Monday, May 23, 2022
I am continuing to catch up on posting a lot of recently produced papers that are part of the on-going series of student papers supported by the Drug Enforcement and Policy Center. The title of this post is the title of this paper authored by Cam Wade, a rising 3L at The Ohio State University Moritz College of Law. Here is its abstract:
Demanding state regulatory schemes render the operation of cannabis businesses an expensive endeavor and create an urgent need for reliable sources of cash. Historically, the federal ban on cannabis has hindered the industry’s fundraising efforts, but larger cannabis companies have begun to make inroads toward friendlier deals with manageable interest rates. This progress has not extended to smaller cannabis businesses, which has prevented many from effectively competing and contributed to a wave of intense industry consolidation around the largest companies in 2021. This paper explores this fundraising disparity and its policy implications. Proposed solutions at the state and federal level are also evaluated along with an overview of the limited fundraising options which are currently available to small cannabis businesses.
Thursday, February 3, 2022
I was very pleased to have received this morning following terrific guest post content from Professor Scott Bloomberg of the University of Maine School of Law about a notable recent federal circuit court ruling:
Since December 2014, Congress has included a rider in its annual appropriations acts that prohibits the Department of Justice (“DOJ”) from expending funds to prevent states from “implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Consolidated Appropriations Act, 2019, Pub. L. No. 116-6, § 537, 133 Stat. 13, 138 (2019). The rider — most commonly known as the Rohrabacher-Farr Amendment — is an important source of protection from federal prosecution for medical marijuana businesses and users.
Until recently, the only federal circuit court to interpret the Rohrabacher-Farr Amendment was the Ninth Circuit. In 2016 in United States v. McIntosh, the court held that the amendment only prohibited the DOJ from prosecuting marijuana businesses that strictly complied with their states medical marijuana rules. This strict compliance standard meant that if a business stepped out of line — including, in theory, if it only extended a toe over the line — the DOJ could prosecute the business for federal drug crimes.
I have never been a fan of the McIntosh court’s strict compliance standard. I don’t think it is workable in practice and I find it to be a rather unsound interpretation of the Rohrabacher-Farr Amendment. So, when the First Circuit had an opportunity to interpret the Amendment in United States v. Bilodeau, I decided to submit an amicus brief arguing as much.
The brief explains that the strict compliance standard offers little real protection for marijuana businesses given the complex state regulatory codes with which they must comply. What’s more, even if the compliance standard were loosened (say, companies only had to remain in “material compliance” rather than “strict compliance” to avoid the risk of prosecution) tethering the DOJ’s ability to prosecute medical marijuana businesses to a business’s non-compliance with state law creates an inherent problem. Under a standard that bases the DOJ’s authority to prosecute businesses on whether that business has complied with state medical marijuana rules, the best way for a state to shield its medical marijuana businesses from federal prosecution is to not have any medical marijuana rules. The more carefully a state regulates medical marijuana, the more likely its businesses are to be subject to federal prosecution. That incentive structure may not only prevent states from “implementing their own State laws that authorize” medical marijuana, it also flies in the face of the DOJ’s Cole Memo, which instructs states to regulate marijuana closely.
The McIntosh court’s strict compliance standard also relies on an artificial distinction between a state’s “laws that authorize” medical marijuana and a state’s enforcement of such laws. According to the court, when the DOJ prosecutes medical marijuana businesses that fail to comply with a state’s medical marijuana rules, the DOJ does not prevent the state from implementing the “laws that authorize” medical marijuana because the business’s conduct was not authorized by those laws. But laws authorizing states to enforce violations of their “laws that authorize” medical marijuana cannot be so easily divorced from the underlying laws. Enforcement rules are intertwined with the underlying laws for many reasons. Most significantly, a looming threat of federal prosecution would deter many businesses from ever entering the state’s marketplace. The threat would also undermine the state’s enforcement authority over those businesses that do—after all, what rational business would admit to even the most menial of regulatory violations if doing so would open a risk of federal prosecution?
In light of these problems with the strict compliance standard, my amicus brief urged the First Circuit to adopt a more expansive interpretation of the Rohrabacher-Farr Amendment. I argued that the Amendment creates a blanket prohibition on the DOJ’s authority to prosecute state-licensed medical marijuana businesses for marijuana-related offenses (with some limited exceptions).
The First Circuit last week handed down its opinion in Bilodeau, which departed from the McIntosh court’s strict compliance standard but did not go quite as far as I urged. As Judge Kayatta explained, the Ninth Circuit’s strict compliance standard affords the DOJ more power to undermine states’ medical marijuana laws than Congress could have intended.
With federal prosecution hanging as a sword of Damocles, ready to drop on account of any noncompliance with Maine law, many potential participants in Maine's medical marijuana market would fasten fearful attention on that threat. The predictable result would be fewer market entrants and higher costs flowing from the expansive efforts required to avoid even tiny, unintentional violations. Maine, in turn, would feel pressure to water down its regulatory requirements to avoid increasing the risk of noncompliance by legitimate market participants.
[Moreover, Maine’s medical marijuana] rules were not drafted to mark the line between lawful activity and cause for imprisonment. Rather, as with most every regulated market, Maine declined to mandate severe punishments (such as, for example, the loss of a license) on participants in the market for each and every infraction, no matter how small or unwitting…. To turn each and every infraction into a basis for federal criminal prosecution would upend that decision in a manner likely to deter the degree of participation in Maine's market that the state seeks to achieve.
After departing from the strict compliance standard, the court declined to clearly demarcate when the DOJ can (and cannot) prosecute medical marijuana businesses. Instead, the court reasoned that, under the facts of this case, the DOJ could subject the defendants to federal criminal punishment because their alleged conduct also constitute a crime under Maine’s marijuana laws.
The First Circuit’s interpretation of the Rohrabacher-Farr Amendment in Bilodeau should bring some comfort to medical marijuana businesses in the First Circuit. The interpretation gives the DOJ less discretion to prosecute medical marijuana businesses than does the Ninth Circuit’s strict compliance standard. This increased protection could become all the more important if a Presidential administration less friendly to marijuana takes power. (And, for marijuana law professors, Bilodeau and McIntosh present an excellent opportunity for a class exercise on statutory interpretation!)
