Federal Law Vs State Law: Marijuana Legalization Battle

Marijuana legalization has been a contentious issue in the United States, with a growing number of states embracing its use for medical and recreational purposes. Despite this, marijuana remains a Schedule I Drug under federal law, creating a complex legal landscape. This conflict between state and federal laws has led to confusion and uncertainty, particularly for businesses operating in the cannabis industry. While the Supremacy Clause of the US Constitution states that federal law supersedes state law in conflicting cases, the federal government has not actively enforced its marijuana laws in states with legalization. This is due to the Tenth Amendment, which limits federal preemption of state laws, and the inability to compel state officers to enforce federal marijuana statutes. As a result, states have been able to chart their own paths, with varying degrees of legalization and regulation.

The Supremacy Clause

Courts have generally held that a state law is only preempted by the Controlled Substances Act (CSA) if it is "physically impossible" to comply with both state and federal law or if the state law stands as an obstacle to the CSA. Carefully crafted state medical marijuana programs do not require state workers to violate federal law but instead regulate private individuals who choose to grow, possess, or use marijuana.

While the federal government has not actively enforced its marijuana prohibition in states that have legalized the drug, the conflict between federal and state laws remains unresolved. The interplay between the Supremacy Clause, federalism, and the Tenth Amendment continues to shape the legal landscape surrounding marijuana legalization in the United States.

State sovereignty

The United States system of government is one of dual sovereignty, with a federal government and individual state governments. While marijuana possession and distribution are federal crimes under the Controlled Substances Act (CSA), the Tenth Amendment limits what state laws can be federally preempted. The CSA itself also makes clear that it only preempts state laws under very limited circumstances. For instance, if there is a "positive conflict" between state and federal law "so that the two cannot consistently stand together".

State laws only apply to citizens within a particular state, while federal law applies to all US citizens. This has resulted in situations where a person can act in compliance with one set of marijuana laws, while violating another. The Supremacy Clause of the US Constitution addresses this conflict, stating that in many (but not all) cases of conflicting laws, federal supersedes state law.

However, the federal government has never alleged in court that federal laws preempt state medical marijuana or legalization and regulation laws. In fact, the Department of Justice (DOJ) argued in favor of dismissing a lawsuit claiming Arizona's medical marijuana law was preempted. This policy of non-interference was formalized in the Department of Justice's 2013 Cole Memo. While the memo was rescinded by then-US Attorney General Jeff Sessions in 2018, the non-enforcement practice continued under the Trump administration and the Biden administration.

Furthermore, the US Supreme Court's 2018 ruling that overturned a federal law prohibiting states from authorizing sports gambling set a precedent that would invalidate a federal attempt to prohibit states from legalizing cannabis. The court explained that requiring state agents to enforce federal laws is an unconstitutional commandeering of a state's resources.

Therefore, while marijuana is still classified as a Schedule I Drug at the federal level, at least 41 states have legalized the possession, manufacture, and sale of at least some cannabis products. The federal government has not stopped states from charting their own paths, and states have been able to dramatically reduce the number of people arrested for cannabis-related offenses, allowing millions of Americans safe and regulated access.

Federal enforcement

Marijuana legalization has been a contentious issue in the United States, with a growing number of states embracing its use for medical and recreational purposes. Despite this, marijuana remains a Schedule I Drug under federal law, creating a complex interplay between state and federal legislation.

The federal government has the authority to enforce its marijuana laws, and marijuana possession and distribution are federal crimes under the Controlled Substances Act (CSA). The Supremacy Clause of the United States Constitution, which is part of Article VI, states that federal law is the "supreme Law of the Land." This clause includes the doctrine of "preemption," which gives federal law precedence over state law in many (but not all) cases of conflict. However, the federal government has never alleged in court that its laws override state marijuana laws or legalization and regulation efforts.

The Tenth Amendment limits the federal government's ability to preempt state laws. It prohibits the federal government from forcing state agents to enforce federal marijuana laws, as this would be unconstitutional commandeering of a state's resources. While federal law enforcement agencies, such as the DEA and the Department of Justice, can enforce federal marijuana laws, they have generally adopted a non-interference policy toward states with legalized marijuana. This policy was formalized in the 2013 Cole Memo, which clarified that federal law enforcement would focus on specific areas while leaving it to states with legal cannabis to establish strict regulatory systems.

