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Since cannabis is still federally illegal, how do states legalize it? Couldn't the federal government still enforce their laws?

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US States cannot and do not claim to repeal the federal laws against cannabis. What they can do is repeal or modify their own laws. Historically the vast majority of prosecutions in the US have been under state, not federal laws.

Nothing requires a state to enforce Federal law.

States can also forbid their police and other employees and officials from cooperating in cannabis cases, passing information to federal law enforcement, or holding accused persons when no Federal warrant is yet available. State support and personnel has often been important to federal investigations.

All of this can make it much harder for the FBI and other federal agencies to pursue cannabis cases in states that have "legalized" cannabis.

Moreover, as a matter of policy, not law, the Justice Department has, in general, declined to pursue cannabis cases in such states. This policy could be changed at any time.

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  • So dispensaries in e.g. Oregon are actually illegal, but the federal government doesn't care?
    – Someone
    Commented Jun 30, 2022 at 4:03
  • @Someone I wouldn't day "doesn't care" exactly. Sone officials care a lot. But for the moment, the policy is not to aggressively enforce those laws against such establishments. One issue is that aggressive enforcement might lead to jury nullification, a thing the federal prosecutors would not like publicized. Commented Jun 30, 2022 at 4:07
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    Should point out that in this specific instance, the proper government agency to enforce drug laws is the Drug Enforcement Agency (DEA). Typically in the United States, most crime is dealt with by state/local law enforcement and federal law enforcement is called in to deal with bigger problems than drug sales in a state which legally allows them.
    – hszmv
    Commented Jun 30, 2022 at 15:03
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The answer by David Siegel is right as far as it goes. Indeed, the right of the federal government to enforce its drug laws in the face of state legalization has been affirmed by the U.S. Supreme Court in a case directly on point. See Gonzales v. Raich (2005).

But, it is important to acknowledge that federal prosecutors and Congress, at various key times during which states have decriminalized and/or legalized and regulated cannabis, have adopted publicly announced policies of refraining from prosecuting violations of federal cannabis laws are generally in conformity with the relevant state law and don't violate certain core federal policies. Sometimes this has been done sometimes as an exercise of prosecutorial discretion. Sometimes this has been done through an appropriations bill providing that federal funds shall not be spent for particular purposes like conducting criminal prosecutions of cannabis violations.

The exact details of when this has been done, how, and under what conditions is rather involved, and is largely of only historical interest. These publicly announced expressions of tolerance allowed states to be comfortable with enacting laws regulating the marijuana industry, as Colorado has done, rather than merely decriminalized some marijuana activities.

In addition, the Biden Administration has adopted a policy of not enforcing federal marijuana possession laws involving simple possession of marijuana (as opposed to drug dealing) and of pardoning some less culpable people previously convicted of marijuana law violations. The Biden Administration has also undertaken to reclassify marijuana within the framework of the federal Controlled Substances Act to the status of other drugs that are legal with a prescription.

While the federal government largely doesn't criminally prosecute cannabis law violations under federal law when the defendants are acting consistent with state law, this doesn't mean that there aren't federal law penalties for marijuana.

Marijuana retailers, under 26 U.S.C. § 280E, as interpreted by the courts, can't take tax deductions for any expenses other than their cost of goods sold. Marijuana businesses are largely prohibited from doing business with federally regulated banking institutions and largely have to operate on a cash basis (although limited exceptions have emerged). Marijuana businesses cannot enforce contracts or tort rights in the federal courts, and can't file for bankruptcy (which is exclusively in the jurisdiction of the federal courts). Marijuana industry related federal patents and trademarks aren't eligible for federal protection. The law related to clinical trials of marijuana related medical treatments is far more restrictive than for other kinds of drugs. People with medical marijuana prescriptions, if that is known to the sellers, aren't eligible to buy firearms.

Federal prosecutors also do prosecute marijuana cases where the marijuana businesses are also in violation of state laws, or exceed guidelines articulated by federal prosecutors for refraining from prosecution of federal marijuana laws (e.g. selling marijuana in or near schools).

Almost all of these limitations on marijuana businesses and use under federal law in states that have "legalized" marijuana at the state level would end if marijuana is rescheduled under the Controlled Substances Act as the Biden Administration is currently attempting to do through the federal regulatory process.

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