February 3, 2022 in Business laws and regulatory issues, Criminal justice developments and reforms, Federal court rulings, Federal Marijuana Laws, Policies and Practices, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)
Monday, June 28, 2021
One of many interesting stories of modern marijuana reform has been the relative lack of Supreme Court engagement with the issue in modern times (which, of course, is partially a function of the relative lack significant federal reforms passed by Congress to date). Against that backdrop, it was especially surprising and exciting that Justice Thomas today decided to pen this five-page statement respecting the denial of cert in a tax case, Standing Akimbo v. US, in order to question whether the Raich decision upholding federal power to prohibit all marijuana activity is still good law. The whole statement is a must read, and here are just a few passages that I especially enjoyed (cites and footnotes removed):
Whatever the merits of Raich when it was decided, federal policies of the past 16 years have greatly undermined its reasoning. Once comprehensive, the Federal Government’s current approach is a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana. This contradictory and unstable state of affairs strains basic principles of federalism and conceals traps for the unwary....
though federal law still flatly forbids the intrastate possession, cultivation, or distribution of marijuana, Controlled Substances Act, the Government, post-Raich, has sent mixed signals on its views. In 2009 and 2013, the Department of Justice issued memorandums outlining a policy against intruding on state legalization schemes or prosecuting certain individuals who comply with state law. In 2009, Congress enabled Washington D. C.’s government to decriminalize medical marijuana under local ordinance. Moreover, in every fiscal year since 2015, Congress has prohibited the Department of Justice from “spending funds to prevent states’ implementation of their own medical marijuana laws.” That policy has broad ramifications given that 36 States allow medicinal marijuana use and 18 of those States also allow recreational use.
Given all these developments, one can certainly understand why an ordinary person might think that the Federal Government has retreated from its once-absolute ban on marijuana. One can also perhaps understand why business owners in Colorado, like petitioners, may think that their intrastate marijuana operations will be treated like any other enterprise that is legal under state law.
Yet, as petitioners recently discovered, legality under state law and the absence of federal criminal enforcement do not ensure equal treatment....
Suffice it to say, the Federal Government’s current approach to marijuana bears little resemblance to the watertight nationwide prohibition that a closely divided Court found necessary to justify the Government’s blanket prohibition in Raich. If the Government is now content to allow States to act “as laboratories” “‘and try novel social and economic experiments,’” Raich, 545 U. S., at 42 (O’Connor, J., dissenting), then it might no longer have authority to intrude on “[t]he States’ core police powers . . . to define criminal law and to protect the health, safety, and welfare of their citizens.” Ibid. A prohibition on intrastate use or cultivation of marijuana may no longer be necessary or proper to support the Federal Government’s piecemeal approach.
Of course, Justice Thomas dissented in Raich, so perhaps it should not seem lke a big surprise that he would be inclined to talk up the possibility that it is no longer good precedent. Still, I do not think the tax issue in Standing Akimbo directly called for considering Raich's standing and status. And, of course, Justice Thomas "had me at hello," given that a mere eight months ago I was talking up in this post the prospects of "Raich 2.0" challenges to federal prohibition because so much has changed in the 16 years since the original Raich ruling. (In my prior post, I suggested a number of new Justices might not only be inclined to join Justice Thomas to reconsider the Commerce Clause ruling in Raich, but also might be inclined to breathe some life into the Ninth and Tenth Amendments in this unique context. And one could further speculate that Justices Breyer, Kagan and Sotomayor might be open to considering Fifth and Eighth Amendment challenges to the modern functioning of federal marijuana prohibition.)
Disappointingly, none of Justice Thomas's fellow Justices joined his statement, and so it is unclear whether there could be others inclined to now reconsider Raich. But I am hopeful that perhaps this statement by Justice Thomas alone could fuel some more lower court litigation and discussion, perhaps on a number of different grounds, concerning whether blanket federal marijuana prohibition now functions in constitutionally problematic ways. I think it is only a matter of time before we start to see more Supreme Court engagement with marijuana reform issues, and broadside constitutional issues always make for an interesting place to start.
Thursday, March 4, 2021
The title of this post is the title of this notable new article authored by Robert Mikos now available via SSRN. Here is its abstract:
A growing number of states have authorized firms to produce and sell cannabis within their borders, but not across state lines. Moreover, many of these legalization states have barred nonresidents from owning local cannabis firms. Thus, while cannabis commerce is booming, it remains almost entirely intrastate. This Essay provides the first analysis of the constitutionality of state restrictions on interstate commerce in cannabis. It challenges the conventional wisdom that the federal ban on marijuana gives legalization states free rein to discriminate against outsiders in their local cannabis markets. It also debunks the justifications states have proffered to defend such discrimination, including the notion that barring interstate commerce is necessary to forestall a federal crackdown on state-licensed cannabis industries.
The Essay concludes that the restrictions legalization states now impose on interstate commerce in cannabis likely violate the Dormant Commerce Clause (DCC). The Essay also examines the ramifications of this legal conclusion for the future of the cannabis market in the United States. It suggests that without the barriers that states have erected to protect local firms, a new breed of large, national cannabis firms concentrated in a handful of cannabis-friendly states is likely to dominate the cannabis market. This development could dampen the incentive for new states to legalize cannabis and further diminish minority participation in the cannabis industry. To address these concerns, congressional legislation may be necessary, because individual states have only limited capacity to shape the national market and the firms that compete therein.
Friday, February 28, 2020
The title of this post is the title of this new paper authored by Robert Greenberg now available via SSRN. Here is its abstract:
The prohibition on immoral trademarks has been steadily eroding as a result of First Amendment litigation at the United States Supreme Court. In light of recent Supreme Court decisions on trademark registrations and free speech, the question then becomes: Is the Lanham Act’s ban on cannabis trademark registrations justifiable in light of the First Amendment in view of these recent cases?
Thursday, February 14, 2019
Federal judge finds Walmart unlawfully discriminated under state law against Arizona medical marijuana patient
As reported in this local article, headlined "Judge Rebukes Arizona Walmart for Firing Employee With Medical-Marijuana Card," a federal court last week issued a notable ruling on behalf of a medical marijuana patient in Arizona. Here are the basics:
An Arizona Walmart location terminated an employee in 2016 who held a valid medical-marijuana card after a drug test came back positive. But now a federal judge has ruled that because Walmart could not prove the employee was impaired at work, the company violated the nondiscrimination provision in the Arizona Medical Marijuana Act.
In a significant decision that recognized a private right of action for employment discrimination under the AMMA, Arizona U.S. District Judge James A. Teilborg said last week that Walmart was not justified in firing the worker based on the company's idea that marijuana metabolites in her urine meant she must have been impaired at work.
Whitmire's attorney Joshua Carden, who runs a Scottsdale-based law firm, said Teilborg's decision is "the first of its kind in Arizona."
"No court has officially decided whether a private right-of-action exists under the Arizona Medical Marijuana Act, so that was a big part of the decision," Carden told Phoenix New Times on Tuesday.
