutes to make it easier for banks to work with the industry. Right now, plenty of capital is sitting on the sidelines waiting for a change in federal policy. The status quo has led to uncertainty, hindering the development of the weed business. Were the STATES Act to pass, all interested parties would know what the rules are, potentially spurring an explosion of startups in states that have legalized it. Call it Hemp Valley.

Fearing opposition from the usual suspects, advocates of the STATES Act have been careful to note that this is not a legalization bill. Buying weed in Colorado and returning home to Nebraska would remain both a state and federal crime under the STATES Act, as would selling weed as a black-market drug dealer who also carries fentanyl in his inventory. People who run afoul of state laws would be subject to federal prosecution, potentially allowing the federal government to reinforce the various legal regimes of each state.

Gardner argues that there are law-enforcement benefits, too. “Conflicting federal and state marijuana laws make it difficult for legitimate businesses to use the basic financial services they need access to, which creates a public safety risk,” the senator told National Review. “Businesses are being forced to carry around bags of money to pay for their employees and rent because of banks not being able to accept their money. . . . Getting this industry into the banking system will help increase transparency and allow law enforcement to ensure both that the profits are going to investors rather than cartels.”

As more states legalize marijuana, the need for a reconciliation between the federal prohibition and the will of the people will come into sharper relief. Nobody should forget that the drug imposes economic and human costs. Its proliferation will invite new regulatory and social questions: What is the proper taxation regime for marijuana? Taxing per gram, for instance, risks incentivizing businesses to develop ever-more potent strains, amplifying these costs. How much should society stigmatize marijuana? A libertarian legal regime need not come with a libertine social ethic that trivializes the abusive potential of weed.

All of which means the STATES Act, even if it were to pass, should not be considered the end of marijuana policymaking in the U.S. But if it is just a start, it is a commonsense step for the federal government to bequeath these questions to the laboratories, and let them experiment with different regulatory strains.

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