Taxing Marijuana: Earmarking Tax Revenue from Legalized Marijuana
| Publication year | 2017 |
Taxing Marijuana: Earmarking Tax Revenue From Legalized Marijuana
Armikka R. Bryant
Washington State Office of the Attorney General
[Page 659]
This Article provides an overview of the legal, political, and societal landscapes in states that have legalized marijuana and imposed taxes on its sale. The article begins by summarizing the War on Drugs' origins, its fiscal expenditures, and the social policies that ultimately led to its failure. Part I briefly details the history of marijuana regulation starting from the early twentieth century up to the Obama administration's decision to permit recreational marijuana laws to stand in Washington state and Colorado.1 Part II dives deeper into the social costs of the War on Drugs and outlines the hardships faced by those who have lost specific liberties from engaging in activities that are now legal under state law. Part III explores the measures and means states have employed to bypass federal legislation to craft their own drug policies. Part IV reviews federal enforcement of existing drug policies as the states began adopting and implementing marijuana legalization legislation in what was formerly a distinctly federal field. Part V examines marijuana's potential as a viable and reliable revenue stream for states that abide
[Page 660]
by guidelines enunciated by the federal government. The Article concludes in Part VI by proposing socially conscious, albeit politically sensitive, earmarks for marijuana state tax revenue for developing social programs to assist those disproportionately and adversely impacted by the War on Drugs.
At a 1971 press conference, President Richard Nixon declared a federal "War on Drugs" and named illegal drug use "public enemy number one."2 A decade and a half later, in 1986, President Ronald Reagan upped the ante by signing the federal Anti-Drug Abuse Act into law and announced his administration was "taking down the surrender flag that has flown over so many drug efforts [and] running up a battle flag."3 The Act dedicated 1.7 billion taxpayer dollars to fight the War on Drugs.4 Since then, the War on Drugs has cost the federal government an estimated $1 trillion.5 Although the Obama administration ceremoniously waived a white flag to end the war in 2009,6 less than two years later his 2011 budget requested $15.55 billion7 in additional spending to continue funding Nixon- and Reagan-era drug enforcement policies.8 This was a 17.1 percent increase from 2008 9 and a 3.5 percent increase from 2010. 10
[Page 661]
Currently, enforcing the War on Drugs' laws against marijuana distribution, possession, and use accounts for $13.7 billion of the United States' annual drug enforcement budget. 11 This total represents amounts expended by both state and federal jurisdictions on investigation, arrests, prosecution, and incarceration.12
The battlefield of the government's costly War on Drugs is evolving. Currently, twenty-three states and the District of Columbia have enacted laws legalizing marijuana.13 Additionally, some states, fueled by the lure of an untapped and lucrative tax base, have gone so far as to decriminalize marijuana and impose excise taxes and retail sales taxes on its sale.14 Federal laws that continue to conflict with state legalization are creating instability and uncertainty as these states begin to institute marijuana reform.15 The potential tax revenue is also a tantalizing subsidy to finance managing the casualties of the War on Drugs. 16 However, operating within the confines of unyielding federal laws that continue to classify marijuana as a Schedule I narcotic threatens to create a dramatic backdrop for a federalist showdown. Although they are unified in their cause to protect their sovereignty, govern their citizens, and enforce their laws, the legalizing states must nevertheless navigate within the
[Page 662]
federal Controlled Substances Act (CSA).17 This continuing battle over marijuana regulation is shaping up to be one of the most important federalist conflicts of this millennium, overshadowed only by marriage and gender equality. In addition to the obvious and substantial legal hurdles that loom, the public policy and fiscal concerns of managing the continuing fallout of the War on Drugs and the untold millions of people left in its wake remain largely unaddressed.18
[Page 663]
Marijuana is illegal to grow, possess, and consume under federal law.19 However, this was not always true. Marijuana was legal to grow and consume in the United States until the early twentieth century.20 It was actually the states, not the federal government, in the 1910s that began enacting laws to criminalize the plant.21 Racism and xenophobia played a central role in marijuana's criminalization22 because it was associated with migrant workers of African and Latin descent.23 The diaspora of these workers paralleled the swath of marijuana criminalization from the West to the Northeast.24 The federal government followed the states' lead and began regulating marijuana in 1937 by passing the Marijuana Tax Act (MTA).25
