Gonzales v Raich through the Economic Lens of Markets Externalities

    This past Tuesday I was sitting in my Comm Law class, listing to Professor Sherri Moore lecture on the Commerce Clause and its many applications. The Commerce Clause gave Congress the power to regulate interstate commerce to prevent states from establishing laws that may disrupt the free flow of goods. There have been numerous commerce clause-related cases appealed to the courts. One case in particular, Gonzales v Raich, relates to our discussions on markets and externalities. The 2005 case involves Gonzales, a citizen of California, who had been growing medical marijuana in his backyard. The 1970 Controlled Substances Act made the use of marijuana, along with many other drugs, illegal on the federal level. Gonzales was arrested for his possession and potential use of marijuana. Gonzales went on to appeal his case under the 1996 California Compassion Act, which made the use of medical marijuana legal in California. The court ruled that the commerce clause gave jurisdiction to the federal law, specifically because the local cultivation of marijuana affected the state market for medical marijuana, thus altering market prices. Gonzales was found guilty.

            The court’s ruling on Gonzales was based on Wickard v. Filburn, a 1942 case involving the quantity of wheat allowed. The Agricultural Act of 1938 restricted the quantity of wheat individual farms were allowed to grow in hopes of manipulating market prices. Wickard, a small farmer in Ohio, sold only the allowed quantity, yet grew more for his own personal use. Although intrastate and not exceeding the quantity of wheat allowed to be sold, the courts found Wickard guilty. Their ruling was as follows: although insignificant when only one farmers, dozens and thousands of farmers growing excess wheat for personal use affects market prices for wheat. Thus, the intrastate wheat market was affected, and the commerce clause stands. Wickard was found guilty.   

            Professor Moore added another justification for Gonzales’ inditement, a justification that directly relates to our Public Choice class and discussion of externalities. Moore commented on “the possibility of overflow smells” from the marijuana, which would inadvertently influence and intoxicate the neighbors. Assuming his neighbors did not want to “get high”, the “spillover” of Gonzales’ marijuana smoke is a negative externality, much like the smelly hog farms of Michigan.