A Colorado medical marijuana tax case was rejected by the U.S. Supreme Court, but a statement released by the court pointed out flaws in the nation’s patchwork legislation.
Authored by Justice Clarence Thomas, the statement released on June 28 used the complaints brought in the Colorado-based lawsuit to evidence a “contradictory and unstable state of affairs that strains the basic principles of federalism.”
Standing Akimbo LLC, a Denver-based medical marijuana company, sued the Internal Revenue Service after it attempted to collect business information that could show the company was in violation of Tax Code 280E. Tax law is one example of where state-legal cannabis butts heads with federal laws. Under 280E, businesses that “consist of trafficking in a controlled substance” cannot deduct business expenses from their taxes, including state legal marijuana firms.
The case was heard in October 2020 by the 10th Circuit of Appeals which held that it is within the jurisdiction of the IRS to audit marijuna business information. In petitioning to the Supreme Court, Standing Akimbo asked, among several other questions, if state-legal marijuana violates the Controlled Substances Act under the Supremacy Clause of the U.S. Constitution.
On Monday, the High Court denied the writ of certiorari, but, unlike the 120 plus other petitions turned down that day, it issued a statement addressing the Colorado case. The statement did not disagree with the court’s denial, but instead outlined the conflicts between federal and state laws surrounding cannabis.
“This is not a dissent. It is not a concurring opinion. It is a statement,” emphasized Jim Thorburn, the attorney representing Standing Akimbo.
Thorburn views Judge Thomas’ statement as a peek into “the black box” of closed court conversations. Like prior SCOTUS cases that have been denied certiorari and are accompanied by a statement, Thorburn believes Thomas left the courthouse door open a crack to give a glimpse into the court’s reasoning and concerns when it comes to state and federal marijuana conflicts, while still declining to hear the case.
In the statement, Thomas heavily criticized “the Federal Government’s current approach,” characterizing it as “a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana.”
He pointed to the blanket and intrastate ban on cannabis affirmed by the court in 2005 with Gonzales v. Raich. But, Thomas wrote, since that decision a series of federal policies regarding state-legal marijuana have gone against Raich and created an uncertain legal area for cannabis. Thomas pointed to Department of Justice Memos regarding cannabis enforcement issued in 2009 and 2013, Congress’ decriminalization of medical marijuana in Washington D.C. in 2009 and congress prohibiting the DOJ from “spending funds to prevent states’ implementation of their own medical marijuana laws.”
Thomas used the Colorado dispensary’s conflict in tax court to evidence a “concealed trap for the unwary” created by current marijuana laws. The importance of these “concealed traps” has grown, as Thomas points out. They apply to the 36 states that legalized medical cannabis and 18 states that legalized adult-use marijuana.
The conservative justice ended with a sweeping criticism of the current marijuana system: “If the Government is now content to allow States to act ‘as laboratories’ ‘‘and try novel social and economic experiments,’ [cited from Raich] then it might no longer have authority to intrude on ‘[t]he States’ core police powers . . . to define criminal law and to protect the health, safety, and welfare of their citizens.’ A prohibition on intrastate use or cultivation of marijuana may no longer be necessary or proper to support the Federal Government’s piecemeal approach.”
Thorburn expects the statement to be cited in pending marijuana tax court cases but thinks it also has broad, legal implications outside of marijuana. “These are due process issues,” Thorburn said, “I don’t care if it’s environmental laws, or civil rights laws, or whatever it may be, there has to be consistency not only in the law but also the enforcement of the law.”
Whether or not the statement will sway national marijuana policies is unknown. However, the case that made it to Washington from the Mile High City, illuminated the cracks in federal marijuana laws and enforcement.
“The cake is not fully baked on this yet, but he brings up important points that the government cannot act arbitrarily,” Thorburn said.