[Page 664]
Before the MTA, the government actually favored the drug, but soon after its passage, marijuana was removed from The United States Pharmacopoeia, the list of permissible medicines approved by the federal government.26 The discriminatory laws originally intended to harass minorities ultimately triumphed on a national scale.27
The 1970 CSA later solidified marijuana's legal status, classifying it as a Schedule I narcotic, alongside LSD, heroin, and other nefarious substances,28 because it was deemed to have a high likelihood of addiction with no safe dosage.29 The CSA prohibits the
[Page 665]
manufacture, distribution, and possession of Schedule I narcotics and imposes criminal sentences that can extend to life in prison.30 A Schedule I classification also means that any doctor who prescribes marijuana puts their Drug Enforcement Agency (DEA) license in danger.31 The American Medical Association (AMA) voiced its opposition to the drug's reclassification32 because it obstructs a science-based determination of marijuana's effects and makes double-blind testing virtually impossible.33 As a result, the AMA recommends revisiting marijuana's classification for the purpose of making clinical trials permissible.34 But, the U.S. Court of Appeals for the District of Columbia Circuit recently declined such a review,35 and the U.S. Supreme Court affirmed federal authority to regulate marijuana.36
[Page 666]
President Reagan's Anti-Drug Abuse Act intensified the War on Drugs by increasing spending on enforcement, which in turn targeted disenfranchised minorities—the very group the original state laws sought to persecute.37 These discriminatory enforcement policies eventually defined the United States as a nation of mass imprisonment that incarcerates its citizens at the highest rate in the world.38 For example, drug convictions "account[ed] for two-thirds of the rise in the federal inmate population and more than half of the [soaring state prison population] between 1985 and 2000."39 Most of the increase in the current U.S. prison population, which jumped from 300,000 to more than 2 million in less than thirty years, came from drug convictions.40 It is estimated, marijuana alone accounts for more than 693,000 annual U.S. arrests,41 most for possession.42 In
[Page 667]
2007, state and local police "arrested 872,721 people for marijuana offenses."43 State laws are responsible for nearly every marijuana arrest in the country.44 For instance, the approximately 900,000 marijuana arrests made at the state and local level in 2010 outnumber those made by federal officials by a ratio of 109 to 1.45
Meanwhile, opinions towards the possession and use of marijuana are softening, 46 but the consequences of marijuana convictions remain harsh, often depriving the convicted of basic rights and denying them access to essential resources. 47 For example, a marijuana conviction could make it difficult or impossible to vote, receive a federally insured student loan, find employment, obtain housing, or even adopt a child.48 Other basic rights that a marijuana conviction can affect include the right to receive food stamps and other welfare benefits and the right to enter some foreign nations.49 Additionally, a conviction for marijuana cultivation, purchase, or possession could influence the outcome of a child custody case in family court or deprive an offender of federally subsidized housing.50
[Page 668]
These offenses remain violations of federal law, so a court could quite easily conclude that a parent convicted of these crimes is not fit to parent without supervision or that a relationship with the parent is not in the child's best interest.51 As mentioned above, a marijuana arrest also makes financing an education more difficult. In the United States, over 200,000 students "lost federal financial aid eligibility due to drug convictions."52 Also, if the accused pleads to a drug offense while already receiving federal student loans, the loans may be cancelled for up to year.53 Proponents of legalization see these consequences of marijuana-related crimes as disproportionate to the offense.54
Marijuana policy at the state level began shifting towards legalization in the mid-1990s.55 States began adopting their own marijuana regulations, 56 which unwound federal policies for a number of reasons including: increasing popular and political support for medical marijuana's use by seriously ill patients;57 the palpable
[Page 669]
futility of outlawing a substance that continued to be relatively easy to acquire; the vast amount of resources spent on enforcement;58 and the racially disparate impact of enforcement.59
In 1996, California voters passed...
To continue reading
Request your trial