Weighing the Costs and Benefits of Federal Prohibition

Public opinion on marijuana is quickly changing. The number of Americans who believe marijuana should be legal more than doubled from 2000 to 2019. As of April 2021, fewer than eight percent of adults agree that marijuana should not be legal for adult use.¹ This places public opinion in direct opposition to current federal laws, under which marijuana is illegal for both medical and recreational use. The economic costs of federal prohibition, such as its negative health effects, the tensions between state and federal laws which create problems in several industries, the negative externalities from underground markets, and the costs of enforcement outweigh any potential benefits of prohibition. Therefore, it is time for the federal government to mend tensions with state laws by legalizing weed completely.

Under federal law, drugs are categorized into five distinct categories with decreasing potential for abuse, Schedule I having the highest potential for abuse and Schedule V having the lowest. Cannabis is classified as a Schedule I drug. For a drug to be defined as such means it has “no currently accepted medical use and a high potential for abuse.” Other Schedule I drugs include heroin, ecstasy, and LSD. Cocaine, oxycodone, and fentanyl are all Schedule II drugs. ² For simple possession of marijuana, an offender can be charged with up to one year in prison, fined a minimum of 1000 dollars, or both.³ Despite marijuana being illegal at the highest level of government, 19 states have legalized marijuana, as well as Washington, D.C. and Guam.⁴ The laws of the states are in direct conflict with federal law. When this occurs, the Supremacy Clause of the Constitution states that federal laws preempt state laws.⁵ Of course, the issue of enforcement follows. Because marijuana is legal in specific states, these states will not enforce federal laws. If the federal government wishes to enforce this law within these states, it may, which leads to a variety of problems.

These tensions create problems in several industries, including the financial services and transportation industries. The federal government provides regulatory oversight for financial institutions, as well as insurance and access to funding and payment systems. If banks provide service to companies with state cannabis licenses, or even to other companies who sell to those businesses, they may be held criminally or civilly liable, or be subject to regulatory sanctions. For these reasons, many financial institutions are unwilling or unable to provide services to cannabis businesses or those in direct relation to them. While some banks have tentatively opened up to this market, many marijuana businesses still have a difficult time engaging in important and fundamental business activities, such as opening bank accounts, making deposits, and accepting credit cards.⁶ Federal prohibition severely hinders the marijuana industry, meaning that state legalization does not give the marijuana industry the power to operate as any other industry would.

In the transportation industry, many drivers who cross state lines hold certifications from the Department of Transportation, which raises many potential issues due to the conflict of state and federal laws on marijuana. If a driver uses cannabis in a state legally, they could still lose their certification if they test positive for use of cannabis. Federal employees face a similar problem: even if marijuana is legal in the state in which they use it, they may still face serious repercussions from the federal government if their usage is discovered. These issues also make it difficult for lawyers to take on clients from the marijuana industry. Because cannabis is illegal federally, it could be argued that a lawyer working with and advising businesses is instructing them to break the law and therefore break the oath of attorney they took when they were sworn into the bar. Many states that have legalized marijuana have created some form of protection for lawyers who advise cannabis-related clients, but the simplest solution to this conflict would be federal legalization of marijuana.

Those opposed to the legalization of marijuana cite its health impacts, the lowering of its price and therefore the increasing of its demand, and an increase in those in the criminal justice system due to behaviors caused by intoxication.⁷ Although prohibition does reduce demand and restrict the supply of marijuana, meaning its cost is higher, this seems to only have a moderate effect on usage.⁸ Most of the market is simply driven underground. For example, alcohol prohibition had about a 20 percent decrease in usage rate.

Opponents of legalization argue that if marijuana were to become legal, people would break the law at a higher rate due to irrational behavior caused by intoxication with the drug, and the criminal justice system would require more resources to prosecute these people. However, it is more likely that prohibition leads to higher rates of violence, because participants in illegal markets cannot resort to institutions such as courts and lawyers to resolve their disputes. Instead, they settle conflicts themselves, often using violent measures. This is confirmed by evidence from alcohol prohibition as well as comparisons across countries.⁹

Marijuana can have several serious health effects, which prohibitionists use as support for the argument against legalizing weed. As with many drugs, some people who use it will become unable to stop using it even if it causes serious problems in their life. Cannabis can also have serious impacts on brain health, especially brain development. Mental health issues have also been linked to marijuana usage.¹⁰ However, because marijuana use is comparable when outlawed or legalized, these concerns would still be present even if prohibition were in effect. A variety of unique health concerns arise under prohibition relating to quality control. Consumers of cannabis cannot sue or give marijuana companies bad publicity for bad quality or use of harmful pesticides, because doing so would reveal they partook in an illegal activity.