Before she was fired, Carol Whitmire had worked at Walmart stores in Show Low and Taylor for about eight years. On May 21, 2016, while working as a customer service supervisor at the Taylor Walmart, a bag of ice fell on Whitmire's wrist while she was leveling the bags, according to the lawsuit. The injury led to an urgent care visit and a drug test, pursuant to Walmart policy. Whitmire’s urine tested positive for marijuana metabolites.
A medical-marijuana cardholder for approximately the last five years, Whitmire smokes marijuana before bed to treat her shoulder pain and arthritis, and as a sleep aid, according to court records. She says she never brought marijuana to work or reported to the job impaired.
After the wrist injury, Whitmire informed the Walmart human resources department and the urgent care clinic that she holds a medical-marijuana card. She continued working until July 4, when she was suspended as a result of the urine sample. Her manager fired Whitmire on July 22 because of the positive result of the drug test, the complaint says.
In March 2017, Whitmire filed a discrimination charge with the Equal Employment Opportunity Commission and the civil rights division of the Arizona Attorney General’s Office. Three months later, she sued Walmart in federal court in Phoenix, alleging wrongful termination and discrimination in violation of the AMMA, the Arizona Civil Rights Act, and Arizona worker's compensation law.
In his decision last week, first reported by Law360, Teilborg granted partial summary judgment to Whitmire for her claim of discrimination under the AMMA. The judge, however, denied Whitmire’s claims alleging discrimination under the Arizona Civil Rights Act and retaliatory termination under Arizona employment protection and worker’s compensation laws.
The court will make a decision regarding damages or Whitmire's potential reinstatement in May, her attorney said. Under the AMMA, it is illegal for an employer to discriminate in hiring or firing based on a patient's "positive drug test for marijuana components or metabolites, unless the patient used, possessed or was impaired by marijuana on the premises of the place of employment or during the hours of employment."
In court, Walmart denied wrongfully terminating or discriminating against Whitmire, and said the company's drug testing policy is lawful and protected under Arizona's Drug Testing of Employees Act (DTEA). But Teilborg wrote that in the absence of expert testimony establishing that Whitmire's drug test shows she was impaired at work because of marijuana she smoked the night before, Walmart "is unable to prove that Plaintiff’s drug screen gave it a ‘good faith basis’ to believe Plaintiff was impaired at work."
Walmart could not meet the burden of proving that the urine sample after the accident “sufficiently establishes the presence of metabolites or components of marijuana in a scientifically sufficient concentration to cause impairment,” the judge wrote.
The full 50+ page ruling in Whitmire v. Walmart is available at this link. As the press report notes, the key to the ruling is the patient protective language in the the Arizona Medical Marijuana Act. Consequently, this ruling does not provide protection to medical marijuana patients outside the state. But the ruling is still notable and another recent example of lower courts growing more comfortable recognizing and enforcing rights under state law on behalf of some marijuana users in some settings.
Monday, February 26, 2018
Federal judge dismisses high-profile suit challenging marijuana's placement on Schedule 1 under the Controlled Substances Act
Earlier this month, as noted in this prior post, a federal district judge heard arguments concerning a motion to dismiss the high-profile suit challenging marijuana's placement on Schedule 1 under the Controlled Substances Act. Though the suit garnered a good bit of public attention, the case of Washington, et.al v. Sessions, et.al, is now likely to go down as yet the latest failed effort to attack the CSA's treatment of marijuana in court because today judge Alvin Hellerstein dismissed the lawsuit. Tom Angell has a useful summary of the ruling and a link to its full 20 pages here. Here is part of that summary:
Judge Alvin K. Hellerstein ruled on Monday that advocates have “failed to exhaust their administrative remedies” to alter cannabis’s legal status, and should pursue changes through the administration and Congress instead of in the courts. “[P]laintiffs’ claim is an administrative one, not one premised on the constitution,” he wrote, and “is best understood as a collateral attack on the various administrative determinations not to reclassify marijuana into a different drug schedule.”...
Hellerstein wrote that “it is clear that Congress had a rational basis for classifying marijuana in Schedule I, and executive officials in different administrations have consistently retained its placement there… Even if marijuana has current medical uses, I cannot say that Congress acted irrationally in placing marijuana in Schedule I.”
However, the judge, who observers say appeared moved by anecdotes about the plaintiffs’ medical uses of cannabis during oral arguments, wrote that he does not reject out of hand the notion that marijuana can be beneficial....
Hellerstein dismissed every other claim in the lawsuit, as well, making it clear he’s done with the case. “Because plaintiffs have failed to state a claim under any constitutional theory, all of plaintiffs’ remaining claims are also dismissed,” he wrote. “For the reasons stated herein, defendants’ motion to dismiss the complaint is granted. Plaintiffs have already amended their complaint once, and I find that further amendments would be futile.”
The plaintiffs in this suit could appeal this dismissal to the US Court of Appeals for the Second Circuit, and doing so would likely keep the case in the headlines. I am not optimistic it would achieve much else, but one never knows with courts these days.
Prior related posts:
- Latest effort to take down federal marijuana prohibition via constitutional litigation filed in SDNY
- "Colorado girl suing U.S. attorney general to legalize medical marijuana nationwide"
- Could a high-profile lawsuit help end federal marijuana prohibition?
- Mixed messages from US District Judge hearing legal challenge to federal marijuana prohibition
Wednesday, February 14, 2018
In this post earlier this week, I noted today's scheduled hearing in federal court concerning a lawsuit challenging marijuana's placement on Schedule 1 under the Controlled Substances Act and asked "Could a high-profile lawsuit help end federal marijuana prohibition?". This Bloomberg article, headlined "Trump Administration Battles Sick Kids on Access to Legal Pot," suggests that the judge hearing the case is sympathetic to the plaintiffs' complaints but still seemingly unlikely to run in their favor:
In a New York courtroom packed with cannabis supporters, the Trump administration urged a federal judge to throw out a lawsuit that aims to pave the way for legal marijuana across the country.
The case was brought on behalf of two sick children, a former National Football League player who says athletes deserve a better way to treat head trauma than addictive opioids and the Cannabis Cultural Association. The suit, filed in July 2017, seeks a ruling that marijuana was unconstitutionally labeled alongside heroin and LSD as a so-called Schedule I drug -- the harshest of five government ratings -- when Congress passed the Controlled Substance Act in 1970.
In court on Wednesday, Justice Department attorney Samuel Hilliard Dolinger said the plaintiffs didn’t follow legal requirements before suing, beginning with a petition to the Drug Enforcement Agency. "The right thing is to defer to the agency," said U.S. District Judge Alvin Hellerstein, an 84-year-old who was nominated by former President Bill Clinton, who famously admitted to experimenting with pot while claiming he "didn’t inhale."...
