Federalism, Coercion, and Marijuana

The recent passage of marijuana legalization in Colorado and Washington suggest the potential for an extremely interesting showdown between the states and federal government.  Let me first suggest what is absolutely not going to happen – DEA agents arresting citizens enjoying marijuana in their homes in Denver and Seattle.  The manpower is simply not there. However, it seems likely that the IRS will disallow tax deductions for properly registered businesses and that the DEA will act to raid any marijuana stores that declare themselves as such by operating aboveground.  So my expected status quo is that two years from now, marijuana possession and use will be fully legal in Colorado and Washington, while there will be no “pot stores” on the streets.

The prospects for D.C. drug warriors to shut this down are actually fairly dim.  They can ensure the distribution and production systems stay underground and off the books, which I expect they will, but it’s not at all clear this is optimal policy for drug warriors.  That’s because it does nothing to prevent marijuana grown in Colorado and Washington being distributed nationwide.

Legally speaking, the pre-emption case that the DOJ will press is of mixed quality.  For Washington and Colorado to license businesses to sell pot is a clear case of state-federal legal conflict, and violates the Controlled Substances act on its face.  In the event of a court challenge, I doubt pot stores will stand.  However, there’s no pre-emption case for the re-criminalization of possession and use.  Legalization isn’t an affirmative stance, it’s states declining to prosecute something.  This has led many to confidently declare that the feds will use the lever of funding to pressure states, by cutting off the funding spigot for infrastructure, as the ultimate weapon.

However, in an irony for conservatives, this would seem to be prohibited by the recent Supreme Court decision in National Federation of Independent Business v. Sebelius. That is, the Obamacare decision.  It found that the Feds could not condition Medicaid funding on states expanding Medicaid as envisioned in the Obamacare legislation.  Why?  Well, it’s “coercive”.  Here is what I view as the key standard set forward (NFIB v. Sebelius, p.50) :

We have upheld Congress’s authority to condition the receipt of funds on the States complying with restrictions on the use of those funds, because that is the means by which Congress ensures that the funds are spent according to its view of the general Welfare. Conditions that do not here govern the use of the funds, however, cannot be justified on that basis. When, for example, such conditions take the form of threats to terminate other significant independent grants,the conditions are properly viewed as a means of pressuring the States to accept policy changes.

 This is in apparent conflict with the decision in South Dakota v. Dole, which concerned the Feds withdrawing 5% of South Dakota’s highway funds until South Dakota raised the drinking age to 21.  The difference here is that the amount in Dole was so low – less than half of 1% of South Dakota’s budget. It would seem that the Feds are prohibited by this decision from making any restrictions that would actually substantially impact the Colorado or Washington budget.  Furthermore, it had previously been made clear that highway funds were related to drunk-driving legislation, of which the drinking age had been a part.  The Supremes in NIFB v. Sebelius suggest that conditioning existing funds on fundamentally new requirements is also a meaningful distinction, and is illegitimate.  It’s fairly obvious that highway funding has never before been conditioned on marijuana legislation.

I find the coercion section of this decision to be completely incoherent – making decisions over federal spending and appropriation seems to be self-evidently within the purview of Congress.  However, it is the law of the land. With NFIB v. Sebelius it seems that the Supreme Court has meaningfully restricted the power of Congress to interfere with the marijuana legalization movement.  Interesting.

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