The federal government's non-interference approach has persisted despite changes in administration, indicating a recognition of states' autonomy in this area. However, this does not mean that the federal government has entirely stepped away from enforcement. Federal law enforcement agencies can still pursue cases related to marijuana, and individuals acting in compliance with state laws may still violate federal laws. The Transportation Security Administration (TSA), for example, will refer criminal violations regarding illegal drugs to law enforcement, although its primary focus is on safety.

The conflict between state and federal laws has created challenges for businesses operating in the cannabis industry, particularly regarding banking rules and regulations. It has also led to consumer confusion, as the market is now saturated with hemp and CBD products whose legality under federal law is uncertain. These complexities highlight the ongoing tension between state legalization efforts and the federal government's stance on marijuana.

State medical marijuana programs

As of February 2024, 47 states, the District of Columbia, and three territories (Guam, Puerto Rico, and the U.S. Virgin Islands) permit the use of cannabis for medical purposes. The specifics of these programs vary, with 14 states and two territories offering comprehensive medical-only programs, while nine states have medical programs that only allow the use of CBD or low-THC products for specific medical conditions.

The evolution of state medical marijuana programs can be traced back to California in 1996, when voters approved Proposition 215, the Compassionate Use Act. This initiative legalized the use, possession, and cultivation of cannabis for patients with a physician's recommendation for various medical conditions. Other states followed suit, with Arizona approving a similar measure in the same year.

While state laws generally apply only to citizens within a particular state, federal law applies to all U.S. citizens, creating a conflict between state and federal marijuana laws. However, the federal government has taken the position that state regulatory activity does not violate the Supremacy Clause, as states do not prevent federal authorities from enforcing their laws, and state workers are not directly involved in cultivation or sales.

The Department of Justice's 2013 Cole Memo formalized a policy of non-interference with state-legal marijuana providers unless a specific federal interest is implicated. While the memo was rescinded in 2018, the non-enforcement practice has continued under subsequent administrations. This approach allows states to chart their own paths regarding marijuana legalization and regulation, with at least 41 states legalizing possession, manufacture, and sale of cannabis products that remain federally illegal.

Business law complications

The conflict between federal and state laws regarding marijuana has created several business law complications. Marijuana is still classified as a Schedule I drug under federal law, which is the same category as LSD and heroin. This classification has significant implications for businesses, as they face potential legal complications related to financing, production, transportation, and sales, even in states with legal recreational marijuana. This is further complicated by the fact that state laws only apply to citizens within that state, while federal law applies to all US citizens, resulting in a situation where individuals and businesses can comply with one set of marijuana laws while simultaneously violating federal law.

The complexity of this legal landscape makes it challenging for business lawyers to provide clear and accurate advice to clients involved in the cannabis industry. Lawyers advising cannabis companies must navigate the conflicting federal and state laws, which can be difficult due to the ever-changing nature of state regulations and the lack of a consistent federal framework. This situation has led to concerns about lawyers potentially violating their professional oaths by advising clients on activities that may conflict with federal law.

Additionally, financial institutions that assist marijuana companies may run the risk of violating the Controlled Substances Act and being accused of money laundering under the Bank Secrecy Act. As a result, some banks, credit card companies, and M&A brokers are hesitant to provide accounts and services to marijuana businesses, despite the increasing number of states legalizing cannabis in some form.

The federal government's position on marijuana enforcement has evolved over time. While the Department of Justice's 2013 Cole Memo clarified their enforcement approach, it was rescinded in 2018, creating uncertainty about the federal government's priorities in marijuana enforcement. However, in practice, a policy of non-enforcement has continued, and federal prosecutions of state-licensed businesses have effectively stopped.

The ongoing conflict between federal and state laws regarding marijuana has resulted in a dynamic and intricate legal landscape that presents challenges for businesses, lawyers, and financial institutions. As more states move towards legalization, the need for a consistent and comprehensive federal framework becomes increasingly crucial to address the business law complications that arise from this conflict of laws.

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