Until 1937, consumption and sale of cannabis was legal in most American states. In some areas it could be openly purchased in bulk from grocers or in cigarette form at newsstands, though an increasing number of states had begun to outlaw it. In that year, federal law made possession or transfer of cannabis (without the purchase of a by-then incriminating tax stamp) illegal throughout the United States. This was contrary to the advice of the American Medical Association at the time. Legal opinions of time held that the federal government could not outlaw it entirely. The tax was $100 per pound of hemp, even for clothes or rope. The expense, extremely high for that time, was such that people stopped buying and making it.
The decision of the U.S. Congress was based in part on testimony derived from articles in the newspapers owned by William Randolph Hearst, who was heavily interested in DuPont Inc. Some analysts theorize DuPont wanted to boost declining post-war textile sales, and wished to eliminate hemp fiber as competition. Many argue that this seems unlikely given DuPont’s lack of concern with the legal status of cotton, wool, and linen; although it should be noted that hemp’s textile potential had not yet been largely exploited, while textile factories already had made large investments in equipment to handle cotton, wool, and linen. Others argue that Dupont wanted to eliminate cannabis because its high natural cellulose content made it a viable alternative to the company’s developing innovation: modern plastic. Still, others could argue that hemp could never truly compete with the high strength and elasticity of synthetics, such as nylon. Furthermore, hemp would have been an easy target due to its intoxicating effect, while no rational justification could have been made for outlawing cotton, wool, or linen.
The 1937 federal marijuana tax act was struck down by the Supreme Court in 1969. In a case brought by Timothy Leary, the Court held that the law’s requirement that a would-be possessor of marijuana register with the local bureau of the IRS, thereby placing his name and address on a file available to local law enforcement, violated the Fifth Amendment privilege against self-incrimination, given the fact that at the time all 50 states had state laws on the books outlawing marijuana outright. In 1970, the Controlled Substances Act made possession of marijuana illegal again on a federal level, without the constitutional issues that scuttled the 1937 act. Several petitions for cannabis rescheduling in the United States have been filed, since the Act permits legalization of marijuana through the executive branch. In 1972, Richard Nixon declared the ineffectual and financially exhausting a War on Drugs which has been waged ever since.
Federal law classifies marijuana as an illegal substance. The Federal Controlled Substances Abuse Act provides criminal sanctions for various activities relating to marijuana. Federal laws are enforced by federal law enforcement agencies that may act independently or in conjunction with state and local law enforcement agencies.
The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In recent study for the Fraser Institute, Economist Stephen T. Easton attempted to calculate how much tax revenue the Canadian government could gain by legalizing marijuana.
The study estimates that the average price of 0.5 grams (a unit) of marijuana sold for $8.60 on the street, while its