Obamas Whack-a-Mole Federal Power And What It Means For Marijuana and Water

By: Jeff Berwick | Tue, May 27, 2014
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Battles to limit federal power are coming to naught because the Obama administration excels at bypassing barriers and restraints. The conflict over marijuana, for example, calls into question whether any freedom can regain a toehold in America. Freedom may have already died through duplicity.

A Snap Shot of Current Marijuana Use in America

Pro-Marijuana Use Cartoon

The federal government wants marijuana to be illegal whatever it may be saying. And so marijuana remains classified as a Schedule I drug along with heroin. Schedule I drugs are "highly addictive" ones which have no "accepted" medical value and cannot be prescribed by a doctor. But the Controlled Substances Act (CSA) specifically grants the Attorney General power to reclassify controlled substances. That authority resides in the Drug Enforcement Agency (DEA), a branch of the Department of Justice (DOJ). Obama has the power to order the ultimate yes-man Attorney General (AG) Eric Holder to shift marijuana's classification from Schedule I to Schedule III along with such drugs as codeine. Why doesn't he? For one thing, the tinkering would cause a political backlash and alienate the financial support of Big Pharma. That's why Obama told a CNN interviewer, "What is and isn't a Schedule I narcotic is a job for Congress." It is not, but he wants Congress to absorb the heat.

As well as reclassifying marijuana, Obama could easily legalize it through an executive order that bypasses Congress. He has the lawful authority to wield any power granted to him by Congress or by the Constitution. When Congress passed the CSA, the executive branch received the power to declassify a drug as a controlled substance. AG Holder needs to receive a favorable report from the Department of Health and Human Services but both federal offices are under Obama's direct control. On May 20th senior Obama adviser Dan Pfeiffer declared that the President would be "picking up the pace on executive actions." But nary a one has appeared on marijuana.

Obama could also direct Holder not to pursue or prosecute marijuana growers. In 2011, for example, the DOJ announced it would not defend the Defense of Marriage Act through court cases; the decision clearly came from Obama. Now that the subject has changed to marijuana, however, Obama insists that he does not have the authority to instruct Holder to cease prosecuting marijuana growers who clash with federal law. He also calls himself powerless to overrule drugs laws passed by Congress despite the fact that he has virtually rewritten Obamacare on his own.

But why marijuana? And why move on the issue now?

Cracking the Back of State Power

Obama's attack on marijuana is largely motivated by a deadly serious competition between state and federal power. It is especially important to rein in rebellious and independent states before the November election, which could throw the Senate over to Republicans. But, again, the administration doesn't want to clash openly with state governments and be seen to nullify measures that were approved by state voters. SWAT-style warfare with the states and their residents could affect November votes, especially those of young people. Stealth is best, and Obama is superb at it.

But bitter conflict is brewing. Colorado and Washington State recently legalized sale and possession for both medical and recreational use. 18 other states and the District of Columbia permit medical use and other states are on the fast-track to do so. Some states are edging toward the legalization of recreational use.

Examples abound of the stealth being used to kill the marijuana industry. The Ending Federal Marijuana Prohibition Act was introduced into the House in February 2013. It has been referred to no less than five subcommittees on whose tables it sits. The administration is consciously cooling down its "drug war" rhetoric; the Huffington Post reported (May 16), "DEA Chief Dials Back Drug War Bluster After Talk With [AG Eric] Holder." The cooling down is not a sign of lessening repression. Quite the opposite. Kentucky has just sued the federal government for confiscating hemp seeds being imported from Italy; the seeds were seized by customs at the request of the DEA. The muting of rhetoric is meant to reassure people and distract them.

Milton Friedman Quote

The Whack-a-Mole Strategy of Obama

The federal government's stand on marijuana is being expressed indirectly. Federal agencies are attempting to make its production and sale prohibitively expensive and cumbersome. Their policies can often be executed behind the scenes by unelected officials who are responsible only to Obama. Trying to oppose them is like playing Whack-a-Mole.

Whack-a-Mole is an arcade game in which toy moles randomly pop out of holes and players hit them back inside with a mallet. It has come to mean a situation in which 'solutions' to a problem are fleeting and futile. And, in America, Obama owns the mole.

The Latest Federal Mole Pops Up

In August 2013, Holder publicly announced that the DOJ would not challenge state laws on marijuana use. It was a lie. The power of a whack-a-mole strategy lies in never letting a player know what to expect or when. But the DOJ is losing at least one of its advantages; the public is getting wise to the game.

Last month, Operation Choke Point was featured in the news. This DOJ program targets America's payment infrastructure through which an estimated eight million merchants process credit and debit card payments. The infrastructure includes banks as well as alternatives to them such as Paypal. One DOJ tactic is to flood such businesses with subpoenas and other expensive demands. To make the harassment go away, all they need to do is comply with the DOJ demand to drop individuals and businesses whose activities are legal but "objectionable." "Pot shops" are included as financial untouchables. Coin dealers are as well.

Water Politics

This month the US Bureau of Reclamation - a subcategory of the Department of the Interior - made an announcement. The agency "will administer its water-related contracts in a manner that is consistent" with the CSA. Translation: marijuana growers cannot use federal water on their crops even in states where growing is legal.

It is not clear how many growers will be affected by the Bureau's announcement; in Washington State, at least, the impact could be profound. The Bureau controls the water delivered to 2/3rds of that state's irrigated land. Growers may need to sink wells or use the water supply of nearby cities. And the pressure on cities to refuse water delivery or permits to drill is likely to be intense.

The federal government is determined to punish states that elevate their own laws above federal ones. It is willing to use innovative measures and reinterpret law. The Democratic Congressman from Colorado, Jared Polis, stated, "This policy places the Bureau of Reclamation at odds with the administration's current guidance to not interfere with the marijuana and hemp industries made lawful by voters in those states. The Bureau of Reclamation is challenging the commonly-held understanding in the arid west that water rights are state-based, an extremely delicate proposition for citizens dependent on water for their livelihood."

The next whack-a-mole conflict may well be the dams that operate under the Bureau's control. Dams, power plants and canals controlled by the Bureau help to irrigate 17 states. Consider the Pueblo Dam in Colorado. Although 80% of the region's water is locally controlled, it passes through the Dam. The federal facility has a legal obligation not to obstruct the flow but legal obligations can be changed or reinterpreted. No wonder some local water districts pre-emptively refused to supply marijuana businesses.

The federal government is playing politics with an essential requirement of human life: water. Wars have been literally fought over water. But the Obama administration has pushed average Americans so hard and so far that "what's one more shove?" It may be one shove too many.


[Editor's Note: The Dollar Vigilante newsletter is identifying and alerting subscribers to potentially massive profits in the booming multi-billion dollar medical marijuana industry but has avoided companies based in the US due to the Obama administration's actions... another booming industry in which the US will fall far behind. Last week, subscribers were alerted to a Canadian based medical marijuana company that could return profits well in excess of 1,000% in the coming months. Click here to subscribe to gain access]



Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website, Stockhouse.com, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use Stockhouse.com for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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