Marijuana: Federal Laws vs. State Laws

As of November 2023, marijuana is legal for recreational use in 24 states and legal for medical use in 38 states. California paved the way, becoming the first state to legalize medical marijuana in 1996.

Is Marijuana Federally Legal?

On a federal level, all marijuana remains illegal. The federal government classifies marijuana, along with heroin and cocaine, as a Schedule I drug with a high potential for abuse and little to no medical benefit.

As a result of the conflict between federal and state law, residents in some states can find themselves using marijuana in compliance with state law, while simultaneously violating federal law. This article discusses some of the complications that arise when state and federal marijuana laws conflict.

How Is Marijuana Federally Illegal But Legal in Some States?

The Supremacy Clause of the United States Constitution (Article VI, Clause 2) establishes that federal law controls when state law and federal law conflict. The Constitution itself, however, provides for an exception when it comes to the exercise of police powers. The Tenth Amendment of the United States Constitution generally delegates police powers to the states.

In practical terms, this means that states can't prevent federal prosecutions of their citizens who are using marijuana, but by making such use noncriminal under their own laws, they can eliminate state prosecutions of those citizens under state law.

Federal Enforcement of Marijuana Laws

Federal prosecutions of individuals possessing marijuana are extremely rare. The federal government has limited resources to investigate and prosecute federal drug laws, and low-level marijuana offenses are at the bottom of the list of priorities.

On the other hand, individuals and businesses that sell marijuana might face criminal investigation and prosecution, depending on which way the political winds blow.

In 2013, the Department of Justice (DOJ), under President Obama's administration, formally announced that it would not interfere with marijuana operations that strictly complied with state regulations. Federal law enforcement would instead narrowly focus on targeting:

• marijuana revenue that appears to fund gangs
• distribution of marijuana to minors
• marijuana moving from states where it's legal to states where it's illegal
• money laundering (using state-legal marijuana sales as a cover for illegal activity)
• violence and firearm use in growing or distributing marijuana
• driving under the influence of marijuana or other negative public health consequences of using marijuana, and
• marijuana possession or use on federal property (for example, national parks).

In 2018, under President Trump's administration, the DOJ abruptly terminated this policy and authorized federal prosecutors to pursue criminal cases whenever state and federal marijuana laws collide.

The policy reversal ended up being largely symbolic. Individual federal prosecutors have the discretion to pursue prosecutions that federal agents bring to them, but the number of federal prosecutions for marijuana trafficking declined to less than 1,000 in 2021. Federal prosecutors bringing marijuana cases run the real risk of jury nullification—when a trial jury reaches a verdict that is contrary to the law because jurors think the law or penalty is unfair.

Law enforcement officers make the vast majority of arrests for marijuana offenses under state, not federal law. In 2022, law enforcement officials in the United States made at least 227,108 arrests for marijuana offenses, mostly possession, according to FBI data.

Federal Law and the State-Legal Marijuana Industry

Legal marijuana is big business. In states where residents have access to legal marijuana, the markets are grossing billions of dollars, despite federal prohibition.

The conflict between federal and state marijuana laws has caused problems beyond uncertainty about criminal liability in the state-legal marijuana industry. Most widespread problems relate to commerce and capital—two areas in which the federal government holds full sway.

Banking

Banks have been generally unwilling to do business with companies that sell marijuana, out of concern that taking deposits from marijuana businesses could violate federal anti-money laundering laws.

Without access to banking services, many companies in the marijuana industry are cash-only businesses that are vulnerable to theft.

Interstate Trade

Federal law strictly prohibits marijuana from crossing state lines, including among states where the sale of marijuana is legal.

The federal restriction on interstate commerce has caused an imbalance in the markets. For example, every year thousands of pounds of marijuana rot in Oregon because growers can't export it across state lines, even to neighboring Nevada, where the use of medical and recreational marijuana is legal, but where marijuana is much more difficult to grow.

Taxes

The Federal tax code (26 U.S.C. § 280E) still classifies marijuana farmers, dispensary owners, and others in the marijuana industry as drug traffickers. Yet marijuana businesses are still required to pay federal taxes. Consequently, marijuana businesses can't take tax deductions like other businesses. For example, payroll and operating expense deductions are not available to them.

Successful marijuana businesses end up with huge federal tax bills that they often have to pay in cash because they lack access to banking services.

Research

Scientists at universities and private labs who receive federal money must abide by federal marijuana laws and regulations, regardless of state marijuana laws. Marijuana's status as a Schedule I substance under federal law severely limits access to the plant. As a result, researchers know little about:

• the benefits and risks of using marijuana, especially when the substance is used over a prolonged period
• at what point users will become impaired behind the wheel
• the compounds in marijuana vaping cartridges, which might account for vaping-related deaths and illnesses, and
• how to reduce the environmental impacts of growing marijuana.

Talk to a Lawyer

If you have questions about state or federal marijuana laws, talk to a lawyer. Many lawyers specialize in marijuana-related business law and criminal law. If you have been charged with a federal crime for marijuana-related activities, choose a lawyer with experience practicing in federal court.

Learn more about getting an attorney to handle your criminal case.