Lawrence Solum has a good sum up of the oral arguments in Ashcroft v. Raich (link via Volokh). The case, as The Volokh Conspiracy pains to note, is really less of a drug case as it is a federalism case. The question is whether the federal Controlled Substances Act (CSA) preempts state laws that allow for the use of medical marijuana that is grown in-state and never enters the commercial market (thus implicated the inter-state commerce clause).
This is a tough case. As many commentators have noted, in this case the conservative theoretical position (states rights) would support a liberal policy position (medical marijuana). This is sure to cause at least a few headaches on the court. For liberal ol' me, its not AS difficult, since I didn't find either US v. Lopez [514 US 549 (1995)] or US v. Morrison [529 US 598 (2000)] to be bad decisions (note to the not-legally-inclined: Lopez and Morrison were two of the major cases that limited the Interstate Commerce Clause. Prior to those cases, congress could and frequently did justify virtually any law on the grounds that it impacted commerce. In these two cases, the court essentially held that the ISC clause only could be used if the activity in question actually was economic in nature. Guns in schools (Lopez) and beating women (Morrison) didn't qualify). I'm generally in favor of federal power, but the Interstate Commerce Clause can't extend to anything and everything if we're even going to pretend that we're in a federal system. The court's decision to limit the ISC clause to "economic activities" strikes me as quite reasonable.
However, two more quite thorny issues then present themselves. The first is whether or not the growth and use of medical marijuana is an "economic activity." This is a close call. Since this marijuana never enters the marketplace and is (supposedly) entirely divorced from the recreational and illegal markets, I would tentatively answer no. However, it seems somewhat shaky that the distribution and use of medicine is not an issue of "commerce." After all, many drugs are shipped around the country and are bought and sold for profit. Entire industries (HMOs, Pharmaceutical Companies, etc.) have been built to enhance and sustain this production. To claim that medicine is not a commercial activity seems absurd on face. Yet, on the other hand, medical issues have unquestionably been traditionally seen as a state concern. If the ISC clause was intended to apply to domestic medical issues, then the idea that states had any right at all to regulate their own medical practices would be entirely undermined. What seems to be key here is that, since the marijuana is NOT part of the marketplace and is entirely contained within one state, any impact on commerce is incidental and is de minimis. This is especially true since the amount of users of medical marijuana amounts to a tiny fraction of the overall market demand for marijuana. As such, one of the governments primary arguments, that allowing for medical marijuana would lower market prices and thus undermine the governments regulatory scheme--which consists of creating a black market that keeps marijuana prices high--seems specious at best.
The second issue is whether or not, as a matter of precedent, actions that are "economic" but avoid the marketplace (such as medical marijuana) are within the purview of the ISC clause. At first, the controlling case would appear to be Wickard v. Filburn [317 US 111 (1942)]. In that case, the court held that that wheat entirely consumed on the farm it was grown on still would implicate the ISC clause and was subject to regulation by the federal government. However, as I learned in the oral argument, the wheat in that case wasn't just put on the farmer's dinner table, it was used to feed the livestock which WAS put on the market. Hence, since the wheat was part of the "stream" of commerce that did impact the market, it could be regulated. Since the entire commercial "life" of medical marijuana begins and ends with the patient, there is no similar implication in this case.