Legalization of marijuana in Colorado and Washington is bringing speculation about what the Administration will do in response. No obvious answer appears, because the Executive Branch’s options are limited – the kind of situation the Founders intended when they split up power and gave so much to the Legislative Branch.
Congress could address the problem of state-legal marijuana. (But what Congress is likely to do is easy to predict – nothing.) A Federal marijuana tax could take away the threat of cheap marijuana flooding the country. It could superimpose regulations on what Colorado and Washington come up with. It could replace the crude tool of Internal Revenue Code section 280E, which now denies all deductions (other than cost of goods sold) for the state-legal marijuana trade. With a soak-up mechanism like the federal estate tax credit for state inheritance taxes, it could leave new marijuana revenue plans, discussed in detail at https://newtax.files.wordpress.com/2012/10/gangs-ganjapreneurs-or-government-marijuana-revenue-up-for-grabs.pdf, to operate in Colorado and Washington.