Cannabis legalization advocates view the U.S. Supreme Court’s landmark decision in Murphy v. NCAA, Nos. 16-476, 16-477, 2018 U.S. LEXIS 2805 (May 14, 2018) as a harbinger of good news for their movement. The core tenets of Murphy relied exclusively on principles of federalism to strike down the Professional and Amateur Sports Protection Act (PASPA), a federal law that regulated sports gambling, and analyze what effect, if any, Murphy will have on the burgeoning cannabis industry and related state regulatory landscape.

The Murphy Decision

PASPA’s most important provision, which was directly at issue in Murphy, specifically made it “unlawful” for a state “to sponsor, operate, advertise, promote, license, or authorize by law or compact … a lottery, sweepstakes, or other betting, gambling, or wagering scheme based … on” competitive sporting events − but only if this is done “pursuant to the law or compact of a governmental entity.” PASPA, however, did not make sports betting a federal crime. Instead, enforcement of these prohibitions was to be carried out by the Attorney General and sports organizations, which could be deputized to bring civil enforcement actions to enjoin violations.

Certain states, such as Nevada, had established sports gambling schemes that were “grandfathered” into PASPA. New Jersey was provided an opportunity to receive an exemption if it could pass legislation legalizing sports gambling within one year of the PASPA’s effective date. However, New Jersey’s electorate did not vote to amend the state’s constitution to permit sports betting until 2011, which was well after the safe harbor period expired. In 2014, the New Jersey legislature repealed its previous statutes prohibiting sports betting in the state, and the major professional sports leagues together with the NCAA initiated the Murphy action against several New Jersey officials in federal court to prevent sports betting in Atlantic City.

As an initial matter, Justice Alito, writing for the majority of the Court in Murphy, decided that when a state completely or partially repeals old laws banning sports gambling, as New Jersey did, the state “authorizes” that activity, just as if the state had passed a law to explicitly permit that activity. More importantly, the Court found that the PASPA violated the “anti-commandeering” principle, and was therefore unconstitutional. The anti-commandeering rule is a relatively new creation of judicial construction (i.e., it does not explicitly appear anywhere in the Constitution). Central to the Court’s reasoning was PASPA’s prohibition on state authorization of sports gambling. The Court found this conscription to “unequivocally” dictate what the state legislature may and may not do, thus running afoul of the anti-commandeering rule.

The anti-commandeering doctrine operates as a limit on the powers of the federal government pursuant to the Tenth Amendment’s charge that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The doctrine, as stated in Murphy, stands for the notion that the Constitution confers power to Congress to legislate directly, but does not confer power on Congress to directly compel the states to require or prohibit certain acts, such as forcing states to enact and enforce a federal regulatory scheme. Without the protection of the anti-commandeering rule, the Supreme Court has posited, the federal government could effectively requisition the legislative processes of the states. Moreover, the anti-commandeering rule is thought to promote political accountability and prevent Congress from shifting the costs of regulation to the states.

The plaintiffs further argued that at least one of the challenged PASPA provisions (section 3702(1)) should be retained on the basis of federal preemption. Preemption originates from the Supremacy Clause of the Constitution, which specifies that federal law is supreme over state law (when those laws are in conflict). The Court applied its preemption standard and noted that, for the PASPA provision to preempt New Jersey’s state gambling laws, it must satisfy two requirements: (1) it must represent the exercise of a power conferred on Congress by the Constitution and (2) it must be “best read” as one that regulates private actors, not states. The Court had already concluded, in its anti-commandeering discussion, that the PASPA provision prohibiting state authorization of sports gambling was a direct command to the states, and not a regulation of private actors. Thus, the Court handily disposed of this argument, and found that the PASPA did not preempt New Jersey’s new gambling law.

Cannabis, Murphy and Federalism

At the very least, Murphy is a signal that the Court is willing to protect state sovereignty from encroachment by the federal government by way of the shield of the anti-commandeering doctrine. The result in Murphy may have surprised some because the makeup of those justices joining the majority opinion included the most conservative of the Court. These justices were willing to sacrifice the entirety of the PASPA to protect New Jersey’s interests, even though gambling is arguably morally hazardous behavior.

As a result of Murphy, states that have already legalized recreational and/or medicinal marijuana use, and regulated the same, likely need not be worried about federal attempts to repeal those laws through a federal mandate. The Court has made clear that Congress cannot strong-arm states and localities into enacting regulations, or prohibiting certain commercial activity. Congress may only legislate its own federal laws by regulating the conduct of private actors, not the states.

However, the Murphy opinion should not be interpreted as an invitation to challenge federal drug laws. Significantly, the PASPA did not criminalize sports gambling directly, whereas marijuana consumption, possession and manufacturing are prohibited by the federal government through the Controlled Substances Act (CSA). Central to Justice Alito’s analysis was his finding that the PASPA did not regulate sports gambling as to individuals, but instead compelled states to do so. He observed that Congress can regulate sports gambling directly, but if it elects not to do so, each state should be free to act on its own accord. For now, the federal government may lawfully regulate and criminalize drugs, including marijuana, through its commerce clause powers (which it has done by way of the CSA). This is a judicial position that is unlikely to change given the current status of commerce clause jurisprudence and the federal government’s role in the drug war. Thus, the CSA would most likely survive a Murphy-type challenge.

Even so, as long as the conservative majority of justices on the Court champion and protect individual states’ rights, the powers of the federal government will continue to erode. For the cannabis industry, this is good news − at least for now.