On March 30, eight bills were introduced by senior members of Congress from both parties to legalize, regulate and tax marijuana. The bills were referred to at least five House Committees, as they address federal criminal law, taxation, banking, transportation, immigration, veterans’ affairs, access to federal benefits and other issues. The legislative activity follows establishment of the Congressional Cannabis Caucus in February. Leaders of the new caucus represent four of the eight states where voters have approved recreational use of marijuana by adults.

In the initial press conference held by Cannabis Caucus members and in statements explaining the new legislation, House and Senate members made frequent reference to laws regulating alcohol beverages. Bills introduced earlier in the current session of Congress also call for state-by-state regulation using language similar to the Section 2 of the Twenty-first Amendment, which authorized each state to regulate the delivery and use of “intoxicating liquors” within its borders.

The failure of national Prohibition of alcohol beverages is often cited as a rationale to legalize recreational marijuana use. Before proceeding toward wider legalization, policymakers should gain a deeper understanding of the history of Prohibition and the regulatory scheme that emerged after repeal. Government regulation is necessary in a complex and pluralistic society of 320 million, but effective marijuana regulation is a tall order.

Continue Reading Legal, Political and Practical Challenges in Regulating Recreational Marijuana

To follow up on our prediction last month that the Trump Administration may take a more aggressive stance toward the legalization of marijuana, White House Press Secretary Sean Spicer stated during the February 23 daily briefing that he anticipates greater federal enforcement of marijuana laws.  Spicer emphasized the distinction between medical marijuana (the legalization of which President Trump does not oppose) and recreational marijuana.  In discussing the latter, Spicer invoked the country’s opioid addiction crisis, suggesting a link between recreational marijuana use and such other drugs.

Spicer hinted that the Justice Department’s enforcement of federal drug laws would extend to the nine jurisdictions that have legalized recreational marijuana, potentially putting at risk the schemes many of these states have created–or are in the process of creating–to regulate marijuana.  As of today, the recreational use of marijuana is legal in Alaska, California, Colorado, the District of Columbia, Maine, Massachusetts, Nevada, Oregon and Washington.  (Note:  Congress has blocked the DC government from using funds to actually implement a system to regulate recreational marijuana, so although technically legal, there is currently no “market” for recreational marijuana in DC.)

If President Trump’s Justice Department does begin to pursue more active enforcement of marijuana laws in states that have legalized marijuana, it may meet pushback from Congress.  Just last week, four congressmen announced the formation of the Congressional Cannabis Caucus (the Caucus), a bipartisan organization seeking to change the federal government’s attitude toward legalized marijuana and, notably, to leave the legalization question to the states.  In support of this mission, earlier this month Representative Dana Rohrabacher (R-CA), a member of the Caucus, introduced a bill (HR 975) in the House that would prevent federal enforcement of the Controlled Substances Act (the Act) in states that have legalized the recreational use of marijuana.

Likely by design, the bill’s introduction occurred just a day before the confirmation of Jeff Sessions, a vocal opponent of marijuana legalization, as Attorney General.  The bill would add a new section to the Act expressly stating that the Act’s provisions concerning marijuana do not apply to persons acting in compliance with state law regarding the possession or sale of marijuana.  The bill, titled the “Respect State Marijuana Laws Act of 2017,” has been referred to the House Judiciary and Energy and Commerce Committees.

Of course, whether the bill will gain enough support to pass in Congress and survive a potential Trump veto remains to be seen.  Nevertheless, the timing of the bill’s introduction, the bipartisan support it has garnered to date (half of its current cosponsors are Republicans), and the announcement of the Caucus indicate a growing tension between Congress–including some members of President Trump’s own party–and the Administration with respect to the enforcement of federal marijuana laws.

On January 30, 2017, President Trump issued Executive Order No. 13771, entitled “Reducing Regulation and Controlling Regulatory Costs.” A link to Executive Oder 13771 appears here.  The Order provides:

  1. For Fiscal Year 2017 (which ends September 30, 2017):
    1. For each new “regulation” published for notice and comment “or otherwise promulgated,” the agency in question must “identify” two existing regulations to be repealed. Notably, the Order does not require the repeal to be concurrent with the publication or promulgation of the new regulation.
    2. For Fiscal Year 2017, each agency must ensure that the total incremental costs of all new and repealed regulations shall not exceed zero, unless otherwise required by law or as consistent with the advice of the Office of Management and Budget (OMB). The Order does not specify whether the costs in question represent costs to the agency, costs to the government or total societal costs. It also does not provide any guidance on how to calculate such costs.
    3. To the extent permitted by law, the costs of any new regulations shall be offset by the elimination of costs associated with at least two existing regulations. Once again, the Order provides no guidance on what constitute costs of a regulation or how to calculate such costs.
    4. The OMB is directed to provide agencies with guidance on how to implement the Order.
  2. Beginning with Fiscal Year 2018 (which begins October 1, 2017):
    1. The semi-annual Unified Regulatory Agenda for each agency must: (i) identify for each new regulation “that increases incremental cost,” two offsetting regulations; and (ii) provide an approximation of the total costs or savings for each new and repealed regulation.
    2. Each regulation approved by the OMB shall be included in the Unified Regulatory Agenda.
    3. Unless otherwise required by law, agencies may not issue new regulations that were not listed in the most recent Unified Regulatory Agenda.
    4. During the budgeting process, the OMB shall notify agencies of the total costs per agency that will be allowed in issuing and repealing new regulations for the upcoming fiscal year.
    5. The OMB shall provide agencies with guidance on implementing the Order’s requirements.

