Over the past 25 years, 38 states have legalized marijuana for medicinal purposes, and at least 19 of those states have legalized it for adult recreational use as well. Each of these states has created its own marijuana market with its own unique set of suppliers, and its own unique set of rules and regulations.
As public support for reform continues to grow, Congress appears poised to follow the states’ lead and legalize marijuana at the federal level. Indeed, Congress is now mulling over a litany of legislative bills that would do just that.
But while commentators have highlighted the upside to federal legalization, a new article shines a light on an overlooked problem that would be created by the bills now under consideration. Legalization Without Disruption: Why Congress Should Let States Restrict Interstate Commerce in Marijuana, co-authored by Vanderbilt Law Professor Robert Mikos, warns that federal legalization of marijuana would trigger the Dormant Commerce Clause (DCC), an obscure constitutional doctrine which limits states’ ability to regulate interstate commerce in commodities.
To date, states have operated under the assumption that the DCC does not apply to their marijuana markets, because Congress has forbidden all commerce in marijuana. Based on this assumption, states have imposed a variety of restraints on interstate commerce in marijuana, including bans on all interstate sale and shipment of marijuana. These restraints have been a key tenet of state reforms and have enabled states to pursue a variety of laudable goals.
But if Congress were to legalize marijuana, it would leave no doubt that the DCC applies to marijuana markets. The DCC would force states to suddenly open their doors to marijuana from other states—including states where producers are used to playing by a very different set of rules. As a result, federal legalization could wreak havoc on the U.S. marijuana industry and state regulators. Among other things, it would jeopardize social equity licensing programs designed to boost minority participation in marijuana markets, render private investments in existing regulatory systems and marketplaces obsolete, and undermine state efforts to carefully monitor marijuana transactions.
“Unfortunately, the DCC has gotten little attention in burgeoning debates over the future of marijuana policy,” the authors write. “This article serves as a much-needed wake up call.”
To mitigate these unintended consequences of federal legalization, the authors urge Congress to preserve state regulatory authority. Their proposal is modeled on the language of the McCarran-Ferguson Act, a 1949 congressional statute that preserved state control over insurance markets in the wake of a Supreme Court decision that threatened to suddenly unleash the DCC and its attendant disruptions on those markets.
The authors’ language affords policymakers time to craft well-researched regulations without market disruption while leaving the door open for federal regulation when Congress chooses to act. They also include a sunset clause, recognizing that the benefits of suspending the DCC will likely diminish over time.
The authors note that “the work on managing the transition from federal prohibition to legalization has only just begun.” Issues regarding international trade, the business of hemp, and how federal marijuana regulations will preempt state regulations all require attention.
“While these issue plainly deserve attention, the most pressing matter is ensuring that Congress suspends the DCC when it repeals the federal marijuana ban,” they write. “Only by doing so will it achieve legalization without disruption.”