WASHINGTON - Under federal law, banks can't accept money from retail shops that sell marijuana, even if they're regulated by a state.That's because, in the eyes of the U.S. government, all pot sales are illegal, with marijuana classified as a Schedule 1 controlled substance, in the same category as heroin and LSD.
Even though Washington state and Colorado voted in November to legalize marijuana, pot advocates say it will be impossible for them to tax and sell the drug next year if the U.S. government doesn't give them a pass on violating federal laws.
If the Obama administration doesn't broker a middle ground, the issue appears destined for a clash: Washington Attorney General Bob Ferguson vows to defend his state's plan, while opponents say any attempt by a state to cash in on marijuana sales will result in a legal challenge from opponents.
Against this backdrop, scholars and advocates are searching for a compromise.
Two ideas have emerged:
Grant waivers to the states, giving them permission to stray from the law, similar to what President Bill Clinton did in granting states freedom to experiment with welfare requirements.
Or have Attorney General Eric Holder sign cooperative agreements with the states, allowing them to sell marijuana so long as they run tightly controlled operations with federal oversight.
Stuart Taylor, who studied the conflict between state and federal marijuana laws as a nonresident senior fellow at the Brookings Institution, a Democratic-leaning think tank in Washington, said the issue is "begging for presidential leadership."
But it would be much easier, he said, for the White House to move on waivers if Congress approved the idea first.
"It's a little awkward to say, 'We just won't say we won't enforce federal law in certain ways.' . The problem is that nobody thinks that Congress is going to do anything on this front soon," Taylor said in an interview.
As for the second possibility, Taylor said, Holder could use his authority under the federal Controlled Substances Act to sign cooperative agreements on enforcement and regulatory issues.
Legalization opponents say that allowing the states to proceed under any circumstances would be a mistake.
"People are trying to think of creative ways around federal law, but the bottom line is that the executive cannot override a federal law passed by Congress - and I don't think they would want to. . I just think that could be instantly challenged," Kevin Sabet, assistant professor and director of the Drug Policy Institute at the University of Florida, said in an interview.
Sabet, who recently teamed up with former Democratic Rep. Patrick Kennedy to create an anti-legalization group called Project SAM (Smart Approaches to Marijuana), predicted that the Obama administration ultimately will intervene.
"I see no indication that the Obama administration is just going to completely take this lying down," he said. "When you have a state that's actually going to be making money off of selling and promoting marijuana, from a legal perspective, that's going to be difficult."
It's unclear what the administration has planned. The White House had no comment, referring questions to the Justice Department, which had little to say.
"The department is continuing to review the legalization initiatives passed in Washington and Colorado," said spokeswoman Allison Price.
The administration's silence has left Washington state and Colorado in limbo as they finalize their marijuana regulations. In March, Holder told a Senate committee that his department would issue a policy "relatively soon."
Taylor said the president needs to step in.
"When the people who are in charge of enforcing the laws systematically avoid giving people the information they need to plan, that seems to me a failure of leadership," Taylor said.
Allen St. Pierre, executive director of the National Organization for the Reform of Marijuana Laws, a pro-legalization group in Washington, said the waiver process could make it clear whether states are exempt from international anti-drug treaties and whether federal workers and military personnel could legally use marijuana.
And he said that getting the waivers in place soon could have an added benefit, allowing Democrats to deal with a hot-potato issue before they select their presidential candidate for 2016.
While Clinton relied on waivers to allow states to conduct experiments with welfare in the 1990s, the Obama administration used them just last year to allow states to make changes in federal welfare-to-work requirements.
Discussions on giving the states marijuana waivers have taken place at the Capitol and at the Brookings Institution, which held forums on issues linked to legalization in mid-April and again on Wednesday. The forums are financed partly with a donation from billionaire Peter Lewis, a top legalization advocate. Brookings would not disclose the size of his gift.
In last month's forum, Mark Kleiman, a professor of public policy at the University of California, Los Angeles, and a consultant who's helping Washington state design its marijuana regulations, said the best solution would be to legalize marijuana nationally.
But he said that approving waivers, which he described as "the cannabis equivalent of the welfare-reform waiver policy," would allow growers and sellers to conduct business legally and to deposit money with banks.
"And then the bank that you want to deposit your money in wouldn't have to worry about whether its teller was going to get a 20-year sentence for violating the money-laundering laws," Kleiman said.
Ferguson, Washington state's attorney general, who spoke at the forum, said he's open to the idea of a cooperative agreement. But he added that he has told his legal team to "prepare for the worst" and be ready to fight in court.
"Our job is to defend the will of the voters," Ferguson said.
If the issue lands in court, Washington state and Colorado could face an uphill fight because of the Constitution's Supremacy Clause, which presumes that federal law trumps state law in the case of a conflict.
While Holder has been slow to respond on the marijuana issue, he wasted no time in reacting last month after Kansas lawmakers passed a law attempting to nullify some federal gun requirements. On the day after the law took effect, Holder fired off a letter to Republican Gov. Sam Brownback, reminding him that federal law took priority over the new state law because of the Supremacy Clause. And he told Brownback the U.S. government would file a lawsuit to make sure that federal law is enforced, if necessary.
"I am writing to inform you that federal law enforcement agencies . will continue to execute their duties to enforce all federal firearms and regulations," Holder said in his letter.
The issue surfaced in Florida last year, when Miami-Dade County's chief attorney objected to a new state law prohibiting local governments from hiring any companies with business ties to Cuba, urging that it not be enforced because it conflicted with federal law. Earlier this month, a federal appeals court upheld a ruling that struck down the law.