Last week, Attorney General Jeff Sessions issued a memo that rescinds the previous administration’s guidance related to the prosecution of federal marijuana laws. The Obama Administration was reacting to state and local decisions to relax their respective marijuana laws.
While none of the provisions were enshrined in law, the guidance found in multiple memos previously issued by the Department of Justice provided the flexibility and confidence that allowed states and cities to develop and experiment with safe, federally-compliant marijuana industries.
Sessions’ recent decision to scrap these existing rules significantly adds to the conflict between federal and state laws related to the manufacturing, distribution and the sale of medical and recreational marijuana. While the memo will likely have little implications for the average marijuana user, it may impact the distribution businesses and the tax bases that have flourished in states and cities under the previous administration’s guidance.
For starters, it jeopardizes the ability of state and local governments to collect tax revenue from the sale of marijuana. Sessions’ directive makes it very difficult for marijuana businesses to open bank accounts, which further pushes the industry to rely on “cash only” models.
Reliance on cash operations makes it more difficult for state and cities to track and collect the taxes related to the trade. During a time of declining federal investment, many states and cities have found ways to recoup lost revenues through this new industry.
It is predicted that state and local governments will collect nearly $1.4 to $1.8 billion in taxes from the sale of cannabis next year. California alone is expected to raise nearly $1 billion from the taxes collected on the recreational cannabis sales. States and local governments are using this tax revenue to fund infrastructure, homelessness, health care, education, drug treatment, drug prevention and law enforcement programs.
Secondly, the urgency for the memo appears to be predicated on some unfounded claims.
While many states and local governments are witnessing increased revenue, the actual public safety impact of marijuana legalization is still being evaluated by cities. Some law enforcement and the criminal justice officials, who opposed marijuana legalization, predicted considerable increase in crime rates and drug abuse, however, the initial reports from states like Colorado and Washington are showing negligible rise in criminal activity and drug abuse.
In fact, in states that have decriminalized or legalized marijuana use, the rates of marijuana related crime and arrests have dropped significantly.
Third, the public health impact of legalizing marijuana use is also showing that legalized marijuana use has not led to increases in the number of individuals becoming dependent or abusing cannabis. According to the National Survey on Drug Use and Health (NSDUH) 2015 annual report, administered by the Substance Abuse and Mental Health Services Administration:
- Marijuana use increased from 6.2 percent in 2002 to 8.3 percent in 2014 (approximately 22.2 million people).
- Marijuana use was most prevalent among people aged 18 to 25
- Since 2002, marijuana use has increased among persons aged 18 to 25, but not among those aged 12 to 17 years
- The greatest percentage of increase in use was among adults aged 55 years or older (from 1.1 percent in 2002 to 6.1 percent in 2014)
- About 1 in 5 young adults aged 18 to 25 (19.8 percent) were current users of marijuana
- From 2002 to 2014, the prevalence of marijuana dependence and abuse decreased by 29 percent among all persons aged 12 years or older
There are also preliminary indicators that the percentage of opioid overdoses and deaths are decreasing in states that have legalized medical and recreational use of marijuana.
While Sessions’ decision gives federal prosecutors greater discretion to pursue criminal charges against some marijuana businesses, the federal government lacks the necessary resources to go after every marijuana user and seller. For the memo to have any significant impact on how marijuana laws are enforced in cities, it will largely be up to local governments to determine how they will manage their local law enforcement officials to enforce federal marijuana laws.
Local governments need to evaluate whether their community would be better off enforcing federal marijuana laws or working with their states to ensure state decriminalized or legalized marijuana use does not adversely impact the health and safety of their communities.
While NLC does not endorse the use of marijuana, we do support efforts to resolve conflicts between state and federal marijuana laws, including providing guidance to financial institutions. The memo will do little to change the consumption of marijuana in America, but it will, unfortunately, contribute to more inconsistencies in the law.
About the Author: Yucel (“u-jel”) Ors is the program director of public safety and crime prevention at the National League of Cities. Follow Yucel on Twitter at @nlcpscp.
About the author: Brian Egan is NLC’s Principal Associate for Finance, Administration and Intergovernmental Relations. Follow him on Twitter @BeegleME