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The Implications of Murphy v. NCAA for State Marijuana Reforms

Posted by on Thursday, May 17, 2018 in News, Updates.

[Updated for clarity]

On Monday, the Supreme Court decided a case that should help insulate state marijuana legalization from preemption challenge. The decision in Murphy v. NCAA invalidated a federal law–the Professional and Amateur Sports Protection Act (PASPA)—that had prohibited the states from (inter alia) “authoriz[ing] by law” sports gambling. 28 U.S.C. § 3702(1).

I’ll summarize the decision (which can be found in full here) and then make two observations about its implications for marijuana law.

The case arose from a PASPA lawsuit brought by several sports leagues that sought to enjoin a 2014 New Jersey law legalizing sports gambling under state law. (PASPA creates a private right of enforcement. The suit was originally filed against then Governor Chris Christie, but the name changed when Phil Murphy became Governor.) The NJ law declared that the state’s longtime prohibition on sports gambling no longer applied to sports gambling by adults (21 years and up) at New Jersey licensed casinos and racetracks. The plaintiff sports leagues convinced a federal district court and the Third Circuit that this “selective” repeal of a state gambling prohibition constituted the sort of “authorization” prohibited by PASPA. The courts proceeded to enjoin the NJ law and the state appealed to the Supreme Court.

While the Supreme Court essentially agreed with the lower courts’ interpretation of PASPA, it reversed on the ground that PASPA, so understood, was unconstitutional. In particular, the Court found that preventing states from repealing their own prohibitions on private activity (like sports gambling) was tantamount to commandeering. In the key passage from the opinion, Justice Alito explains the Court’s reasoning:

“The PASPA provision at issue here—prohibiting state authorization of sports gambling—violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do. . . . State legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.

Neither respondents nor the United States contends that Congress can compel a State to enact legislation, but they say that prohibiting a State from enacting new laws is another matter. . . . Noting that the laws challenged in New York and Printz “told states what they must do instead of what they must not do,” respondents contend that commandeering occurs “only when Congress goes beyond precluding state action and affirmatively commands it.” . . .

This distinction is empty. It was a matter of happenstance that the laws challenged in New York and Printz commanded “affirmative” action as opposed to imposing a prohibition. The basic principle—that Congress cannot issue direct orders to state legislatures—applies in either event.

Here is an illustration. PASPA includes an exemption for States that permitted sports betting at the time of enactment, . . . but suppose Congress did not adopt such an exemption. Suppose Congress ordered States with legalized sports betting to take the affirmative step of criminalizing that activity and ordered the remaining States to retain their laws prohibiting sports betting. There is no good reason why the former would intrude more deeply on state sovereignty than the latter.”

Slip Op. at 18-19.

I’ve been making this very argument–that prohibitions on state action can function as commands for state action–for nearly a decade (see my Article here (esp. pp. 160-161)), and I helped draft an Amicus Brief in Murphy on behalf of several law professors (see here) that elaborates on the point. So I feel vindicated by the Court’s decision and its reasoning, even if the Court didn’t cite the Article or the Brief (sigh) in its opinion.

Interestingly, the Court went on to invalidate all of PASPA, even though it found only part of the law to be unconstitutional. PASPA prohibited much more than state authorization of sports gambling. In relevant part, Section 3702(1) made it unlawful for states to “sponsor, operate, advertise, promote, license, or authorize by law” sports gambling. The very next provision, Section 3702(2) also made it unlawful for private persons to “sponsor, operate, advertise, or promote” sports gambling “pursuant to the law” of a state. As I explain in my Article linked above (see pp. 160-61), barring states from “sponsoring, operating, advertising, or promoting” sports gambling is uncontroversial (constitutionally speaking), because all of those actions interfere with the private market. Congress has always been allowed to preempt such state interference–i.e., preemption in such circumstances is not commandeering. But the majority found that Congress would not have passed these other prohibitions, or the prohibitions on private sports gambling, had it known that its ban on state “authorization” of sports gambling would later be invalidated – i.e., the Court found the separate prohibitions of the statute to be inseverable.

Three Justices (Breyer, Ginsburg, and Sotomayor) dissented from the severability ruling. Breyer agreed that PASPA was unconstitutional insofar as it forbade states from repealing sports gambling bans. This means the commandeering ruling got at least seven votes. Justices Ginsburg and Sotomayor glossed over the commandeering issue and focused instead on asserting that the (possibly) defective language of PASPA was severable from the rest of the statute.