Hellerstein said he would issue a ruling later, and it was far from clear which way he was leaning. The judge, who had the courtroom erupting in laughter on more than a few occasions during the hearing, was skeptical of the government’s claim that there’s no medical benefit to marijuana. "Your clients are living proof of the medical effectiveness of marijuana," Hellerstein said to the plaintiffs’ lawyer, Michael Hiller....
Cannabis was criminalized "not to control the spread of a dangerous drug, but rather to suppress the rights and interests of those whom the Nixon Administration wrongly regarded as hostile to the interests of the U.S. -- African Americans and protesters of the Vietnam War," the suit says.
At the hearing, Hellerstein said that argument wasn’t going to work with him. The decision "will not depend on what may have been in the mind of Richard Nixon at the time," Hellerstein said.
Prior related posts:
- Latest effort to take down federal marijuana prohibition via constitutional litigation filed in SDNY
- "Colorado girl suing U.S. attorney general to legalize medical marijuana nationwide"
- Could a high-profile lawsuit help end federal marijuana prohibition?
Saturday, November 11, 2017
The title of this post is the headline of this local report on a notable new lawsuit seeking to ensure legal access to medical marijuana. (This lawsuit, filed in federal district court in New York, was first discussed in this post in July 2017.) Here are excerpts from the press piece:
Alexis Bortell is hardly the first child whose family moved to Colorado for access to medical marijuana. But the 12-year-old is the first Colorado kid to sue U.S. Attorney Jeff Sessions over the nation's official marijuana policy.
"As the seizures got worse, we had to move to Colorado to get cannabis because it's illegal in Texas," said Bortell, who was diagnosed with epilepsy as a young child.
The sixth-grader said traditional medicine wasn't helping her seizures and doctors in her home state were recommending invasive brain surgery. But a pediatrician did mention an out-of-state option: Medical marijuana.
Shortly after moving to Larkspur, Bortell's family began using a strain of cannabis oil called Haleigh's Hope. A drop of liquid THC in the morning and at night has kept her seizure-free for 2 1/2 years. "I'd say it`s a lot better than brain surgery," Bortell said.
But Bortell said the federal prohibition on marijuana prevents her from returning to Texas. "I would like to be able to visit my grandparents without risking being taken to a foster home," Bortell said on why she's joined a lawsuit that seeks to legalize medical marijuana on the federal level....
Alexis' dad Dean Bortell ... showed his backyard fields, where he grows five acres of marijuana plants used to derive the medicine that helps his daughter and patients he's never met. "When you look at it from a distance and you see it saving their lives, me as a father and an American, I go, what are we doing? How could you possibly look at someone who`s benefiting from this as a medicine and threaten to take it away?" Bortell said....
Alexis' New York attorney Michael Hiller argues it should be legal nationwide. "As it pertains to cannabis, the (Controlled Substances Act) is irrational and thus unconstitutional," said Heller, who added the U.S. government "made a representation that cannabis has medical application for the treatments of Parkinson`s Disease, HIV-induced dementia and Alzheimer's disease and yet at the same time the United States government maintains that there is absolutely no medical benefit for the use of cannabis. That is of course absurd."
Denver attorney Adam Foster represents marijuana businesses. He said he thought the lawsuit was clever but admitted its success might be a long shot. "Whenever you sue the government, the deck is really stacked against you," Foster said.
But he added the federal government might have a hard time arguing medical marijuana has no known medical benefits. "We now live in an era where 62 percent of Americans live in a state where the medical use of cannabis is legal at the state level," he said.
Alexis Bortell said she hopes her lawsuit will normalize medical marijuana but also legalize it. "We'll be able to be treated like what you call 'normal' families," she said.
Bortell is joined in the lawsuit by another child, a military veteran, a marijuana advocacy group and former Broncos player Marvin Washington, who played on the 1998 Super Bowl-winning team. The federal government has already lost its first motion to have the case dismissed.
Prior related post:
November 11, 2017 in Federal court rulings, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (1)
Monday, August 22, 2016
A darker view of a recent medical marijuana court victory: "10 things to hate about the McIntosh decision"
In this post over at my other blog, I flagged last week's Ninth Circuit panel ruling in US v. McIntosh, No. No. 15-10117 (9th Cir. Aug. 16, 2016) (available here), on a series of appeals concerning "whether criminal defendants may avoid prosecution for various federal marijuana offenses on the basis of a congressional appropriations rider that prohibits the United States Department of Justice from spending funds to prevent states’ implementation of their own medical marijuana laws." That ruling was hailed by many marijuana reform advocates as a victory because the court concluded that "at a minimum, § 542 prohibits DOJ from spending funds from relevant appropriations acts for the prosecution of individuals who engaged in conduct permitted by the State Medical Marijuana Laws and who fully complied with such laws."
But astute followers of the law and policies surrounding marijuana reform know that there is rarely simple story around any aspect of federal marijuana laws and policy, and John Hudak has this recent posting at a Brookings blog explaining reasons why "medical marijuana advocates should [still] worry" after the McIntosh decision. Here are excerpts from the start and the headings of his commentary:
[M]arijuana reform advocates applauded a federal appeals court decision limiting the power of the Department of Justice to prosecute certain marijuana growers. In United States v. McIntosh, the three judge panel (two Republican and one Democratic appointee) dealt explicitly with the Rohrabacher amendment — a rider to a congressional spending bill that barred the DOJ from spending funds on enforcing the Controlled Substances Act in states with medical marijuana reform laws.
Despite the rider being signed into law—by President Obama—the Obama administration continued to bust growers in medical marijuana states. The defendants in the 10 cases grouped together in this appeal hail from California and Washington and were indicted on a variety of federal charges. They fought the charges in lower courts on the basis of the rider without success, and brought their case to the 9th Circuit Court of Appeals.
After the usual judicial hoops of establishing jurisdiction and the appropriateness of the court stepping in at this time to intervene in an ongoing prosecution, the court ruled on the merits of the case. The 9th circuit decision explains that even though “the rider is not a model or clarity” (24) it “prohibits DOJ from spending funds from relevant appropriations acts for the prosecution of individuals who engaged in conduct permitted by the State Medical Marijuana Laws and who fully complied with such laws” (27).
If you’re a marijuana reform advocate, a grower, a cannabis enterprise executive, a patient, or otherwise related to the medical marijuana industry, this is great news, right?
