By David B. Rivkin and Randall John Meyer
November 23, 2018, in the Wall Street Journal
The Internal Revenue Service infamously targeted dissenters during President Obama’s re-election campaign. Now the IRS is at it again. Earlier this year it issued a rule suppressing huge swaths of First Amendment protected speech. The regulation appears designed to hamper the marijuana industry, which is still illegal under federal law although many states have enacted decriminalization measures. But it goes far beyond that.
The innocuously named Revenue Procedure 2018-5 contains a well-hidden provision enabling the Service to withhold tax-exempt status from organizations seeking to improve “business conditions . . . relating to an activity involving controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by federal law.” That means that to obtain tax-exempt status under any provision of the Internal Revenue Code’s Section 501—whether as a charity, social-welfare advocacy group or other type of nonprofit—an organization may not advocate for altering the legal regime applicable to any Schedule I or II substance.
Marijuana is a Schedule I substance, meaning the Food and Drug Administration has found it has “no currently accepted medical use and a high potential for abuse.” Schedule II drugs include such widely prescribed medications as Adderall, Vyvanse, codeine and oxycodone. The IRS can deny tax-exempt status to any organization that seeks to improve the “business conditions” of a currently prohibited activity involving these medications. That could include simply advocating for a change in the law or regulation forbidding the possession, sale or use of marijuana or other Schedule I substances. It would also encompass advocacy for relaxing the regulatory regime currently governing the production, distribution or prescription of Schedule II medications.
The rule does not apply to all speech dealing with the listed substances, only that involving an “improvement” in “business conditions,” such as legalization or deregulation. Efforts to maintain restrictions or impose additional ones are fine by the IRS. This is constitutionally pernicious viewpoint discrimination. As the Supreme Court stated in Rosenberger v. University of Virginia (1995): “When the government targets not subject matter, but particular views taken by speakers on a subject, the violation of the First Amendment is all the more blatant.”
Defenders of the IRS may argue that tax-exempt status is a privilege, not a right. But the court has held that the government cannot require recipients of governmental largess to relinquish constitutional rights in return—particularly free-speech rights.
The IRS may point to Bob Jones University v. U.S. (1983), in which the high court upheld the denial of tax-exempt status to a private school with racially discriminatory practices that were “contrary to settled public policy.” But public policy on drugs, especially marijuana, is far from settled. A majority of states have enacted legalization measures contrary to federal law; Michigan, Missouri and Utah all did so this month. And Congress has already defunded Justice Department prosecutions of medical cannabis businesses that are legal under state law.
More important, Bob Jones involved not advocacy but action—discriminatory policies that constrained the university’s students. The case would likely have come out differently if the schools complied with public policy while arguing that it should change.
Although no constitutional right is absolute, governmental policies that burden First Amendment rights are strictly scrutinized by the courts and will be upheld only if based upon a compelling governmental interest.
The framers of the Bill of Rights had experienced the full brunt of British antisedition laws, which were used to punish political advocacy. They were determined that this never happen again. Banning or even burdening the freedom to advocate for changing governmental policies, no matter how unpopular or odious the message may be, violates not only the First Amendment but the idea of government by the people. Impeding such advocacy cannot have any legitimate governmental purpose, much less a compelling one.
Accordingly, while government has been able to justify limiting activities or conduct even when it has an expressive or religious component, the Supreme Court has sanctioned limits on the content of speech only in extreme circumstances. In Holder v. Humanitarian Law Project (2010), for instance, the justices upheld a ban on policy advocacy undertaken under the direction of, or in coordination with, certain terrorist groups. This narrow prohibition was constitutional only because the coordinated speech amounted to a “material support” to terrorist groups. The same speech, if conducted independently, would have been fully protected.
Here, by contrast, the IRS seeks to control independent policy advocacy. That’s something the federal government may not do. Yet it’s the second time this decade for the IRS.
Messrs. Rivkin and Meyer practice appellate and constitutional law in Washington.