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In 1920 the Eighteenth Amendment to the United States Constitution banned the production, importation, transportation and sale of alcohol. Prohibition or the “Great Experiment” was repealed in 1933 with the ratification of the twenty-first Amendment.  Four years later, Congress passed the Marihuana Tax Act of 1937, beginning what could be called the “Not-So-Great Experiment”.  A great deal can be learned from the origins, effects and laws governing the subsequent repeal (or in the case of cannabis, partial repeal) of the prohibition of these two substances.

In the early part of the twentieth century, a number of groups that otherwise had little in common, joined in their collective desire to end the sale of alcohol.  These groups included, Protestant Clergy, major industrialists like Thomas Edison and Henry Ford, the Women’s Temperance Union, Suffragettes, and the Anti-Saloon League. The moralists among these groups coalesced around the idea that alcohol was destructive to marriages and families.  The industrialists believed that alcohol created an inefficient workforce. As these major groups joined forces, the movement to ban the sale of Alcohol became the most successful single-issue movement in America’s history, but there were obstacles yet to come.  

The greatest impediment to national prohibition was finding an acceptable source of income.  In 1895, in Pollock v Farmers Loan & Trust, the Supreme Court found the Income Tax Act of 1894 unconstitutional.  According to the Court, the Constitution only allowed the Federal Government to impose taxes on its citizens in proportion to population. The federal government could not legally tax rents, dividends or interest. This created a major hurdle for prohibitionists since taxes on alcohol generated thirty to forty percent of country’s income.  If the sale of alcohol was prohibited, the economy of the country would suffer a rapid contraction.

There was only one solution. On February 3, 1913, the 16th Amendment was added to the Constitution, allowing the federal government to impose taxes on its citizens without apportionment among the states according to population. The Revenue Act of 1913 passed shortly thereafter, introducing America to the income tax.

Just three years later, in 1917, the United States entered World War I and the last building blocks of prohibition fell into place. Many of the breweries were owned and run by German immigrants, who were the object of enmity that springs from war.  At the same time, President Woodrow Wilson imposed a temporary wartime prohibition to save grain for food production. The following year the Eighteenth Amendment to the Constitution was ratified, banning the importation, production, transportation and sale of beverage alcohol. It took effect one year later.

From inception, prohibition suffered from a number of enforcement problems.  Officials estimated that national enforcement would cost close to three hundred million dollars, but Congress appropriated just five million dollars towards this endeavor. In addition, there were many loopholes in the law. While importation, production, transportation and sale were illegal, possession and consumption were not. Warned that prohibition was coming, those who could afford it stocked up.  Moreover, the law allowed doctors to prescribe alcohol as a medicine and wine was permitted for religious purposes.  Unsurprisingly, medicinal whiskey and ecclesiastical wine was widely popular during prohibition.

Prohibition also led to an increase in crime. With boarders as long and unguarded as those of the United States, it became relatively easy to smuggle alcohol into the country from Canada, Mexico and the Caribbean. Once in the country, the alcohol was “stepped on” to increase volume and profits. Because the government had limited supply, but not demand, natural economic forces made the importation, illegal manufacture and sale of alcoholic beverages extremely profitable.

Consider too that whenever a government imposes an unpopular law on its citizens, the natural order of things is reversed. Citizens side with those viewed as victims of the unpopular law and discount those that enforce it. That was the natural result of Prohibition.

Alcohol prohibition lasted thirteen years, ten months and nineteen days. It ended in 1933, with the ratification of the Twenty-First Amendment.  By that time, countless people had been killed or injured by bad liquor, innocent bystanders had been killed in shootouts between the police and bootleggers, and the population of federal prisons skyrocketed. 

But as horrifying as these statistics may be, what really ended prohibition was the depression.

Income taxes are only a reliable source of funds, when people are working and earning income. During the great depression unemployment rose to 23%.  By opening the faucets through which alcohol flowed, federal and state governments filled their coffers with funds from excise taxes and a “new” industry was open, employing people to make, store, distribute and sell alcohol. In addition, a vast new market opened for the agricultural products from which beverage alcohol is brewed, fermented and distilled. Happy days were here again, at least for those that enjoyed a dram.

It is often said that the definition of insanity is doing the same thing over and over again and expecting a different result.  Under this premise, it is not unreasonable to think that the failure of alcohol prohibition, and the economic gains realized post repeal should have been instructive when it came to cannabis. Unfortunately, states and the Federal Government were not so enlightened and followed an eerily similar path when it came to the prohibition of cannabis.  