Executive Oder 13771 applies to each “executive department or agency,” but leaves a number of government regulatory functions outside of its scope. These include agencies involved in military, national security, and foreign affairs functions, as well as any government organization arising from the Legislative or Judicial branches. Nevertheless, the Order applies to a vast swath of the federal bureaucracy.

On its face, Executive Order 13771 could have a significant impact on the pace of federal rulemaking during the Trump Administration. The “two-for-one” requirement, in particular, appears to be a blunt instrument aimed at shrinking the Code of Federal Regulations. Moreover, the explicit requirement for cost estimates and “zero” total costs flowing from the rulemaking process plainly seeks to halt the growth and costs of the federal administrative state.

But the jury remains out on the practical impact of Executive Order 13771. Longstanding observers of the federal bureaucracy will, no doubt, recall that the Paperwork Reduction Act (1980), Executive Order 12866 (1993), the Paperwork Reduction Act of 1995, and other measures all failed to noticeably slow the growth or improve the functioning of the administrative state. In that spirit, President Trump’s Executive Order leaves many questions unanswered:

  1. Much hinges on the interpretation of “costs” referenced throughout the Executive Order. Does this mean the costs to the Agency, the entire federal government or society at large? And, particularly if “costs” are defined broadly, how will agencies and/or the OMB calculate such costs? The OMB presumably must arrive at answers to these fundamental questions.
  2. While a “rule” has a defined meaning in administrative law, a “regulation” does not. While the Order purports to define the term, as every lawyer in an administrative practice knows, individual “sections” within the Code of Federal Regulations are called “regulations” and come in many sizes. Does an agency satisfy the “two-for-one” rule by replacing two one-sentence regulations with a single ten-sentence regulation? The opportunities to “game” the Executive Order’s mandate seem endless.
  3. The Executive Order might not withstand a legal challenge. While the President yields broad authority over most administrative agencies, nothing in current law authorizes a “two-for-one” rule. While a full analysis is beyond the scope of this note, on its face the Order seems to push the boundaries of what a President can mandate by Executive Order.

Finally, the Executive Order may accelerate the unfortunate trend of agencies to make rules through informal documents instead of the notice-and-comment rulemaking process mandated by the Administrative Procedures Act. During the past several decades, many agencies have sought to shortcut the rulemaking process by asserting that any number of substantive rules are mere “interpretations” not subject to notice-and-comment. Too often, the legal costs and potential for relationship damage involved in challenging such rules outweighs the benefit of a challenge. (For example, how willing is a heavily-regulated brewery, winery or distillery to engage in protracted litigation with the Alcohol & Tobacco Tax & Trade Bureau?)  As a result, usually the regulated public tacitly accepts this subversion of Administrative Procedures Act requirements – requirements that flow directly from the Fifth Amendment’s requirement for Due Process of Law. By making formal notice-and-comment rulemaking even more burdensome, Executive Order 13771 will likely accelerate the pace of regulation by internet posting, bottom-drawer regulation, letter ruling and other means that do not provide the regulated public with notice and an opportunity to comment on legal requirements that will affect them.

In the end, then, President Trump’s Executive Order on Reducing Regulations leaves many important questions unanswered and, like other like-minded actions before it (e.g., the Paperwork Reduction Act), may not progress the objective of simplifying and reducing the federal bureaucracy.

The incoming Trump Administration may usher in a more hostile climate to state efforts to legalize the sale and distribution of marijuana and products that contain the drug. The Obama Administration opposed the federal legalization of marijuana, but its enforcement approach, which focused on persons and entities whose conduct interferes with eight drug enforcement priorities, is outlined in a memorandum. This guidance does not have the force and effect of law, which means that the incoming Administration may replace it with a new guidance addressing prosecutorial discretion in marijuana cases. Below we examine the positions taken by President-elect Trump and his nominee for Attorney General, Senator Jeff Sessions, on (1) medical and recreational marijuana, (2) states’ rights, (3) attitudes toward marijuana use, and (4) enforcement of federal drug laws.

Continue Reading The Trump Administration’s View on Marijuana: Reading the (Tea) Leaves