Let me make two brief observations about the case and its implications for marijuana reforms.

First, the decision clearly gives states the green light to legalize marijuana under state law. If a state is constitutionally entitled to repeal its own ban on sports gambling (in whole or part), it follows that the state is also constitutionally entitled to repeal its own bans on other activities, like the possession, manufacture, and distribution of marijuana. Indeed, the Amicus Brief (linked above) stressed the parallels between state laws legalizing marijuana and state laws legalizing sports gambling.

The Murphy decision will provide states the clear precedent they need to debunk lingering claims that their marijuana reforms are preempted because they “authorize” drug activities federal law forbids. Such claims have been made in a number of preemption lawsuits, including Nebraska’s notable suit challenging all of Colorado’s Amendment 64 (see book, pages 535-550).

Importantly, the Murphy decision would also appear to shield state marijuana licensing laws from preemption challenge. The sports leagues had claimed that the 2014 NJ law not only “authorized” sports gambling, but “licensed” such gambling as well (thereby violating a second prohibition found in Section 3702(1)), because the state law only permitted state-licensed entities—namely, casinos and racetracks—to conduct sports gambling. The Court, however, found no constitutionally significant distinction between “licensing” and “authorizing” an activity:

“PASPA’s prohibition of state “licens[ing]” . . . suffers from the same defect as the prohibition of state authorization. It issues a direct order to the state legislature. Just as Congress lacks the power to order a state legislature not to enact a law authorizing sports gambling, it may not order a state legislature to refrain from enacting a law licensing sports gambling.

Slip Op. p. 25. (State marijuana licensing laws are discussed in the book on pages 444-455.)

The Amicus Brief had made this point (again, sigh), but also qualified it in an important way that Justice Alito neglects to note:

“Just like authorization, licensure merely provides the state’s permission to engage in activity. If that is all licensing does, then it is not pre-emptible, for the same reasons authorization qua repeal is not pre-emptible. But if the license imposes additional restrictions that interfere with activity—such as requiring a retail licensee to collect sales taxes—those additional restrictions likely would be subject to preemption, even if the underlying license (permission) is not.”

Amicus Brief, p. 6n.3. In other words, while the Court seemingly recognizes a state power to license private marijuana suppliers (as well as sports gambling operations), Justice Alito’s language shouldn’t necessarily be read to enable states to regulate those licenses however they see fit.

The bottom line: Murphy nicely clarifies that states may legalize and license marijuana activities, even though it doesn’t really say much about how states may regulate those activities. None of this is really new. As I noted above, I think the anti-commandeering rule has always enabled states to deregulate some activity under their own laws, regardless of how federal law might treat that activity. But the case provides the Court’s imprimatur to that argument, which should help lower courts, lawmakers, and litigants get the law right.

A second observation: Even though Murphy gave marijuana reformers reason to cheer, it gave sports gambling proponents even more cause for celebration. In the decision, the Court not only enabled states to legalize sports gambling for purposes of state law, it also eliminated the federal prohibition on sports gambling. Without that second holding invalidating the federal prohibition, New Jersey’s victory likely would have been “mostly pyrrhic”, as Justice Breyer put it (Slip Op. p. 3). That’s because New Jersey’s casinos and racetracks might not operate a sports book if doing so remained illegal under federal law (even if the state allowed them to do so). After all, the sports leagues that sued New Jersey could still go after them (recall that PASPA creates a private cause of action).

It’s worth noting, however, that Justice Breyer’s gloomy assessment of the significance of the states’ victory in Murphy doesn’t apply to marijuana law (and perhaps other fields). In other words, if the Court were to uphold a state law legalizing marijuana without also invalidating the federal ban on same, the state victory would be far from “pyrrhic.” That’s because the federal ban on private marijuana activities is largely toothless as compared to PASPA’s ban on sports gambling. For one thing, Congress hasn’t authorized private parties to enforce the federal marijuana ban against other private parties (except in the limited circumstances of Civil RICO, discussed here). In addition, the federal government itself lacks the resources needed to crack down on state-approved marijuana suppliers (see my Article linked above and the book on pages 282-283). The broader lesson here is that while constitutional doctrines like the anti-commandeering rule help limit federal power, so do more practical considerations – like enforcement resources.

That’s it for now. For more on the case, I highly recommend (though don’t necessarily agree with!) Rick Hills’ excellent post on the case at Prawfsblawg here; and for more on Murphy’s broader ramifications, I highly recommend Sam Kamin’s piece in The Hill here.

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