Photo: Aram Vartian / Flickr
The White House recently made some not-so-subtle hints about a federal crackdown on marijuana. Could the feds roll back the rapidly blooming end to prohibition? And what does this mean for the budding industry in states that have established medical and recreational markets? Planet Experts spoke with marijuana attorney Michael Chernis to get the details.
Empty Threats or Ample Warning?
The marijuana movement was given some disturbing news on February 23rd when Press Secretary Sean Spicer said he expects “greater enforcement” of federal laws that prohibit marijuana use.
Several days later, Attorney General Jeff Sessions echoed Spicer’s claims by saying, “it does remain a violation of federal law to distribute marijuana throughout any place in the United States, whether a state legalizes it or not.”
Is this the beginning of the end for legalization or is it just an unsubstantiated threat?
“It is disconcerting,” Chernis said, “but I’m hopeful that theses signals don’t come to fruition. It’s possible that proposed policy changes get stamped down by other people close to the administration who don’t want to pick a fight with marijuana entrepreneurs.”
Of note, Trump is considering marijuana legalization advocate Jim O’Niell to run the FDA. O’Neill also has close ties with the President’s advisor and supporter, billionaire Peter Thiel, who is a major cannabis investor.
Misunderstanding and Hypocrisy
“There’s no rational reason to fight this trend other than some puritanical ideology,” argued Chernis. Spicer’s and Sessions’ reasoning for why marijuana shouldn’t be legalized simply doesn’t make sense.
“Experts are telling me there’s more violence around marijuana than one would think and there’s big money involved,” Sessions recently told reporters during a meeting at the Justice Department.
While legalization effectively disincentives illegal marijuana-related activities, like violence, the second part of Sessions’ statement is correct. The North American regulated marijuana industry amounted to $6.7 billion in 2016 and experts predict the market to exceed $20 billion annually by 2021.
In contradiction to Sessions’ concerns, Colorado Governor John Hickenlooper told MSNBC that his state is “beginning to see — at least anecdotally… fewer drug dealers, which is one of the hoped for consequences.”
The Governor also questioned the impact of shutting down weed-related banking, which he said would make “the whole thing more susceptible to corruption and racketeering.”
In opposing pot, the Trump administration has also alluded to marijuana’s role as a gateway drug — a common myth that has already been busted by science. “When you see something like the opioid addiction crisis blossoming in so many states around this country, the last thing that we should be doing is encouraging people,” Spicer argued.
Researchers from West Virginia University and Texas Tech University recently released a paper on the “effect of medical marijuana legalization on heroin use rates” and found a negative but scientifically insignificant relationship between the two substances. This means, “while the legalization of medical marijuana will not lead to a reduction in heroin use, medical marijuana is not a gateway drug for heroin.”
What’s more is that the Trump administration prides itself on supporting states’ rights, job growth and domestic business, but is threatening to shut down the marijuana industry, which could help the President accomplish much of his agenda.
Recreational Vs. Medical
Despite Spicer and Sessions’ unfounded claims about marijuana, the Press Secretary did acknowledge the distinction between medical and recreational pot. By referencing the 2014 Rohrabacher–Farr amendment, which restricts the Department of Justice from spending federal dollars to prosecute medical marijuana-related operations, Spicer alluded that the government would veer away from attacking medical businesses and would focus enforcement efforts on recreational outfits. Chernis noted that the Amendment must be reapproved each fiscal year.
If the recreational policy change does take place, “it’s going to be tricky to try to unwind medical from recreational,” Chernis explained .
Essentially, each state has a different market structure and the nature of the regional industry will determine what kind of an impact a federal crackdown on recreational weed would have in each state.
For example, while recreational use is legal in California, commercial sale licenses won’t come online until 2018.
“It wouldn’t be that burdensome for California to hold off on implementing recreational licenses and focus on medical until this gets sorted out,” continued Chernis. “In states like Colorado and Oregon though, it would be very difficult to put the genie back in the bottle because the recreational activities in those states dwarf the medical.”
Where it get’s even trickier is in taxation laws. There’s typically less of a tax burden on medical than on recreational marijuana. “For example, in California prop 64 exempts medical marijuana from sale tax, at least until the end of 2017. That’s obviously a big give-up for the state if it’s not able to collect taxes on recreational marijuana moving forward,” clarified the lawyer.
In Washington state, regulators merged medical and recreational marijuana to avoid tax complications and illegal sales. If the feds meddle with state-level policies, the states that have made significant investments in legalization “would have no choice but to fight any enforcement action that threatens the industry they are trying to create,” Chernis said.
Implications and the Way Forward
The Trump administration’s recent anti-marijuana sentiments will “probably put a pause on efforts by other states to pass legalizations laws and initiatives and will certainly cause states like California — that are in the midst of implementing legalization initiatives — to take stock of what’s happening,” speculated Chernis.
That said, pro-pot politicians are taking steps to safeguard the growing industry.
California Republican Congressman Dana Rohrbacher, who was behind the 2014 amendment that bears his name, recently introduced the Respect State Marijuana Laws Act, which would give states authority to control their medical and recreational marijuana laws.
Government officials from states with legal pot — like Washington State’s Attorney General Bob Ferguson, Oregon Senator Ron Wyden, Nevada Senator Aaron Ford, California’s Lieutenant Governor Gavin Newsom and others – are making it clear that they will take action to protect their states’ marijuana industries.
Although there’s a strong opposition to a federal crackdown, the White House could technically use its authority to prosecute marijuana operations despite state-level support.
Chernis cited the 2005 Gonzales vs. Raich court ruling that gave the federal government the authority to supersede state’s rights in regards to marijuana cultivation and use. Chernis did say that the “calculus is a little different now” because medical and recreational pot is now legal in 28 and 8 states respectively.
At the end of the day, it comes down to federal versus states’ rights. If there is a federal crackdown, there will be a lot of resistance and the industry is unlikely to go away.
“You have to remember that just a couple of years ago there were a lot of businesses operating outside the law. The recent business represents a different set of investors and entrepreneurs than the original pioneers,” Chernis said.
There is a range of plausible scenarios. Some may riot, more conservative investors may voluntarily close their doors, but one thing is for sure, there will be plenty of lawsuits. In other words, the legal marijuana industry will not simply go up in smoke.