Before passage of the Marijuana Tax Act in 1937, cannabis was legal in the United States. It was regularly used by Americans in medical preparations. Until the Civil War, the American government encouraged the production of hemp, which was used to produce rope, sail cloth, clothing and added to food and beverage for both medical and recreational use.  During World War II, the United States government asked farmers to grow hemp to help the war effort.  

Although leaders of the movement for alcohol prohibition turned their attention to opiates and similar drugs, most Americans had no issue with cannabis until 1910, when as a result of the Mexican Revolution a large number of people immigrated to the United States from Mexico and introduced new ways of consuming cannabis.  The 1920s brought the jazz age, and cannabis became intertwined with jazz culture.  Many Americans feared the cultural changes unleashed in the roaring twenties. They thought of jazz as the “devil’s music.” When the great depression hit and one third of Americans were out of work, a combination of xenophobia, racism and social Darwinism escalated into a campaign against cannabis. 

At the same time, the federal government was moving towards national prohibition by first passing the Pure Food and Drug Act in 1910, which required medications to disclose cannabis as a product ingredient.  Then in 1930, Congress created the Federal Bureau of Narcotics, appointing a commissioner who railed against cannabis (and other drugs) stoking bigotry and racism among supporters of cannabis prohibition.  As national concern increased, the federal government encouraged states to pass the Uniform State Narcotic Act, making states responsible to enforce drug laws.   Finally, in 1937, Congress passed the Marijuana Tax Act, which restricted possession of marijuana for specific industrial and medical uses and required the payment of an excise tax which most deemed punitive.  In 1951, Congress passed the Narcotics Control Act of 1956, which imposed minimum sentences for drug related offences.  A first offence for marijuana possession carried a minimum sentence of two to ten years. As with the prohibition of alcohol, federal prisons populations swelled. This trend continued and was exacerbated when Congress listed cannabis as a schedule I drug under the Federal Controlled Substances Act.  The result of which has been most impactful on Black Americans, minorities and those living in low-income communities.

Now, with 19 states having legalized the recreational use of cannabis American culture has changed.  Recall that it was not the loss of life or imprisonment of Americans that convinced the federal government to repeal prohibition, it was the great depression.   Now federal and state governments must confront the economic fallout from Covid-19. Many states and some in the federal government are looking at Cannabis as a potential source of income and increased employment. The end of cannabis prohibition is in sight. 

Rather than create new regulatory schemes from whole cloth, many states are patterning Cannabis laws on the enormously successful post prohibition alcohol regulatory scheme. Illinois and New York took comfort in their ability to regulate alcohol and have adopted cannabis laws and regulations that resemble those in place for alcohol while Washington and Colorado have appointed alcohol beverage agencies to administer the laws governing the cannabis trade within its borders. 

New York created a new independent commission to oversee the sale of Cannabis and placed within the New York State Liquor Authority.  The state divided the fledgling industry into three tiers: suppliers, distributors and retailers. The members of each tier must obtain an appropriate license. This division makes tax collection easier to monitor and prevents a supplier or wholesaler from exerting undue influence over retailers that might encourage retailers to oversell or otherwise break the law. The New York Cannabis law separates on and off premise consumption. This is a post Prohibition concept that was developed encourage people to drink at home rather than in saloons. The idea was that the family unit will tamper excess consumption and limit driving under the influence. 

With few exceptions, cultivation, possession and sale of Cannabis is still a violation of federal law.  However, Congress has introduced numerous bills, including the Common-Sense Cannabis Reform for Veterans, Small Business and Medical Professionals Act, proposing that the manufacture, sale and transportation of cannabis should be regulated like alcohol.  This too is consistent with post Prohibition regulation which subjects beverage alcohol to both federal and state regulatory schemes.

Clearly, federal and states government take comfort and pride in their successful regulation of alcohol. Those seeking legalization of cannabis may be well served by demonstrating that cannabis, as a tradable commodity, can also be governed by a uniform set of consumer protection and trade practice laws.  Such advocates need only point to the U.S. alcohol industry, rising from the mayhem of Prohibition, to become a major contributor to the U.S. economy.

This article is not intended to give specific legal advice.  Before taking any action, the reader should consult with an attorney familiar with the relevant facts and circumstances.

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