Until a decade or so ago, America’s policy on cannabis had been outright prohibition. Marijuana was illegal to grow, produce or sell in nearly every state, and individuals who participated in any of these activities were subject to intense policing and harsh sentencing. Now more than 30 states allow some form of cannabis, and the industry has employed hundreds of thousands and provided states with millions of dollars in tax revenue.
However, federal law still classifies marijuana as a Schedule I controlled substance, similar to hard drugs such as cocaine and heroin. Additionally, most states have different cannabis regulations, and what is allowed in one state may be illegal in another. Consequently, this has led to a mismatch between federal law and a patchwork of state law, with state-legal businesses being forced to navigate an extremely tricky legal environment.
This week a conservative U.S. Supreme Court Justice slammed America’s federal policy on cannabis, calling it unstable and contradictory and suggesting that outright federal prohibition of the controversial drug may even be unconstitutional. Justice Clarence Thomas specifically talked about the 2005 Gonzales v. Raich ruling, which determined that since the federal government had the authority to regulate interstate commerce, it could enforce prohibition policies against cannabis cultivation in California.
However, he says, federal policies have undermined this ruling in the 16 years since it was passed. The federal government’s approach to cannabis has since been a “half-in, half-out regime,” he says, with the federal government seeming to both allow and forbid local cannabis use. Not only does this strain the credibility of federal law, but it also hides traps for unwary cannabis businesses that might think they are acting lawfully based on the federal government’s previous actions, only to find themselves facing repercussions.
Since the Gonzales v. Raich ruling, the government has sent mixed signals regarding cannabis. For instance, a spending bill rider that has been approved repeatedly forbids the Justice Department from using its funds to interfere with state-legal medical marijuana programs. Additionally, Obama-era memorandums by the Justice Department state that the government would “tolerate” certain cannabis-related activities as long as they are lawful in the state in which they occur. Federal prosecutors were also instructed not to pursue low-level cannabis offenders, contrary to federal law.
Thus, he says, these actions may lead the ordinary person to believe that the federal government has reversed its prohibitionist policies when it hasn’t. The mismatch between federal and state law has also prevented cannabis businesses from accessing financial services, despite being legal entities that pay tax. Most of them are forced to operate on a cash-only basis, which puts them at risk of burglaries and robberies. In conclusion, Thomas said that outright prohibition may no longer be a proper approach.
The comments of the Justice of the Supreme Court give a voice to what the entire cannabis sector, including companies such as Grapefruit USA Inc. (OTCQB: GPFT), feel about the contradictions between federal and state marijuana policies.
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