Well, yes and no. The cork popping over the ruling in McIntosh may have been a bit premature. While the central holding of the case is a tremendous victory for the movement and offers a real barrier against executive enforcement power in the context of marijuana, the details of the decision are a bit more mixed. Namely, for the medical marijuana community, there are 10 things to hate about the McIntosh decision.
- The ruling has limited scope...
- McIntosh is about medical marijuana only...
- The Cole Memos are not the Great Savior many believe...
- State-level marijuana reforms do not legalize marijuana...
- State-level marijuana reforms do not legalize marijuana...
- This ruling may not always help current defendants or marijuana law violators...
- This ruling may not always help future defendants...
- This ruling may not always help future defendants...
- This ruling may not always help future defendants...
- This ruling may not always help future defendants
August 22, 2016 in Business laws and regulatory issues, Court Rulings, Federal court rulings, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Who decides | Permalink | Comments (1)
Monday, March 21, 2016
SCOTUS rejects original lawsuit brought by Nebraska and Oklahoma against Colorado over marijuana reform
Legal gurus closely following state-level marijuana reforms have been also closely following the lawsuit brought directly to the Supreme Court way back in December 2014 by Nebraska and Oklahoma complaining about how Colorado reformed its state marijuana laws. Today, via this order list, the Supreme Court finally officially denied the "motion for leave to file a bill of complaint" by Nebraska and Oklahoma against Colorado. This is huge news for state marijuana reform efforts, but not really all that surprising. (It would have been bigger news and surprising if the motion was granted.)
Notably, Justice Thomas authored an extended dissent to this denial, which was joined by Justice Alito. Here is how this dissent stats and ends:
Federal law does not, on its face, give this Court discretion to decline to decide cases within its original jurisdiction. Yet the Court has long exercised such discretion, and does so again today in denying, without explanation, Nebraska and Oklahoma’s motion for leave to file a complaint against Colorado. I would not dispose of the complaint so hastily. Because our discretionary approach to exercising our original jurisdiction is questionable, and because the plaintiff States have made a reasonable case that this dispute falls within our original and exclusive jurisdiction, I would grant the plaintiff States leave to file their complaint....
Federal law generally prohibits the manufacture, distribution, dispensing, and possession of marijuana. See Controlled Substances Act (CSA), 84 Stat. 1242, as amended, 21 U. S. C. §§812(c), Schedule I(c)(10), 841–846 (2012 ed. and Supp. II). Emphasizing the breadth of the CSA, this Court has stated that the statute establishes “a comprehensive regime to combat the international and interstate traffic in illicit drugs.” Gonzales v. Raich, 545 U.S. 1, 12 (2005). Despite the CSA’s broad prohibitions, in 2012 the State of Colorado adopted Amendment 64, which amends the State Constitution to legalize, regulate, and facilitate the recreational use of marijuana. See Colo. Const., Art. XVIII, §16. Amendment 64 exempts from Colorado’s criminal prohibitions certain uses of marijuana. §§16(3)(a), (c), (d); see Colo. Rev. Stat. §18–18–433 (2015). Amendment 64 directs the Colorado Department of Revenue to promulgate licensing procedures for marijuana establishments. Art. XVIII, §16(5)(a). And the amendment requires the Colorado General Assembly to enact an excise tax for sales of marijuana from cultivation facilities to manufacturing facilities and retail stores. §16(5)(d).
In December 2014, Nebraska and Oklahoma filed in this Court a motion seeking leave to file a complaint against Colorado. The plaintiff States — which share borders with Colorado — allege that Amendment 64 affirmatively facilitates the violation and frustration of federal drug laws. See Complaint ¶¶54–65. They claim that Amendment 64 has “increased trafficking and transportation of Coloradosourced marijuana” into their territories, requiring them to expend significant “law enforcement, judicial system, and penal system resources” to combat the increased trafficking and transportation of marijuana. Id., ¶58; Brief [for Nebraska and Oklahoma] in Support of Motion for Leave to File Complaint 11–16. The plaintiff States seek a declaratory judgment that the CSA pre-empts certain of Amendment 64’s licensing, regulation, and taxation provisions and an injunction barring their implementation. Complaint 28–29.
The complaint, on its face, presents a “controvers[y] between two or more States” that this Court alone has authority to adjudicate. 28 U. S. C. §1251(a). The plaintiff States have alleged significant harms to their sovereign interests caused by another State. Whatever the merit of the plaintiff States’ claims, we should let this complaint proceed further rather than denying leave without so much as a word of explanation.
Cross-posted at Marijuana Law, Policy & Reform.
March 21, 2016 in Criminal justice developments and reforms, Federal court rulings, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink | Comments (1)
Friday, March 18, 2016
"One Toke Too Far: The Demise of the Dormant Commerce Clause's Extraterritoriality Doctrine Threatens the Marijuana-Legalization Experiment"
The title of this post is the title of this notable new and timely piece of legal scholarship authored by Chad DeVeaux now available via SSRN. Here is the abstract:
This Article argues that the pending feuds between neighboring states over marijuana decriminalization demonstrate the need for a strict doctrine limiting a state’s regulatory authority to its own borders. Precedent recognizes that the dormant Commerce Clause (DCC) “precludes the application of a state statute to commerce that takes place wholly outside the State’s borders, whether or not the commerce has effects within the state.” This prohibition protects “the autonomy of the individual States within their respective spheres” by dictating that “[n]o state has the authority to tell other polities what laws they must enact or how affairs must be conducted.” But this principle was called into doubt last summer by the Tenth Circuit, which concluded that this “most dormant doctrine in [DCC] jurisprudence” had withered and died from nonuse.
The Tenth Circuit’s conclusion, which approved Colorado’s purported direct regulation of coal-fired power generation in Nebraska, ironically coincided Nebraska’s (and Oklahoma’s) attempt to enjoin Colorado’s pot-friendly laws. Nebraska contends that Colorado’s commercial pot market allows marijuana to “flow . . . into [Nebraska], undermining [its] own marijuana ban, draining [its] treasur[y], and placing stress on [its] criminal justice system.” While Colorado celebrated its new-found power to impose its legislative judgments on Nebraskans, the festivities might be short lived. Colorado failed to recognize the impact the extraterritorial doctrine’s apparent demise will have on its own marijuana-legalization experiment. If Colorado is empowered to regulate coal burning in Nebraska because of its effects in Colorado, what prevents Nebraska from projecting its own laws across the border to regulate Colorado marijuana transactions that affect a substantial number of Nebraskans?
