Saturday, November 14, 2009

Fig-Leaf Legalization

Fig-Leaf Legalization

In my last posting, I referred to California’s medical marijuana system as “fig-leaf legalization”. The more I think about it, the better that idea looks.

The idea, as pointed out in a recent issue of Fortune among other places, is that the limits and qualifications of the Californian medical marijuana program are so liberal that virtually anyone can qualify. The result is that the medical dispensaries are in fact nothing but retail marijuana outlets – pot shops.

Several factors contribute to this laissez faire operation.

The first is that the state law places no direct limitation on the medical conditions for which a doctor may recommend the use of marijuana. A doctor may recommend its use, not only for relief of chronic pain or adjunct therapy for cancer patients, but for minor conditions like headaches, mild insomnia, or even mild feelings of malaise. (In its first life as a legal medicine before 1937, two of the main uses of cannabis were for migraine headaches and PMS, two conditions for which newer drugs often provide insufficient relief.)

The second factor is that, in American law in general, only a doctor exercising his professional judgment in the treatment of a patient may determine what does or does not have medical value. Subject only to state licensing and disciplinary rules and malpractice laws, that doctor may recommend, dispense, or prescribe any substance or course of treatment he thinks will be of value to the patient. A small exception exists in the case of heroin, which the federal government persuaded many states to ban outright in the 1920s and 30s.

California doctors are now charging $150 for a consultation for a marijuana recommendation. The consultations usually last no more than ten minutes and rarely involve an actual physical examination. They have become a ready source of additional income for a large number of California doctors.

The third factor is that the federal government has no jurisdiction to determine the medical value, or its lack, of any substance. This limit on federal power has been recognized since the mid-1920s and was reaffirmed as recently as Gonzales v. Oregon. (2006) Three major federal statutes are concerned with the way in which drugs are marketed – The Food, Drug, and Cosmetics Act (as amended), which establishes the Food and Drug Administration, The Controlled Substances Act, which regulates the way in which scheduled drugs are marketed, and the Dietary Supplement Health and Education Act of 1994, which grants the FDA oversight of the marketing of herbal remedies and dietary supplements – but none of these authorize any federal agency to determine whether or not any substance has medicinal value.

Many think that the FDA “approves” new medicines, but it does not. The FDA, acting under the Interstate Commerce clause, prevents misleading or deceptive marketing of drugs by requiring that each drug bear an approved “label” [1] .

Once the drug is sold, the FDA has no control over how doctors use that drug. A doctor may then prescribe the drug for other diseases, a practice known as “off-label” uses. For instance, amphetamines are approved for the treatment of narcolepsy, a rare disease, but physicians prescribe them for attention spectrum disorders as well; and now some doctors are prescribing them for patients to use as “brain-boosters”.

The Dietary Supplement Act is also a marketing act, preventing deceptive or misleading marketing of supplements, vitamins, and herbal preparations. The distinction is that the FDA may intervene only after a product is marketed using methods that make unsubstantiated health claims.

Contrary to popular perception, the Controlled Substances Act is also a marketing control act, not one determining the medicinal value of any substance. It divides all drugs with psychoactive effects into two broad categories: Schedule I and Schedules II-V. The Drug Enforcement Administration establishes regulations for the ways in which doctors may prescribe drugs in Schedules II-V (duplicate forms, non-refillable, limits on amounts for each prescription, etc.), but it may not limit the uses for which a doctor may prescribe that drug.

Schedule I drugs seem to be an exception to the general scheme in that those drugs (including heroin, marijuana, MDMA, and most psychedelics) may not be manufactured, distributed, or possessed. However, a close reading of the statutory language reveals that Schedule I drugs are not defined by their medical effectiveness (reserved by the Constitution to the states), but by whether they have “currently accepted medical use in the United States.” In other words, the DEA is not to determine medical effectiveness, but is only allowed to conduct a survey as to whether the drug is currently used by doctors.

In the first rescheduling action (MDMA), the Administrative law Judge recommended placement on lower than Schedule I on the grounds that the drug was in fact used by doctors with the approval of reviewing peers. The Administrator refused to accept the petition and placed the drug in Schedule I. In that case and the two other cases decided by the Courts of Appeals that issue was not presented to the court and the courts made no finding on that definition. The Iowa Supreme Court, using this interpretation of equivalent language in the state law, has ordered the State Board of Pharmacy to reconsider the scheduling of marijuana. The first federal law suit based on this interpretation is now pending in the U.S. District Court in New Mexico. The result could be to force the federal government to follow the lead of the states.

If that legal interpretation controls, the federal government will have no legal force against state medical marijuana, and the AG’s decision not to prosecute compliant medical marijuana distributors suggests that it has also lost its moral and political backing.

One result is appearing that, at first sight, looks surprising, but is predictable in hindsight. With the risk premium for unlawful conduct removed from their cost structure, medical marijuana distributors are lowering their prices. Market rules apply here as they do elsewhere. Reports show some illegal street dealers lowering their prices by up to 20% in order to compete. Illegal dealers have inherently higher cost structures than do legal ones; the illegal dealers and distributors will be forced from the market. Al Capone cannot compete with Anheiser-Busch.

Colorado is rapidly following in California’s footsteps, and three other states have approved distribution systems. Legislative action on medical marijuana is heating up to unprecedented levels, with nation-wide popular support running over 70% in recent polls. Editorial support is also uniformly high.

Outright legalization of marijuana is still too frightening and too radical for many, and therefore probably politically impossible in the immediate future. Decriminalization has its fans and provides some relief for the consumer, but it does nothing to combat the violence, corruption, and harms of the black market; it may even strengthen them by increasing demand. Fig-leaf legalization, following in the steps of California and Colorado, may be an acceptable compromise. It furnishes an excuse to those whose morals may be offended by a pleasure-driven search for chemical happiness while also furnishing a loosely regulated market, avoiding the excesses and harms of full legalization. Paying a hundred dollars a year for a license from a doctor is a small price to pay for demolishing a major part of the War on Drugs.

[1]  The label is all of the text, and only that text, which the FDA has approved and which must be included when the drug is sold or advertised. The label must include at least one medical use for which the drug has been scientifically shown to be safe and effective. The label is actually several pages long and is presented as the package insert, which the pharmacist will give to you if you ask for it. It is also included in compendia like Physician’s Desk Reference.


  1. Great article Mr. Terrell. I've only been reading your blog for several weeks now and I can honestly say you've taught me some things.

  2. This may be your best article yet. I wonder how this plays out in the anal states...

    Regarding legalization (or regulation, as I like to think of it), how long is the immediate future? Does it stretch to election season in California next year?

  3. I don't know that my crystal ball is any clearer than anyone else's, but my guess (and I stress that word 'guess') is that something will happen on the federal level during this term of Congress.

    DoJ's recognition of state med mj may be enough to force rescheduling --
    Congress may recognize state med mj programs or even decrim federally--

    In any case, I think the cops nationwide will begin to opt out of enforcement (budget problems are a good excuse if anyone calls their hand) by fits and starts.

    Actual, on the books legalization may take several years, and will probably be an accelerating state-by-state thing