New Front in the War on Weed

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Feb 8th, 2013 | By | Category: Emerging Markets, Featured, Pink sheet stocks

Good news for private prison operators, alcohol companies and Big Pharma: The feds are quietly plotting their crackdown on legal marijuana in Colorado and Washington State — voter referenda be damned.

“The Obama administration has been holding high-level meetings since the election to debate the response of federal law enforcement agencies to the decriminalization efforts,” according to Charlie Savage of The New York Times.

It comes down to two options:

1. Sue the states on the grounds that any attempt by states to tax and regulate the pot trade is preempted by the federal Controlled Substances Act.
2. Or, Savage reports, “bring some cases against low-level marijuana users of the sort they until now have rarely bothered with, waiting for a defendant to make a motion to dismiss the case because the drug is now legal in that state. The [Justice Department] could then obtain a court ruling that federal law trumps the state one.”

Pressed by Barbara Walters in December, the president coyly hinted at option No. 2: “We’ve got bigger fish to fry. It would not make sense for us to see a top priority as going after recreational users in states that have determined that it’s legal.”

Of course, it doesn’t have to be a “top” priority to achieve the desired result.

A third possibility is suggested in the Times by Bush-43 Justice Department official Gregory Katsas — the one we sniffed out in The 5 Min. Forecast days after the election. “The soft totalitarianism of withholding federal highway funds,” is how we described it — “the same way Ronald Reagan, that tireless champion of limited government, imposed a national drinking age of 21.”

FDR’s Example… And Why Obama Won’t Follow It

If Obama’s serious about cementing a “legacy” during his second term, he’ll think seriously about the example set by Franklin Roosevelt. “In his first 30 days,” writes Mark Thornton of the Mises Institute, “he did more to bring liberty to Americans than any president since Thomas Jefferson repealed the Alien and Sedition Acts.”

Nine days after inauguration in 1933, he called on Congress to repeal Prohibition. Ten days after that, he signed a bill making near-beer legal again. By December, conventions in 36 of the 48 states voted to adopt the 21st Amendment — repealing the 18th Amendment. Prohibition was dead.

Thornton continues:

Most historians like to credit his New Deal for his popularity without considering what an amazing thing it was to have repealed Prohibition… Economist and prohibitionist Irving Fisher found that Prohibition had driven up the price of all classes of alcoholic beverages by several hundred percent. With repeal, the price of alcoholic beverages plummeted in what was, in effect, a giant tax cut for the American drinking class.

New jobs abounded in distilleries, wineries and breweries. The gangsters had fewer reasons to open fire on each other. The national murder rate fell by half.

In our own day, Obama might do well to remember that while he carried Colorado… legalized pot got even more votes than he did.

But as we said in the November issue, there are too many entrenched interests standing in the way of legal weed. However the crackdown takes place, it’ll work out very well for Corrections Corp. of America (CXW), Liquor Group Wholesale (LIQR) and Endo Health Solutions (ENDP).

Addison Wiggin

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