Thursday, November 19, 2015
Menominee Indian Tribe files suit seeking declaration it has right under federal Farm Bill to cultivate industrial hemp
This press release reports on a interesting new lawsuit filed in federal district court this week. Here are the details:
The Menominee Indian Tribe of Wisconsin filed a lawsuit for declaratory judgment today against the United States Department of Justice (“DOJ”) and Drug Enforcement Agency (“DEA”) seeking a judicial determination that Menominee has the right to cultivate industrial hemp pursuant to the Agricultural Act of 2014 (“Farm Bill”). Menominee filed its lawsuit in the United States District Court for the Eastern District of Wisconsin – Green Bay Division.
Menominee Chairman Gary Besaw stated: “The Menominee Tribe, in cooperation with the College of Menominee Nation, should have the right under the Farm Bill to cultivate industrial hemp in the same manner as Kentucky, Colorado, and other states. These and other states cultivate industrial hemp without threats or interference from the United States government. In contrast, when our Tribe attempted to cultivate industrial hemp we were subjected to armed federal agents who came to our Reservation and destroyed our crop. The Department of Justice should recognize the equality of Tribes under the Farm Bill, and provide us with the same respect they have demonstrated to states growing industrial hemp for research purposes.”
Industrial hemp — which can be grown as a fiber and a seed crop — is used to produce a range of textiles, foods, papers, body care products, detergents, plastics, and building materials that are available throughout North America, the European Union, and Asia. Unlike marijuana, it has no psychoactive effect. Industrial hemp is currently cultivated by farmers in more than 30 countries around the world—from Australia to Canada to China. Menominee had been in discussions regarding its growth of industrial hemp with federal officials for months prior to October 23, 2015 when DEA and DOJ officials raided the Menominee Reservation and destroyed its industrial hemp crop. Brendan Johnson, Partner at Robins Kaplan LLP, former United States Attorney for South Dakota, former Chair of then-Attorney General Eric Holder’s Native American Issues Subcommittee, and an attorney representing Menominee in the action filed today stated: “This is a straightforward legal issue. The lawsuit focuses on the specific legal question of whether the Farm Bill’s industrial hemp provisions apply to Menominee. We are confident that the provisions do apply to Menominee; that Menominee is authorized under federal law to cultivate industrial hemp consistent with those provisions; and that a federal court will read the Farm Bill provisions as we do and require the federal government to recognize Menominee’s rights under federal law to cultivate industrial hemp.”
Tuesday, July 14, 2015
As reviewed by this recent Forbes article, headlined "Big Court Defeat For Marijuana Despite Record Tax Harvests," the Ninth Circuit late last week in Olive v. CIR, No. 13-70510 (9th Cir. July 10, 2015) (available here), affirmed the basic approach that federal authorities have adopted to determining the tax obligations of state-legal marijuana businesses. The Forbes piece provides this overview of the issues and the ruling:
Should marijuana businesses pay tax on gross profits or net profits? It sounds like a silly question. Virtually every business in every country pays tax only on net profits, after expenses. But the topsy-turvy rules for marijuana seem to defy logic. And taxes are clearly a big topic these days under both federal and burgeoning state law.
Many observers and legislators suggested that legalizing marijuana would mean huge tax revenues. With legalized medical marijuana now giving way to more and more states legalizing recreational use, the cash hauls look ever more alluring. Washington state regulators say the state collected $65 million in first-year taxes from recreational marijuana sales in just 12 months on cannabis sales of over $260 million from June 2014 to June 2015. In Colorado, the governor’s office estimated that it would collect $100 million in taxes from the first year of recreational marijuana....
Now ... the IRS has convinced the influential Ninth Circuit Court of Appeals that marijuana dispensaries cannot deduct business expenses, must pay taxes on 100% of their gross income. The case, Olive v. Commissioner, was an appeal from a U.S. Tax Court decision. Martin Olive sold medical marijuana at the Vapor Room, using vaporizers so patients do not even have to smoke.
But even good records won’t make vaporizers or drug paraphernalia deductible. The Ninth Circuit upheld the Tax Court ruling that § 280E prevents legal medical marijuana dispensaries from deducting ordinary and necessary business expenses. Under federal tax law, the Vapor Room is a trade or business that is trafficking in controlled substances prohibited by federal law....
On the question whether marijuana businesses should pay tax on their net or gross profits, the tax code says the latter. Indeed, Section 280E of the tax code denies even legal dispensaries tax deductions, because marijuana remains a federal controlled substance. The IRS says it has no choice but to enforce the tax code.
One common answer to this dilemma is for dispensaries to deduct expenses from other businesses distinct from dispensing marijuana. If a dispensary sells marijuana and is in the separate business of care-giving, for example, the care-giving expenses are deductible. If only 10% of the premises is used to dispense marijuana, most of the rent is deductible. Good record-keeping is essential, but there is only so far one can go. For example, in the case of the Vapor Room and Martin Olive, with only one business, the courts ruled that Section 280E precluded Mr. Olive’s deductions....
The IRS is clear that you can deduct only what the tax law allows you to deduct. The trouble started in 1982, when Congress enacted § 280E. It prohibits deductions, but not for cost of goods sold. Most businesses don’t want to capitalize costs, since claiming an immediate deduction is easier and faster. In the case of marijuana businesses, the incentive is the reverse. So the IRS says it is policing the line between the costs that are part of selling the drugs and others.
Sure, deduct wages, rents, and repair expenses attributable to production activities. They are part of the cost of goods sold. But don’t deduct wages, rents, or repair expenses attributable to general business activities or marketing activities that are not part of cost of goods sold.
2013′s proposed Marijuana Tax Equity Act would end the federal prohibition on marijuana and allow it to be taxed – at a whopping 50%. The bill would impose a 50% excise tax on cannabis sales, plus an annual occupational tax on workers in the field of legal marijuana. Incredibly, though, with what currently amounts to a tax on gross revenues with deductions being disallowed by Section 280E, perhaps it would be an improvement. More recently, Rep. Jared Polis (D-Co.) and Rep. Earl Blumenauer (D-Or.) have suggested a phased 10% rate here, ramping up to 25% in five years.
Monday, May 4, 2015
SCOTUS asks for views from US Solicitor General on original lawsuit between states over marijuana reform
Via this order list, the US Supreme Court called for the views of the Solicitor General in the original case of Nebraska and Oklahoma v. Colorado. That is the case, as readers may recall from posts here and here back in December, in which two states filed suit directly in the Supreme Court seeking "a declaratory judgment stating that Sections 16(4) and (5) of Article XVIII of the Colorado Constitution [legalizing and regulating marijuana sales] are preempted by federal law, and therefore unconstitutional and unenforceable under the Supremacy Clause, Article VI of the U.S. Constitution."
