Opinion: US Should Decriminalize, Regulate and Tax Marijuana

Published as Expert Analysis on Law360.com. 
By Adam Schleifer (April 27, 2020, 12:06 PM EDT)

Before COVID-19 turned our world upside down, legalization of marijuana was expected to be a centerpiece of New York’s 2020 budget legislation. Now, legalization — and the $300 million in estimated annual tax revenues that it will eventually bring — will have to wait.

This raises an important question: Why are we not talking more about federal legalization of marijuana, which could generate some $132 billion in tax revenue and 1 million new jobs?[1]

If undertaken with appropriate health and safety oversight by the U.S. Food and Drug Administration, federal legalization would help address our vaping health crisis, which evidence suggests may be caused by grey-market THC pens[2] adulterated with harmful additives.

Federally legalized, regulated, quality-controlled marijuana would also deprive pernicious international drug cartels of a major revenue source and help support the integrity of our borders.

The perniciousness of those cartels’ illegal operations cannot be understated. On Feb. 7, 1985, for example, drug-cartel thugs abducted U.S. Drug Enforcement Administration Special Agent Enrique “Kiki” Camarena in broad daylight just outside of the U.S. Consulate in Guadalajara, Mexico. As they also did with a pilot, Alfredo Zavala, who had helped Camarena investigate large Mexican marijuana plantations, these thugs dragged Camarena to a safe house, where they interrogated and tortured him to death.

These murderers were motivated by a pair of recent busts in which the DEA had helped seize many billions of dollars’ worth of marijuana from the cartel’s thriving Mexican military-industrial-cartel complex. Marijuana was big business in 1985; it remains so today.

I learned of those tragic crimes and their marijuana connection by investigating them as a federal prosecutor.

As I reconstructed the dark, cocaine-fueled life and times of the Guadalajara cartel and its corrupt allies and partners, I was surprised at the centrality of the American marijuana market to those dangerous cartels’ profits and power, cartels which remain a blight on and threat to civil society throughout the Americas.

More broadly, I was also struck by the flow of (1) Mexican panga boats that smuggle tons and tons of marijuana onto our shores; and (2) the slow burn of fraud, corruption and tax evasion endemic to the state-legal but federally illegal marijuana industry in its current form.

So, although states such as Colorado and California have served as helpful laboratories of democracy in our country’s experimentation with marijuana legalization, the results are in. We can do better; we must do more.
First, we must federally decriminalize the possession and licensed distribution of marijuana.

Although many may assume state decriminalization makes it legal to possess marijuana, the only thing standing between all marijuana businesses and end-users and federal criminal prosecution is a discretionary set of U.S. Department of Justice guidelines set forth in the Cole memorandum,[3] and a current congressional budget rider denying funds to prosecution of state-legal marijuana activity — both of which are subject to change anytime. This uncertainty is anathema to the planning and certainty that rule of law and legitimate business activity both require.

And unlike physically addictive, dangerous and deadly drugs like methamphetamine, opioids and heroin, it is hard to see how continued devotion of federal criminal resources to the interdiction of marijuana accomplishes much beyond supporting a life-limiting one-way ratchet of criminal institutionalization of young people — particularly young people of color, upon whom the incidence of marijuana arrests and prosecutions has fallen unequally.[4]

The criminal justice system has a salutary role in protecting society from the scourge of violence, property crimes and death posed by drug addiction and abuse, but it’s clear by now that marijuana use has little to do with that important mission.

Second, we should reschedule marijuana under the Controlled Substances Act. While the 2018 Farm Bill circumvented certain limitations when it comes to hemp agriculture[5] — a very important first step — marijuana’s listing within Schedule I of the Controlled Substances Act belies pharmacological reality, stymies further scientific study, and makes use and development of marijuana-related therapeutics unnecessarily difficult.

Marijuana should either be removed from the schedules entirely or reclassified[6] within a schedule that reflects its low or lower potential for abuse and physical addiction. And while rescheduling could be accomplished without legislation through administrative rulemaking, Congress should act directly and pass federal rescheduling (or unscheduling) legislation for the dual purposes of greater permanency and increased legitimacy.

Third, we should reform the tax code and related federal statutes affecting the financial treatment of marijuana, its proceeds and the access to credit it needs to function legitimately.

The tax code establishes unfair limitations[7] on the ability of marijuana-related businesses to deduct routine expenses, which encourages accounting and tax fraud and makes it difficult for legitimate marijuana businesses to operate profitably and make accurate financial disclosures to potential investors and shareholders.
These limitations and others,[8] which essentially deprive marijuana businesses of access to the interstate banking and credit system, create dangerous Wild West conditions in the marijuana industry.

Finally, we must amend the relevant international treaties and our obligations under them. It is an inconvenient truth that major reform of our federal marijuana framework would put us out of compliance with various treaty obligations.[9] Rather than ignore this and further undermine our country’s once-proud status as a multilateralist force for public international law, we must work to amend these treaties and our obligations thereunder.

It’s high time our federal laws recognize the scientific, financial and policy realities of marijuana.

Adam P. Schleifer is a candidate for Congress in New York’s 17th congressional district. He previously worked as an an assistant U.S. attorney and as special associate counsel for the New York State Department of Financial Services.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of Portfolio Media Inc., or any of its affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


[1] https://www.washingtonpost.com/national/2018/01/10/study-legal-marijuana-could-generate- more-than-132-billion-in-federal-tax-revenue-and-1-million-jobs/.
[2] https://www.nytimes.com/interactive/2020/health/vaping-illness-tracker- evali.html?searchResultPosition=10.
[3] https://en.wikipedia.org/wiki/File:DOJ_Cole_Memo_2013.pdf.
[4] https://www.aclu.org/report/report-war-marijuana-black-and-white?redirect=criminal-law- reform/war-marijuana-black-and-white.
[5] https://www.fda.gov/news-events/congressional-testimony/hemp-production-and-2018-farm-bill- 07252019.
[6] https://www.drugpolicy.org/sites/default/files/marijuana-scheduling_january_2019_0.pdf.
[7] https://my.vanderbilt.edu/marijuanalaw/2019/01/564/.
[8] https://www.nafcu.org/faqs-marijuana-banking-credit-unions#question%201.
[9] https://www.brookings.edu/blog/fixgov/2014/10/16/marijuana-legalization-poses-a-dilemma-for- international-drug-treaties/.