Day One, Question One
OAKLAND, California (CNN) — Oakland’s bid to become the first U.S. city to tax proceeds on medical marijuana passed Tuesday by a landslide vote.
About 80 percent of voters chose to impose the tax on Oakland’s medical marijuana facilities, according to the Alameda County Registrar of Voters.
Some celebrated the news at Oaksterdam University by hand rolling large marijuana cigarettes or stuffing cannabis into pipes. The school trains students for work in the medical marijuana industry.
“It is important because the city of Oakland is facing a massive deficit like many jurisdictions in California,” said Steve DeAngelo, a leader of one of the city’s cannabis clubs. “And we decided to step up to the plate and make a contribution to the city in a time of need.”
DeAngelo is one of the people who lead the effort to get the tax approved and said his business will now have to pay more than $350,000 from the new tax next year.
Question 1: Would a Marijuana seller have standing to challenge the tax on Supremacy Clause grounds? Discuss.
Question 2: Is this tax provision proper under the federal constitution? Discuss.
About 80 percent of voters chose to impose the tax on Oakland’s medical marijuana facilities, according to the Alameda County Registrar of Voters.
Some celebrated the news at Oaksterdam University by hand rolling large marijuana cigarettes or stuffing cannabis into pipes. The school trains students for work in the medical marijuana industry.
“It is important because the city of Oakland is facing a massive deficit like many jurisdictions in California,” said Steve DeAngelo, a leader of one of the city’s cannabis clubs. “And we decided to step up to the plate and make a contribution to the city in a time of need.”
DeAngelo is one of the people who lead the effort to get the tax approved and said his business will now have to pay more than $350,000 from the new tax next year.
Question 1: Would a Marijuana seller have standing to challenge the tax on Supremacy Clause grounds? Discuss.
Question 2: Is this tax provision proper under the federal constitution? Discuss.
Labels: Bar Exams
posted by McWho at 10:44 PM
7 Comments:
1) Would a marijuana seller have standing to sue? Harm: loss of money in tax revenues. Causation: caused by the tax law. Redressability: If tax law is struck down, no more taxes need to be paid, thus harm redressed. Yes, they would have standing.
2) Is the law constitutionally valid?
Taxing power of local govts: local govts have the power to tax, but may not use tax systems to help instate businesses vis a vis out of state businesses, and only if there is a substantial nexus to the state. On these facts, I see no problem with either.
Fed Preemption: Not preempted by Internal Revenue Code (which, incidentally, allows for taxation of illegally obtained income). Also not preempted by the Controlled Substances Act, which expressly does not preempt state drug laws.
At the risk of showing my ignorance about the 5th Amendment privilege, couldn't you're testimony about selling marijuana be used against you in a subsequent trial brought by the Feds for the sale of marijuana?
It's my understanding that the 5th only protects against compelled testimony. So, if you voluntarily bringing a suit in which you necessarily have to indicate that you make money by selling marijuana, wouldn't that waive the 5th Amendment privilege and leave you subject to federal criminal liability?
And even without bringing suit, wouldn't the tax forms that you file with the state be admissible as well?
I mean, I'm all about legalizing pot and taxing it for the revenue, it just seems to me that anyone actually paying this tax (or fighting it) is leaving themselves open to criminal liability.
Good brisk and timely answers! My main query has to do with whether the federal government has totally preempted the field of illegal narcotics, rather than a specific statutory preemption.
I'm not sure on that one.
It seems to me there is not field preemption, since most drug enforcement is still on a state level. The CSA roughly reads that state laws not inconsistent with the CSA are not preempted. SCOTUS has declined numerous appeals from holdout counties that argue it is preempted. I think that 13 years on the best assessment of the law is that it is not preempted. But the statute is pretty vague:
"No provision of this subchapter shall be construed as indicating an intent on the part of the Congress to occupy the field in which that provision operates, including criminal penalties, to the exclusion of any State law on the same subject matter which would otherwise be within the authority of the State, unless there is a positive conflict between that provision of this subchapter and that State law so that the two cannot consistently stand together."
21 U.S.C. Sec. 903.
My opinion: Congress can't not want to preempt a field (so as to keep state drug laws valid), but also field preempt drug laws it doesn't like. Either the field is preempted, or it's not.
None of this is on the bar, though, so I'm done.
McWhow, I can see no significant legal issues here.
1) No. Taxpayer standing is too narrow to support this type of challenge. See Allen v. Wright (disparity in tax exempt status is not "harm" for article III standing purposes); c.f. DaimlerChrysler Corp. v. Cuno (taxpayer standing is constitutionally sufficient to sue a municipal government in federal court).
2) Yes. There is no indication that Congress has attempted to preempt all regulation of marijuana. While the federal government is limited to taxing income (US Const. Amend. 16) that constraint does not apply to the states. Consumption taxes like this one are permissible; Oakland is just as free to tax marijuana as it is to tax cigarettes.
*McWho. Mc-wow is a stretch. ;)
For not seeing any legal issues, you lose on #1.
Taxpayer standing is not valid only when the only basis is that the government is spending tax dollars. If a business is being directly taxed, they can challenge the tax as unconstitutional on its face.
That said, tax challenges only generally succeed if (1) the government is not taxing for any public benefit (unlikely) or (2) because the tax itself is illegal. Think taxing federal lands.
Anyway, if you think it is simplistic, that makes it more likely to be a bar question some day.
-McWow
Post a Comment
<< Home