Politics is about separating substance from fluff.  Every citizen has an obligation to do so before voting, particularly with respect to issues that are near and dear to them. Politicians make promises in their attempts to entice voters to favor them come election day.  But which choice will be best for you?  And for the Nation?  That is not always clear unless you look deeper.

If you’ve already made up you mind who you are going to vote for, articles like this looking at issues probably won’t make much difference.  But it you are a mind to be entertained by just how strange the alliances and bedfellows are this year, read on.

For this article, I am going to try to examine the very tricky subject of cannabis policy. Why? Because it is an issue that means a lot to swing voters. These are the precious votes that the candidates shill hope to win over to their side. Many people have strong views on marijuana.  I personally have little interest in the substance. But I know a lot of people that do on both sides of the issue.  They run the spectrum of political beliefs and react to the subject with strong emotions. Politically, that means it is an issue that can and will be exploited by the campaigns.

Laws, Regulations, Evolution

What I am interested in is how the laws and regulations of the United States are evolving.  And, what a Trump or Biden presidency means to the future course of the evolution of those laws.

Marijuana is a controlled substance. Specifically, it is what is called a federal schedule one drug. That means, it is defined to have no useful purpose for anything or anyone by the central government.  At the national level, the closest thing to that was the prohibition against alcohol that was also once US national law.

In the history of the United States, alcohol prohibition was a fanatical cause that was enshrined as the 18^th Amendment to the Constitution on January 27, 1920.  Ironically, almost exactly 100 years to the day before the emergence of the COVID-19 pandemic.

Prohibition lasted 13 years and it took the 21^st Amendment to the Constitution to repeal it. I first ran into this legal oddity in the year 2000 at the end of Dot Com One.  The web company Wine.com had just failed and one of the venture capitalists asked me if I could have a look at getting it back on its feet. The pitch to me said, “Dennis you like regulatory puzzles. You know how there’s one Amendment in the Constitution about guns?  Well this one has two.”

What I found looking into alcohol in Y2K was legal and regulatory matrix that is today relevant to how cannabis is evolving. Marijuana is changing from a substance under prohibition into a commodity not unlike its chemical “sindustry” cousins, alcohol and tobacco.

The 21^st Amendment took control over alcohol away from the federal government and gave it entirely to the states. America became fifty independent nations of alcohol law. Very differentiated nations, some permissive, others draconian.  In some states you can buy booze freely. In others, only in state stores or “private clubs” you are a “wink” member of.  The import and export of alcohol in the US is not across international borders, it is across state borders.  What is legal in one state can be a felony in another.

The role of the federal government changed from having centralized control over alcohol to a limited role of collecting fees for tax stamps.  For those of you that are unfamiliar with what this is, look at the labels on wine bottles and the tops of been cans.  Those are tax stamps. The US Treasury collects a fee for each one. That is the remaining function left by the 21^st Amendment to the federal government. The agency that collect money for all such stamps is Department of the Treasury’s Bureau of Alcohol, Tobacco and Firearms.

If that sounds like what is happening to cannabis today, you are correct. States a very much acting like fifty independent nations crafting marijuana law that, like alcohol, ranges from permissive to draconian. Except, no tax stamp revenue because marijuana because at the federal level, it is still a schedule one drug, a “prohibited” substance.

This means that it is not just that there is no “revenuer” profit in it for the feds. There is actually a loss of control that would have to occur on the scale of the repeal of prohibition taking control from and decommissioning a number of federal regulatory and enforcement agencies to achieve what the 21^st Amendment did for alcohol. That is not exactly something the D.C. Beltway Establishment wants to do.

That is one of the reasons why there has been so little movement on the issue; but not the only one. The regulatory structure that happened to alcohol at the state level is now also being repeated with cannabis.

Who runs alcohol infrastructure in each state? When I worked on Wine.com, I discovered that company’s internet hubris had failed to realize that after Prohibition ended, the states needed to empower someone to get the newly freed commodity to flow smoothly again.  What states did was hire the only people that knew how to do this, the Prohibition days rum runners.

