United States: What Else Can't The Feds Commandeer?

Last Updated: May 22 2018
Article by James Beck

We bloggers don't generally consider the Drug and Device Law sandbox to extend to illegal drugs. We regard that as a completely separate can of worms. But what of a drug – like marijuana – that's in between being legal and being illegal? In an increasing number of states, marijuana's current situation is a bit like Schroedinger's famous cat, legal and illegal at the same time depending on who's enforcing what law.

The same could be said of sports betting – at least until last week, when the United States Supreme Court decided Murphy v. National Collegiate Athletic Assn., ___ S. Ct. ___, 2018 WL 2186168 (U.S. May 14, 2018). The federal government had banned sports betting (except in Nevada), but a number of states (including New Jersey, the real plaintiff) were champing at the bet to legalize – and reap tax revenues from – gambling on sporting events.

The Supreme Court basically said that the federal government couldn't force the states to abstain from legalizing sports betting. The feds could not "commandeer" state law enforcement and require them to keep sports betting illegal:

The [statutory] provision at issue here − prohibiting state authorization of sports gambling − violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do. . . . [S]tate legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.

Murphy, 2018 WL 2186168, at *13. See Id. at *17 ("Just as Congress lacks the power to order a state legislature not to enact a law authorizing sports gambling, it may not order a state legislature to refrain from enacting a law licensing sports gambling."). The federal scheme "would break down if a State broadly decriminalized sports gambling." Id. at *19.

The Court viewed both affirmative and negative demands that the states do what the feds want as barred by that principle:

Here is an illustration. [The statute] includes an exemption for [Nevada], but suppose Congress did not adopt such an exemption. Suppose Congress ordered States with legalized sports betting to take the affirmative step of criminalizing that activity and ordered the remaining States to retain their laws prohibiting sports betting. There is no good reason why the former would intrude more deeply on state sovereignty than the latter.

Id. This example certainly seems to resembles certain noises emanating from the current Department of Justice that it might seek to roll back state legalization of marijuana.

Now, let's be clear, "commandeering" is not something that dissolves federal powers provided for in the constitution. It would not allow the department to re-institute Jim Crow, let alone slavery. Federal powers in the constitution (such as power over interstate commerce) remain:

The legislative powers granted to Congress are sizable, but they are not unlimited. The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved for the States, as the Tenth Amendment confirms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States. The anticommandeering doctrine simply represents the recognition of this limit on congressional authority.

Id. at *10. But once the state decides to legalize the activity within its borders, the feds can't force the states to keep that activity illegal under state law. Id. at *18 ("If the people of a State support the legalization of sports gambling, federal law would make the activity illegal."). A federal law that only operates only to "undermine[] whatever policy is favored by the people of a State" is both "perverse" and "weird." Id. at *18.

Thus, what Murphy calls "the anticomandeering principle" is limited. While it could well prevent DoJ from – as the "example" above indicates – "order[ing] States with legalized [marijuana] to take the affirmative step of criminalizing that activity," id. at *13, the feds still retain the power, for example, to ban marijuana from interstate commerce. Murphy also leaves open the possibility that a federal statute, phrased (unlike the law before the Court) explicitly in terms of federal preemption and not directed at states, might have provided means of avoiding the anticomandeering principle. Id. at *15-16 ("every form of preemption is based on a federal law that regulates the conduct of private actors, not the States"). So that's another possible source of federal power to continue pothibition, should Congress choose to act in that fashion.

There's one other place where would be marijuana entrepreneurs – and states wishing to raise revenue from taxing such enterprises – might be able to put the anticomandeering principle to good use. One big problem has been federal laws that prevent even legalized marijuana businesses from accessing the banking system. While the feds can certainly continue that practice, whether it's a good or bad idea, with respect to federally regulated banks, we think that Murphy casts considerable doubt on whether the federal government can tell state banks that they cannot accept deposits from marijuana businesses that the state regulating those banks has declared to be legal.

We don't claim to know all the ins and outs of anticommandeering – a word we had never seen before reading Murphy. But if a state, in its wisdom, chooses to legalize commerce in marijuana, it seems equally "perverse" and "weird" to require those legal businesses to bury the money they legally make in their basements rather than to deposit it in a bank regulated by the same government that legalized their activities.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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