[UPDATE 22 December 2014: Extension of the Holder memo to Native American territory opens the distinct possibility of monopolies there. And the case of Nebraska v. Colorado gives the Supreme Court a chance to address Legality (of a lesser provocation) and Standing.]
You hear folks say states can’t run a marijuana monopoly because they would be ordering employees to violate federal law. I’m not so sure. First, a monopoly is not indisputably illegal. Second, no one other than the federal government may have standing to complain.
I. Legality
The CSA’s definition of the term “person” – possible violators – does not include states of the Union. http://www.deadiversion.usdoj.gov/21cfr/21usc/802.htm
From U. of Wisconsin professor David Schwartz, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2237618:
The CSA only regulates “persons.” The Supreme Court has identified an “often-expressed understanding” in interpreting statutes that “in common usage, the term ‘person’ does not include the sovereign, [and] statutes employing the [word] are ordinarily construed to exclude it,” particularly “where it is claimed that Congress has subjected the States to liability to which they had not been subject before.” In Will v. Michigan Department of State Police, the Court held that sovereign immunity principles dictated applying this presumption against interpreting the word “person” in 42 U.S.C. § 1983 to include states or their officers acting in an official capacity. The same principle should apply for the CSA to state officials acting in good faith compliance with state laws and to legislators and voters enacting them.
Schwartz, David S., High Federalism: Marijuana Legalization and the Limits of Federal Power to Regulate States (March 21, 2013). Cardozo Law Review, Vol. 35, No. 567, 2013; Univ. of Wisconsin Legal Studies Research Paper No. 1222.
The Schwartz article refers to the Will case, which, by 5-4, says the civil rights protections of 1983 do not apply against states. I think I might have taken the other side of that argument, but the majority had five votes. Maybe judges would give states more leeway in the marijuana business because states are more trustworthy than the entrepreneur on the corner. Courts read statutes in the context of the case in front of them. Sometimes courts surprise us, and reach the result the judges want, given the tiniest opportunity (Bush v. Gore). I do not suggest that Professor Schwartz thinks monopoly is doable; his argument is in the context of the federal government suing everybody in sight, even voters who cast ballots for legalization.
Rob Mikos of Vanderbilt argues that the CSA applies to state officials: If it didn’t, for instance, section 885(d), which provides that “no civil or criminal liability shall be imposed . . . upon any duly authorized officer of any State . . . who shall be lawfully engaged in the enforcement of any law or municipal ordinance relating to controlled substances” (clearly blessing keeping of evidence and maybe testing) would be unnecessary. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356093, starting at 1457.
But some courts have read that section in ways that Professor Mikos does not agree with — that it allows police to return confiscated medical marijuana to patients, for example. Id. at notes 131 and 132. Read broadly, 885(d) could bless not just that limited distribution but also monopoly. Now Professor Mikos thinks those cases are bad law. But if an officer can give marijuana to a patient, that looks like distribution. I don’t know.
In the meantime, a state contemplating monopoly would naturally reach out to the DOJ informally to test the waters.
II. Standing
For monopoly to fail, if the federal government does not take it down, someone else must have judicial standing to sue – simplistically, a personal harm. It is not clear that anyone would. But certainty on this issue would require proving a negative.
(This argument does not take away the possibility that a 2017 Administration would go back and sue states and state officials for marijuana offenses committed in 2016 (the Administration would have thousands of ganjapreneurs to sue, too). I would imagine that a 2017 Administration would simply tell a monopoly state to stop selling, the state would comply, and the Administration would then let bygones be bygones. If that is the context for interpretation of the CSA, some courts might bend over backwards to let the state off. But there are no guarantees. Even commercial legalization puts the state at risk.)
It may be useful to think of standing as a kind of analogue to citizens’ arrests. Citizens’ arrests are possible, but mostly in theory. Enforcing criminal law is up to the government in nearly all cases. So on the street, citizens’ arrests have a high barrier to overcome before they result in conviction. And in the courts, private parties saying the state is violating federal law have a high barrier to overcome before they even get to court. The courts may be happy to leave enforcing federal criminal law up to the federal government. Standing is a vague doctrine that lets the court dodge cases they want to dodge.
How about the state employee who is ordered to sell marijuana? A state monopoly might begin by trying to filter out potential litigants from marijuana-selling duties by assigning those duties to willing workers. If litigation still ensued, the state might be able to end the litigation by reassigning the litigious employee. Then that particular employee would no longer have a claim that the state is making him violate federal law, and would lose standing. In Arizonans For Official English v. Arizona, 520 U.S. 43 (1997), “a state employee attacking an English-only work requirement had standing at the time she brought the suit, but she resigned following a decision in the trial court, thus mooting the case before it was taken to the appellate court, which should not have acted to hear and decide it.” http://www.law.cornell.edu/anncon/html/art3frag23_user.html. “To qualify as a case fit for federal-court adjudication, an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.” Id. Now such a large number of state employees might be involved in marijuana trade that the filtering and reassignment tactics might not work.
But other litigants might pop up. “Parens patriae” (father of the state) standing might allow a non-legalizing state where a child overdoses on a marijuana edible bought in a legalizing state to sue. (Thanks to Professor Brandon Denning for this point.)
In any event, it could take years for the litigation to play out. (“The Supreme Court on [December 2] will consider a business battle over trademark rights for screws that has been in the courts for more than 16 years, an extreme example of how cases headed for the high court can be matters of endurance. . . . The average age for a high court case is nearly six years.” http://online.wsj.com/articles/why-supreme-court-cases-are-marathons-1417394399.) There are no certainties, only risks.
III. Conclusion
There are no guarantees. But I would be willing to bet that a cautious and policy-oriented state monopoly enacted in 2015 and beginning business sometime in 2016 would still be operating on January 19, 2017. And that any new anti-marijuana Administration would let bygones be bygones – call it amnesty – for past violations.
The Center for New Revenue 