Powerless to Penalize: Why Congress Lacks the Power to Penalize Marijuana Businesses Through § 280E of the Internal Revenue Code

This Note examines whether § 280E of the Internal Revenue Code—a thorny little provision that forces state-authorized marijuana businesses to pay exceptionally high taxes—is constitutionally justifiable under Congress’s power to tax and spend. After canvassing the history and purposes behind § 280E, this Note outlines Supreme Court precedent regarding congressional power to tax before detailing the Supreme Court’s analysis in National Federation of Independent Businesses v. Sebelius (“NFIB”) , a recent case addressing the limits of congressional power. This Note applies NFIB  to § 280E and concludes that § 280E lies outside of Congress’s Taxing Power because § 280E is an impermissible penalty. This Note then considers whether we should simply recast § 280E as a criminal penalty founded on Commerce Clause Power by examining the roles that precedent, the public-policy doctrine, and judicial deference to Congress should play. Lastly, this Note suggests alternative—constitutionally permissible—methods for Congress to generate revenue from marijuana sales and alternative avenues to impose criminal penalties for federally unlawful activities. This Note ends by suggesting that §280E should not exist in its current form as a tax provision because it cannot be justified by Congress’s Taxing Power.