I am not sure what the usual timelines tend to be for submission of CVSG briefs during this time of year, but I would think this request from the Justices will just now further slow the resolution of a suit that was filled five months ago and will remain in limbo now until the Solicitor General weighs in.
Prior related posts:
- Nebraska and Oklahoma sue Colorado in US Supreme Court over marijuana legalization
- Could (and should) Colorado (or others) respond to attack on marijuana legalization by counter-attacking federal prohibition?
May 4, 2015 in Federal court rulings, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States, Initiative reforms in states, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)
Thursday, April 9, 2015
Effective coverage of the legal land mine of the DOJ spending restriction in medical marijuana cases
As previously noted in posts here and elsewhere, a provision buried in H.R. 83, the 1700-page Cromnibus spending bill passed late last year, directed the US Department of Justice not to use any funds to interfere with state-legalized medical marijuana regimes. Today the New York Times has this extended and informative discussion of this provision and its uncertain meaning and impact four months after its passage. The article is headlined "Legal Conflicts on Medical Marijuana Ensnare Hundreds as Courts Debate a New Provision," and here are excerpts:
In December, in a little-publicized amendment to the 2015 appropriations bill that one legal scholar called a “buried land mine,” Congress barred the Justice Department from spending any money to prevent states from “implementing their own state laws that authorize the use, distribution, possession or cultivation of medical marijuana.”
In the most advanced test of the law yet, Mr. Lynch’s lawyers have asked the Ninth Circuit Court of Appeals to “direct the D.O.J. to cease spending funds on the case.” In a filing last month, they argued that by continuing to work on his prosecution, federal prosecutors “would be committing criminal acts.”
But the Justice Department asserts that the amendment does not undercut its power to enforce federal drug law. It says that the amendment only bars federal agencies from interfering with state efforts to carry out medical marijuana laws, and that it does not preclude criminal prosecutions for violations of the Controlled Substances Act.
With the new challenge raised in several cases, federal judges will have to weigh in soon, opening a new arena in a legal field already rife with contradiction....
The California sponsors of the December amendment, including Representatives Sam Farr and Barbara Lee, both Democrats, and Representative Dana Rohrabacher, a Republican, say it was clearly intended to curb individual prosecutions and have accused the Justice Department of violating its spirit and substance. “If federal prosecutors are engaged in legal action against those involved with medical marijuana in a state that has made it legal, then they are the ones who are the lawbreakers,” Mr. Rohrabacher said.
Mr. Farr said, “For the feds to come in and take this hardline approach in a state with years of experience in regulating medical marijuana is disruptive and disrespectful.” The sponsors said they were planning how to renew the spending prohibition next year.
Some prior related posts:
- Defense moves to postpone federal marijuana sentencing based new law ordering DOJ not to prevent states from implementing medical marijuana laws
- Should ALL federal marijuana sentencings be postponed now that Cromnibus precludes DOJ from interfering with state medical marijuana laws?
- Impact of the 2015 federal budget's medical marijuana spending restriction remains unclear
April 9, 2015 in Federal court rulings, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Data and Research, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)
Wednesday, March 4, 2015
This AP story reports on the notable mixed verdict in a high-profile federal prosecution of a group of defendants in Washington state who claimed they were growing marijuana only for medical purposes. Here are the details:
Three people were found guilty Tuesday of growing marijuana, but they also were exonerated of more serious charges in a widely-watched federal drug case in a state where medical and recreational marijuana is legal.
The three remaining defendants of the so-called Kettle Falls Five were all found guilty of growing marijuana. But a jury found them not guilty of distributing marijuana, conspiracy to distribute and firearms charges that carried long prison sentences.
U.S. District Court Judge Thomas Rice set sentencing for June 10.
The defendants were Rhonda Firestack-Harvey, her son Rolland Gregg and his wife, Michelle Gregg. Firestack-Harvey wiped away tears as she declared victory in the case. "The truth comes out," she said, noting that the defendants were growing marijuana for medical purposes and had cards permitting that use. "We would have loved to be exonerated of all charges."
However, there was no doubt that federal drug agents found marijuana plants growing on their property near Kettle Falls, she said.
Federal prosecutors did not speak with reporters after the verdict, which followed a full day of deliberations by the jury. Prosecutors asked that the three be taken into custody until sentencing, but Rice declined.
"It's a victory, but it's bittersweet," said Jeff Niesen, an attorney for Firestack-Harvey. "They've been convicted of a federal crime." But while the tougher charges carried sentences of a decade in prison, growing marijuana should bring a much lower sentence, Niesen said.
On Monday, attorneys for the defendants asked jurors to throw out what he described as an overzealous and overreaching case. Attorney Phil Tefleyan criticized the government's prosecution of the three, who contend they were growing medical marijuana for personal use in a case that has drawn wide attention over the government's willingness to prosecute marijuana growers. "They roped in this innocent family," Tefleyan told jurors.
Assistant U.S. Attorney Earl Hicks told jurors Monday that Washington state's stance on marijuana doesn't matter. He says the question for the jury is, "Is it legal under federal law?"
The defendants contend they didn't distribute the marijuana. But they were barred from telling jurors their claim that they grew the marijuana only for personal medical use. That issue can be raised during sentencing. Tefleyan said the government could not point to a single sale of the drug by the family. He said the evidence seized by drug enforcement agents during a raid in August 2012 — 4 pounds of marijuana and about $700 in cash — didn't support the conclusion the family was dealing.
The government has argued the family grew the plants in violation of federal law. "I don't believe there's any question in this case that we're talking about the manufacture of marijuana," Hicks told the jury.
Tefleyan placed blame for those plants on Jason Zucker, a former defendant who cut a plea deal last week, just before the trial started. Zucker, 39, testified Friday that he fronted $10,000 in costs to get the operation up and running. Zucker's plea deal called for a 16-month sentence....
Larry Harvey, 71, was recently dismissed from the case after being diagnosed with terminal pancreatic cancer in December.
I believe that these defendants' acquittal on gun charges means that that they are not subject to any mandatory minimum sentencing terms, and the judge's decision to allow them to be free awaiting sentencing suggests to me that they will likely not receive significant (or perhaps any) prison time for these offenses. In addition, these defendants might have various grounds for appealing to the Ninth Circuit (although they many not want to bother if they get relatively lenient sentencing terms).
Prior related posts:
- Family of medical marijuana patients in Washington turn down plea and set up notable federal trial
- New York Times op-ed laments Kettle Falls 5 federal marijuana prosecution
Friday, February 13, 2015
The questions in the title of this post are prompted by this Reuters report about an on-going federal criminal trial in California. Here is why:
A federal judge hearing the case of nine men accused of illegally growing marijuana in California said Wednesday she was taking very seriously arguments by their attorneys that the federal government has improperly classified the drug as among the most dangerous, and should throw the charges out.
