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Supreme Court Justice Clarence Thomas Says Current State-Federal Cannabis is “Untenable”

The highest court in the land refused to hear the case of a Colorado-based medical marijuana dispensary seeking to take advantage of tax breaks available to other businesses.

Supreme Court Justice Clarence Thomas Says Current State-Federal Cannabis is “Untenable”

In a no-holds-barred statement written by Supreme Court Justice Clarence Thomas on Monday, he classified the government’s “half-in, half-out regime” regarding cannabis legalization to be precarious and straining the “basic principles of federalism.”

The statement came in response to the court’s refusal to hear the Colorado case, Standing Akimbo, LLC v. United States, which the medical marijuana dispensary filed in an effort to access federal tax breaks for businesses.

Colorado was one of the first dominoes to fall in widespread state legalization, first with medical cannabis usage in 2000 and later recreational usage in 2012. Currently, 36 states have legalized medical use, while 18 of those have followed with recreational or adult use.

“Given all these developments, one can certainly understand why an ordinary person might think that the Federal Government has retreated from its once-absolute ban on marijuana,” Thomas wrote.  

In a 6-3 conservative-leaning court, Thomas remains one of the more conservative members after nearly 30 years on the bench since his appointment by President George H.W. Bush. His ideological placement and seniority, along with the strong wording of the statement, point to the untenable nature of a state-federal split.

The Colorado petitioners filed the case in response to four summonses by the Internal Revenue Service. In 2017, the IRS served the medical marijuana company when it refused to provide the documentation necessary for a tax audit. The government agency claims Standing Akimbo sought to deduct or credit business expenses from taxes due, a practice unavailable to businesses who trade in controlled substances prohibited by the federal or state government.

In April 2020, the 10th Circuit Court of Appeals ruled in favor of the IRS and the Tax Code public-policy provision.

With governmental cannabis policies in a constant state of flux, the Justice expressed his appreciation of Standing Akimbo’s perilous position. “One can also perhaps understand why business owners in Colorado, like petitioners, may think that their intrastate marijuana operations will be treated like any other enterprise that is legal under state law,” Thomas wrote.

While this 10th Circuit Court’s favoring of the IRS is discouraging for businesses that take part in the $40 billion-a-year cannabis industry, the federal government has not left them in the dark. Obama-era memorandums, including the Cole memorandum, expressed the federal government’s decision to tolerate low-level marijuana usage in states that had passed legalization. During his time as Attorney General, Jeff Sessions later overturned the Cole Memorandum in 2018 while other politicians, including New Jersey Senator Corey Booker, have expressed a desire to reinstate it, so far to no avail.

As Thomas summarized, “In other words, petitioners have found that the Government’s willingness to often look the other way on marijuana is more episodic than coherent.”

The statement went on to address the myriad of ways that those in the cannabis industry have been forced to jump through ever-shifting hoops to conduct business, including dealing in cash. Thomas emphasized the danger this posed to business owners who would prudently hire armed security leading the owners to “run afoul of a federal law that imposes harsh penalties for using a firearm in furtherance of a ‘drug trafficking crime.’”

In a total of five pages, Thomas ran through the gambit of contradictions within the government’s policies with the undeniable feel of a grandfather clock oscillating, marking time and a soon-arriving reckoning.

“A prohibition on intrastate use or cultivation of marijuana may no longer be necessary or proper to support the Federal Government’s piecemeal approach,” the Justice concluded.

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Photo: Justice Clarence Thomas, official Supreme Court portrait (C) Steve Petteway, Collection of the Supreme Court of the United States. Courtesy of The Oyez Project / Wikimedia Commons.