With great effort, they transformed what was an underground economy into an above the table one, mostly.  The shades of the old moonshine network still echo in things like the Alcohol Beverage Control (ABC), the Wine and Spirits Wholesalers Association (WSWA) and the Three-Tier Distribution system that alcohol in America has evolved to, what were criminal rackets became exchange traded corporations. The children of the rum runners have long since gone to Ivy League schools and learned to navigate complex net present value analytics with aplomb.

That legal and regulatory infrastructure evolution is still in its infancy for cannabis. But like alcohol before it, marijuana is evolving under a model much more like that of the 21^st Amendment than what existed prior to the 18^th Amendment.

The federal government struggles with if or how it might let go of old roles and missions.  If one took things to the full 21^st Amendment model, that would mean not just shifting marijuana from being a schedule one controlled substance to some other level on the federal schedule, it would mean it being reinvented as a tax stamp revenue commodity.  The reality is no one in D.C. from either party is ready or willing to even contemplate such a thing.

On the flip side of the coin, states that have changed their laws permitting cannabis are now struggling with what regulation, wholesale and retail looks like within their borders.  They are dealing with issues like what kinds of excise taxes to impose on cultivators, manufacturers, wholesalers, and retailers. Just like after Prohibition, they are struggling with how to convert previously underground economies into above board ones including the difficult questions of purging the system of its criminal legacy. They are also beginning to ponder the future introduction of what will become exchange traded corporate participation into what is presently a mostly cottage industry.

The likely course of the future of this evolution varies significantly depending on a Trump or Biden presidency.

Trump

The actions of the first term of the Trump tenure portend an arduous post-21^st Amendment path for marijuana. The Trump administration has shown a tendency to leave the states to explore cannabis policy, regulation, and trade, even with strong reservations from the justice department, which still see’s marijuana as part of the war on drugs.

This has allowed states to independently create a three-tier like regulatory regime for marijuana inching more and more into the pattern of regulating alcohol. There seems to be a consensus among cannabis though leaders that the policy of letting the states continue to figure things out fifty independent solutions would be how Trump would pursue his second term if elected. This is a very Jeffersonian “local control and decentralized governance” approach.

Trump has also shown attention to prosecution and prison reform with an eye to recalibrating punishment for offenses particularly for lower level offenders. But he wants to keep the teeth sharp against organized crime. His administration continues to direct resources to concentrate on breaking down the economics of the criminal enterprise aspects of the drug.

The enforcement agenda paves the way for the eventual entry of corporate participants into a future marijuana as a commodity marketplace.

Biden

Biden promises a more activist federal approach to cannabis. The campaign has stated intentions to “de-schedule” cannabis.  However, closer attention to this campaign rhetoric shows the platform means taking it off schedule one and putting it on schedule two.

What this does is increase the amount of authority, energy, and attention the D.C. Beltway agencies will be empowered to do at the federal level to control and regulate the substance.

Ultimately this means normalizing the treatment of marijuana across all fifty states, a federalized control model. Cannabis industry thought leaders note that this may be a please no one scenario for the states. It will impose stresses on their ability to tailor local policies to their leanings. Under a federalized model, restrictive states would be forced to liberalize; but permissive states would also have to tighten down to conform to federal expectations. The consensus is that federal normalization may not go smoothy. Having observed federal vs. state regulatory policy rifts in the past, I tend to agree that their concern is not meritless.

This activist approach very much fits the Democratic Party’s mantra. A very Hamilton “think continental” style of governance. The kind of thing that would make the Washington D.C. Establishment feel vindicated and important again after enduring President Trump’s four years of “draining the swamp”.

On enforcement, the Biden camp does say they intends to decriminalize marijuana at the federal level.  They want to do explicitly what Trump is doing implicitly. How that will play to the federal agencies is unclear. These are Beltway Establishment bureaucracies and their ideas tend to be their own more often than they are that of whoever sits in the White House.

For either Trump or Biden however, that’s not actually where criminal laws affecting main street will continue to hit the hardest. Cannabis laws at the state level are a a lot like gun laws, all over the place.  It’s the management strategy of each potential president to navigate dealing with fifty feisty sovereign states that have been developing their three-tier regulatory regimes that I want to hear about more before election day.