State-level cannabis legalization has become a sensitive issue in recent years. As states like Colorado, Nevada, California, and Washington vote to make recreational marijuana use legal, debate has intensified in New Mexico over whether to do the same. The marijuana debate is interesting in itself, but it also raises important constitutional questions. Should the federal government leave the cannabis question to the states?
The Rio Grande Foundation supports common sense, transparent, regulatory systems for businesses. This is also true when applied to state-based cannabis industries. We believe in federalism and the power of the states to act and legislate in a constitutionally guaranteed and sovereign manner.
Tristan Goodwin is a policy analyst with the Rio Grande Foundation, a libertarian-oriented think tank based in New Mexico.
As Supreme Court Justice Louis Brandeis wrote, “a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” We agree, and urge Congress to ensure stability by removing regulatory ambiguity for an important industry in 29 states, the District of Columbia, Guam and Puerto Rico, which have legalized medical and/or adult use cannabis.
If federalism is to work in any meaningful way, it cannot be applied selectively, based on what policymakers in Washington think of an issue. The 10th amendment reserves all powers to the states or to the people not explicitly delegated to the federal government. The freedom of states to regulate their local economies has been critical to our union, no matter the product. Virginia is free to regulate tobacco if it is grown, distributed and purchased within the boundaries of the state. Why should the cannabis industry be subjected to a different set of standards? Federal intrusion on cannabis in legal states is an assault on our constitutional system.
The cannabis industry has become a vital economic force for states that have chosen to legalize. The Tax Foundation estimates that states have the potential to collect between $5 and $23 billion dollars annually in tax revenue through the legal cannabis industry. Additionally, the federal government has the potential to gain $7 billion dollars per year in legal cannabis tax dollars. Not only will states that legalize cannabis be able to more effectively prioritize law enforcement resources, revenues from taxation will fund education, treatment, and law enforcement activities. This industry has proven to be valuable to state general funds and an economic engine of job growth; one that is a vital, local economic force in states that have pursued legalization as an approach to cannabis law.
The safety of our families, businesses, and communities is of utmost importance. By providing codification of the Cole Memorandum and reform of IRS Section §280(e), states can prioritize limited law enforcement assets and severely curtail the cash and cartel-based operations of the cannabis black market.
The administration and Department of Justice must make it clear that they are upholding the Cole Memorandum. This will keep the industry in the sunlight of banking and state regulatory systems. It will provide common sense, transparent regulatory systems for businesses that operate in state-based cannabis industries. It will provide the time necessary for leaders in Congress and stakeholders to determine the appropriate regulatory system for a burgeoning, legal industry within the states; an industry that is proving to be an engine of job growth and boost to state general funds.
Finally, we support legislation that allows these legal businesses access to traditional banking services. Under the Controlled Substances Act, marijuana is still illegal at the federal level, which means that any profit made from the sale of marijuana is also considered illegal. Banks that might provide services to marijuana businesses open themselves up to government seizure and criminal prosecution by the Federal Deposit Insurance Corporation (FDIC) if they choose to do business with the industry.
As a matter of public safety, legal businesses should have access to legitimate banking services. Denying cannabis businesses the right to traditional banking services creates a dangerous, “cash-based” business culture that invites violence and illegal activity. Since legalization, the Denver Police Department has reported over 200 robberies of legal cannabis businesses.
Sometimes, it takes a controversial issue like the legalization of cannabis to bring to light the importance of “bigger picture” goals we must strive for. If you believe in the 10th Amendment and support a state’s right to grow its own economy, within its borders, under its own rule of law, let your federal officials know that cannabis laws belong under state jurisdiction. There is no need to set a precedent for disrupting this state-federal balance. If the American people would like to see the constitution upheld, law enforcement resources properly spent and growth for locally-based economies, we must allow cannabis laws and enforcement to remain under state jurisdiction.
