Why Wait-And-See On Legal Pot Isn’t Good Enough For The Next President
by ALAN PYKE –
It’s early in the presidential campaign yet but two major strains of thought are emerging among the candidates when it comes to legal marijuana.
Hillary Clinton voiced one of them Tuesday night, saying she’d rather take a wait and see approach to legalization pending the outcome of state experiments.
“No,” Clinton said when asked if she was ready to take a position on federal repeal. “I think that we have the opportunity through the states that are pursuing recreational marijuana to find out a lot more than we know today.”
The kind of benign neglect Clinton and others advocate would be better than a crackdown for businesses and consumers in Colorado, Washington, and elsewhere. But the status quo in legalization states suggests that such a hands-off approach wouldn’t produce the kind of clean experimentation and innovation that might actually guide national policy down the road. Whoever wins next fall will have a lot of work to do to pull federal obstacles off the road states are trying to walk.
Businesses can’t really experiment under federal prohibition
The biggest obstacles to the legitimate pot business are bureaucratic. Business owners can’t get bank accounts, leaving them to deal entirely in large and growing piles of cash. They’re not being granted the tax deductions that are standard for all other firms, threatening their financial survival. Credit cards and small business loans are also out of reach – a gap that venture capital can fill in some cases, but a hurdle nonetheless to the kind of low-friction laboratory conditions that Colorado, Washington, and other nascent pot economies need to perform true experiments.
Cannabis’ ongoing Schedule 1 status under federal narcotics law is the wellspring of all that paperwork woe. Absent federal legalization, financial trade associations say their members will probably never form business ties to companies that are technically criminal according to the U.S. Code.
But even if Clinton isn’t ready to go there yet, there is a lot she – or anyone elected to the White House – would have to do in order to have these state experiments produce valid results to guide the rest of American policy on weed.
The Obama administration has tried to make the rough places smooth for pot shops. The Departments of Justice and Treasury each issued guidance on how retail banks can take deposits from cannabusinesses without putting themselves in legal jeopardy for laundering drug money. But existing banks have declined to take up the complicated, tenuous path to pot banking laid out in those memos. And when a group of financiers in Colorado set out to create The Four Corners Credit Union (TFCCU) to pioneer accountability standards that not only met but exceeded what the Obama administration had asked for, they still had their application for depository insurance denied by federal officials.
The hard-to-explain failure of that credit union effort – explicitly premised upon official attempts to square ongoing federal prohibition with state experimentation – illustrates the shortcomings of Clinton’s wait-and-see answer.
Forcing legal pot economies to operate in cash, choose between financial death and lying to the IRS, and rely entirely on venture capitalists for their bridge funding needs is a great way to undermine their function. Energy that should be going to innovating business practices instead must be spent worrying through day-to-day survival questions. Legalization’s potential to destroy the black market and reduce criminal activity is hindered when business owners have to manage stacks of cash that make them targets for robbers.
These are daily headaches for entrepreneurs on the ground, but in experimentation terms they’re foreign particles mucking up the laboratory conditions. If President Clinton would want to learn from the states before loosening federal pot law, she’d need to convince federal banking agencies to start authorizing outfits like TFCCU. Tribal governments may yet step into the gap and authorize banks chartered through specific Native American governance rules to begin taking pot business, but that avenue is similarly tenuous to Obama’s efforts.
Want fewer pot prisoners? Legalize.
The leading Democratic candidates agree that the U.S. should “stop imprisoning people who use marijuana,” as Clinton said Tuesday night. That idea is gaining steam across the ideological spectrum. But extending such mercy won’t mean very much so long as federal law still makes pot possession, consumption, and trafficking a felony even in states where it’s legal.
Federal prosecutors just finished sending medical marijuana growers in Washington to prison for terms ranging from a year to nearly three, even though their actions were consistent with state law. The Drug Enforcement Agency has flouted Obama administration policy statements by continuing to target medicinal dispensaries in raids. It’s one thing to express support for state experimentation, but quite another to get federal drug warriors to keep their cuffs off those experiments without simply legalizing marijuana nationwide.
So long as federal prohibition persists, marijuana enforcement will continue to produce racist outcomes. Marijuana prohibition originally stemmed from overt racism. As head of the Federal Bureau of Narcotics in the 1930s, Harry Anslinger initiated a media campaign to vilify marijuana and its users that included frequent rhetorical suggestions that the drug would lead to interracial relationships between white women and black men.
Modern statistics show a far subtler form of racism is baked into the ongoing drug war.
About one in seven drug users is black, but nearly two in five people who get arrested for drug offenses are black. Together, black and Latino drug offenders make up almost 80 percent of the federal prison population for drug crimes despite accounting for just 30 percent of the U.S. population. The disproportionate toll of the drug war for non-white Americans helps reinforce racial inequities elsewhere in our society by making it harder for ex-convicts to find paying jobs and receive social services.
Full federal legalization would again be the cleanest way for Washington to eradicate these disparities in enforcement and to enable legalization state businesses to operate on a level playing field. Such a large change will surely become more plausible in time as Colorado, Washington, Oregon, Alaska, and other states begin to see big gains in both economic activity and tax revenue from legalization.
But that doesn’t mean the next administration can simply sit it out while the states do the heavy lifting and expect actionable results. From federal restrictions on pot research to keeping a tight leash on the law enforcement agencies that sometimes pursue the drug war even when explicitly told not to by the White House, the next president’s job on marijuana will be much more complicated than just waiting for state experiments to bear fruit.