Supporters of prohibition argue that social costs would include use of healthcare due to health effects, loss of productivity, and increased bad behavior resulting in criminal justice costs.¹¹ But prohibition also has costs, including the costs of enforcement and the forgoing of the tax revenues that could be imposed on this market. These forgone tax revenues are not exactly “lost”, but under prohibition, they are redistributed. In legal markets, taxes are collected by the government. But in underground markets, would-be tax revenue is collected as profits by suppliers.¹²

Because prohibition has a small effect on usage and large economic costs, the federal government should remove marijuana as a Schedule I drug under the Controlled Substances Act. On October 7, 2022, President Joe Biden announced that he would pardon anyone convicted of a federal crime of simple marijuana possession, and called for governors to do the same for those similarly convicted under state laws.¹³ This move is a step in the direction of decriminalization, but does not come close to legalization. The current situation is perhaps best illustrated by Harvard University’s position on the substance. Harvard receives federal funding, meaning use of the drug is prohibited on campus. But walk a few feet off campus, and anyone over the age of 21 is free to possess and use weed.¹⁴ It would be best to mend inconsistencies like this by simply legalizing weed federally.

References

1. Ted Van Green, “Americans Overwhelmingly Say Marijuana Should Be Legal for Recreational or Medical Use,” Pew Research Center (Pew Research Center, April 16, 2021), https://www.pewresearch.org/fact-tank/2021/04/16/americans-overwhelmingly-say-marijuana-should-be-legal-for-recreational-or-medical-use/. ↩

2. ​​DEA, “Drug Scheduling” (Drug Enforcement Agency, July 10, 2018), https://www.dea.gov/drug-information/drug-scheduling. ↩

3. Reimer, Melissa K. “Weighing the Charges: Simple Possession of Drugs in the Federal Criminal Justice System Introduction.” United States Sentencing Commission, September 2016. https://www.ussc.gov/sites/default/files/pdf/research-and-publications/research-publications/2016/201609_Simple-Possession.pdf.  ↩

4. Claire Hansen, Horus Alas, and Elliott Davis, “Where Is Marijuana Legal? A Guide to Marijuana Legalization,” U.S. News and World Report, October 7, 2022, https://www.usnews.com/news/best-states/articles/where-is-marijuana-legal-a-guide-to-marijuana-legalization. ↩

5. “Preemption,” Legal Information Institute (Cornell Law School), accessed October 13, 2022, https://www.law.cornell.edu/wex/preemption..  ↩

6. Amy J Kellogg, Caitlyn A Anderson, and Meg C Michiels, “A Cannabis Conflict of Law: Federal vs. State Law” (American Bar Association, March 21, 2022), https://www.americanbar.org/groups/business_law/publications/blt/2022/04/cannabis-fed-vs-state-law/. ↩

7. “Marijuana Legalization: A Bad Idea,” Office of Justice Programs (U.S. Department of Justice, October 2010), https://www.ojp.gov/ncjrs/virtual-library/abstracts/marijuana-legalization-bad-idea. ↩

8. Jeffery Miron, (2022). ↩

9. Jeffery Miron, (2022). ↩

10. “Marijuana and Public Health” (Centers for Disease Control and Prevention, October 19, 2020), https://www.cdc.gov/marijuana/health-effects/addiction.html. ↩

11. “Marijuana Legalization: A Bad Idea,” Office of Justice Programs (U.S. Department of Justice, October 2010), https://www.ojp.gov/ncjrs/virtual-library/abstracts/marijuana-legalization-bad-idea. ↩

12. Jeffery Miron, (2022) ↩

13. Kevin Liptak, “Biden Pardons All Federal Offenses of Simple Marijuana Possession in First Major Steps toward Decriminalization,” CNN Politics (Cable News Network, October 6, 2022), https://www.cnn.com/2022/10/06/politics/marijuana-decriminalization-white-house-joe-biden. ↩

14. Benjamin D Senzer and Lucy Wang, “It's High Time: Weed at Harvard” (The Harvard Crimson, March 8, 2017), https://www.thecrimson.com/article/2017/3/8/weed-at-harvard/. ↩