> businesses can be legal in states while being illegal under federal law

It still sounds a way ridiculous for a thing to be legal and illegal at the same time. There ought to be a non-ambiguous mechanism to decide whether a business is legal or not. As long as the feds let the states decide on their own they shouldn't consider something to be a crime as long as it is done in a state where it is legal. E.g. pot money from Colorado should be considered perfectly clean while pot money from Idaho can be treated as criminal. Doesn't this make sense?

> Banking is heavily regulated for a reason (terrorist financing

Doesn't seem to help much, terrorists still get everything they need.

> It still sounds a way ridiculous for a thing to be legal and illegal at the same time.

It's not legal and illegal at the same time. It is not prohibited by state law, and prohibited by federal law. It is, therefore, illegal, plain and simple.

Much like California's prison policies few years back: they were exactly what state law specified, but violated federal law. They weren't in some weird legal-illegal contradictory state, they were illegal.

> As long as the feds let the states decide on their own

Federal law does not allow states to decide on their own, in fact, it prohibits them from doing so (OTOH, on state authorized medical marijuana, there is also federal law tied to spending bills for the last several years prohibiting federal enforcement that interferes with the state implementation, but an enforcement moratorium isn't legalization.)

In a unitary state (i.e. one without a federal system) you don't have this particular source of ambiguity - the central government passes laws, and they define what's legal [1]. The USA, however, has a federal system; the essence of that system is a separate of powers between Federal and state governments, which means you also have conflicts of power between Federal and state governments over whose law applies. Drug policy is a classic example; so was segregation, for example.

In this case, the act in question is the Controlled Substances Act, which makes a whole host of drug offenses federal crimes. It was ruled constitutional [2] in the early 2000s, in response to a challenge from California pot growers obeying the local medical marijuana laws who were raided by the DEA.

That is supposed to be the mechanism by which to decide these questions; go to the Supreme Court. However, it turns out that even if states don't actively prevent the feds from enforcing drug laws, most of drug enforcement is in fact done by local police. If the SFPD isn't going to arrest you for smoking joints or selling potklava in Dolores Park, what's the federal government going to do? Put DEA agents on patrol on street corners in SF? Which leaves the federal government in the situation of having declared something illegal, but without having anywhere near the resources to enforce those laws - and the states passively encouraging disobedience of those laws.

Welcome, young folk, to the USA's first real-life (if small) constitutional crisis since Watergate!

[1] Leaving aside the conflict between constitutional law and regular law.

[2] Under the Commerce Clause, which I think is a bit of a stretch, but hey, that's the Commerce Clause for ya

> Under the Commerce Clause, which I think is a bit of a stretch, but hey, that's the Commerce Clause for ya

My favorite bit of the federal drug policy: magic mushrooms grew wild on my college campus since...forever. There was in no way, by any stretch of the imagination, 'interstate commerce' involved in any part of their life cycle yet it was a federal crime to pick them.

How's that work?

Because you picking said mushrooms affects interstate commerce, which after dude's new deal would fall under the control of the commerce clause. Prior to fdr only people and things in interstate commerce could be controlled

Bingo! In fact, the specific precedent cited by the Supreme Court for convicting marijuana growers in CA was the price controls on agricultural produce during the New Deal era.

> If the SFPD isn't going to arrest you for smoking joints or selling potklava in Dolores Park, what's the federal government going to do?

Target the successful state-authorized businesses (and key individuals in those businesses) selling pot (and those businesses, and key individuals in them, knowingly providing key services to those pot businesses) using, among other tools, RICO, the Continuing Criminal Enterprise law (popularly known as the “drug kingpin” law, with mandatory 20-year or, for.more successful businesses, life sentences), and the regular drug trafficking laws and the full panoply of civil and criminal forfeiture provisions associated with all of those laws.

A state-licensed industry isn't going to survive when most of the evidence that the feds need to secure major felony convictions—and seize all the assets of the businesses—against operators is available in state licensing and tax records, and a tiny bit more work lets them do the similar things to supporting businesses.

State-legal marijuana regulatory schemes—and businesses participating in them, even at one step removed from.the direct marijuana trade—exist through federal prosecutorial forbearance, and one of the reasons that state-legal marijuana businesses have had so much problem with access to banking and other support services is that there is wide knowledge of this fact and the lack of guarantee that that forbearance will continue indefinitely, with potentially devastating consequence for anyone who participated in that market even while the forbearance was the executive policy.

Which is exactly what they're threatening to do. But they can't stamp out more underground growers without local support, which leaves the feds in a policy bind - accept state defiance, or produce a hard-to-track and harder-to-constrain underground market.

> Welcome, young folk, to the USA's first real-life (if small) constitutional crisis since Watergate!

Not even close. For one thing, it's no more of a Constitutional crisis than the structurally similar sanctuary city movement, which is considerably older.

I think the scale of this is in practice substantially larger than the sanctuary city movement, as is the centrality of local cooperation to enforcement.

>> If the SFPD isn't going to arrest you for smoking joints or selling potklava in Dolores Park, what's the federal government going to do?

I would guess they would target the growers/large suppliers.

Are local, state-chartered banks with no branches outside of their home state just as squeamish when it comes to marijuana businesses?

Banks will be blacklisted if they finance drugdealers. The US war on drugs is no joke and it is international. If your bank participates in the global financial system it can't ignore the US.

Feds don't care, all they have to do is find a single dollar bill printed outside the state and they have jurisdiction.

Until the interstate banking act of 1994, all banks had branches only in their own state.