Judge Kimberly J. Mueller said she would rule within 30 days on the request, which comes amid looser enforcement of U.S. marijuana laws, including moves to legalize its recreational use in Washington state, Colorado, Oregon and Alaska.
"If I were persuaded by the defense's argument, if I bought their argument, what would you lose here?" she asked prosecutors during closing arguments on the motion to dismiss the cases against the men.
The men were charged in 2011 with growing marijuana on private and federal land in the Shasta-Trinity National Forest in Northern California near the city of Redding. If convicted, they face up to life imprisonment and a $10 million fine, plus forfeiture of property and weapons.
In their case before Mueller in U.S. District Court in Sacramento, defense lawyers have argued that U.S. law classifying pot as a Schedule One drug, which means it has no medical use and is among the most dangerous, is unconstitutional, given that 23 states have legalized the drug for medical use.
Lawyer Zenia Gilg, who represented defense attorneys for all of the men during closing arguments, pointed to Congress' recent decision to ban the Department of Justice from interfering in states' implementation of their medical marijuana laws as evidence of her contention that the drug's classification as Schedule One should be overturned. "It's impossible to say that there is no accepted medical use," said Gilg, who has argued that her client was growing pot for medical use.
But Assistant U.S. Attorney Gregory Broderick said that it was up to Congress to change the law, not the court. He said that too few doctors believed that marijuana had medical uses for the drug's definition to change under the law. "We're not saying that this is the most dangerous drug in the world," Broderick said. "All we're saying is that the evidence is such that reasonable people could disagree."
Notably, this new Bloomberg article, headlined "Grower’s Case Rivets Investors Seeking Pot of Gold," suggests that those interested in investing in the marijuana industry think that merely "the fact that the judge has agreed to consider the issue is an enormously significant event.” Obviously, this event becomes even more significant if (when?) a federal judge declares unconstitutional the placement of marijuana on Schedule I under the Controlled Substances Act.
February 13, 2015 in Criminal justice developments and reforms, Federal court rulings, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Who decides | Permalink | Comments (2)
Monday, January 26, 2015
Yes, according to the authors of "Fear and Loathing in Colorado: Invoking the Supreme Court's Jurisdiction to Challenge The Marijuana-Legalization Experiment." Their proposed remedy? Similar to any other polluter, Colorado should pay damages to neighboring states to compensate them for "negative externalities."
Here's the abstract:
In this Article, we assert that States may invoke the Supreme Court’s original jurisdiction to challenge Colorado’s marijuana-legalization experiment; the most appropriate remedy is damages. The Constitution endows the Court with jurisdiction to adjudicate suits between States. Historically, such cases generally fall into three categories: conflicts over boundary lines, water-rights disputes, and cross-border nuisances. Suits challenging the marijuana-legalization experiment would implicate the last category. Such suits once comprised a relatively common part of the Court’s docket. The number of these actions fell dramatically in the late-1970s following Congress’s passage of the Clean Air and Water Acts, rendering the Court’s historic role of establishing and enforcing interstate environmental standards obsolete. Colorado’s introduction of recreational marijuana into the stream of interstate commerce has reawakened this long-dormant body of constitutional law. Like downstream pollution produced by industrial operations, the cross-border externalities resulting from Colorado’s introduction of marijuana into the stream of interstate commerce fall squarely within the ambit of the Court’s original jurisdiction. The exercise of this jurisdiction is most appropriately applied “to questions in which the sovereign and political powers of the respective states [are] in controversy” — and in particular, those involving a quarrel for which a “sovereign State could seek a remedy by negotiation, and, that failing, by force.” The current controversy presents just such a case.
In such a controversy the Court should award damages to a prevailing state, using the Coase Theorem as its guide. The theorem states that if transaction costs are eliminated, “parties will negotiate the efficient solution to private nuisance problems.” Real-world application of the Coase Theorem is attained through the application of legal rules that best approximate the way disputes would be resolved in the absence of transaction costs. Such an outcome is best effectuated by a rule charging the nuisance with the damages it causes. As Coase observed, “when a damaging business has to pay for all damage caused” market forces will determine which of the competing enterprises should prevail, coercing the partisans to allocate their resources in the most economically efficient manner. If compelling a polluter to internalize the cost of his pollution drives him out of business, then his enterprise was not the most economically efficient use of the property and his interests should yield to that of his neighbors. In contrast, if the polluter assumes responsibility for all the costs of his venture and still realizes a sufficient profit to stay in business, then his use of the land is most efficient, and his neighbors should yield to his interest. If this remedy is applied, the market will determine the success or failure of Colorado’s marijuana legalization experiment and will serve as a guide to other states in deciding whether Colorado’s venture is worth emulating. This remedy respects the sovereignty of all States, leaving it to the market, not the Court, to decide which of the competing policies should prevail.
You may not agree with the authors' perspective [I didn't]; but the article provides some good background information on "original jurisdiction."
Wednesday, October 29, 2014
District court evidentiary hearing on the constitutionality of marijuana's Schedule I status is underway
Earlier this year, an Eastern District of California judge granted a very rare evidentiary hearing on the constitutionality of the federal government's treatment of marijuana. That hearing is finally underway this week. I'd recommend the Eastern District of California blog for following all of the news and developments.
The EDCA blog has been linking to relevant news coverage, which so far has been sparse unfortunately.
There have been some posts suggesting things aren't going very well for the federal government, but I'm not so sure how much stock to put in those reports.
For example, the Leaf has this post up on some of the testimony of defense witnesses, reprting that "attempts by US Attorneys to paint [Dr. Carl] Hart – who teaches neuroscience at Columbia University and sits on an advisory board to the National Institute of Drug Abuse (NIDA) – as a researcher blinded by his personal biases blew up, at times embarrassingly, in their faces." The anecdotes cited to support this seem focused more on cross examination drama sorts of points, however.
Though it does sound like Hart had a few snappy and effective replies to questions on cross, I doubt that tells us much at all about how the hearing is actually going ias far as what the likely outcome will be. (Even weirder, the Leaf's post comes with the click-driving headline "Federal Prosecutors Appear to Concede Cannabis' Medical Benefits" but there is absolutely nothing reported in the story that I see to back up that wild claim.)
A rational basis challenge to marijuana's Schedule I status will be a tough claim to make out, as anyone familiar with the law in this area knows. Whatever the result, news about the hearings will be interesting to continue to follow.