How States Have Shrunk the Loophole

To date, no state has completely prohibited state and local law enforcement from participating in equitable sharing, but nine states and D.C. have taken steps to shrink the loophole.

Five states—Arizona, Maryland, Nebraska, New Mexico and Ohio—have prohibited state and local agencies from transferring property to the federal government for forfeiture unless the property is worth more than a threshold amount. 1 These thresholds range from $25,000 in Nebraska to $100,000 in Ohio. New Mexico also bars law enforcement from receiving any equitable sharing proceeds. By outlawing the federal forfeiture of less valuable property, these states have likely drastically reduced the number of their equitable sharing cases, potentially protecting thousands of innocent property owners.

For example, DOJ data indicate that between 2012 and 2016—the year Nebraska passed its anticircumvention law—93% of Nebraska’s equitable sharing forfeitures fell below the state’s $25,000 threshold for equitable sharing participation. 2 Under the new law, such forfeitures either do not happen or must be processed under state law, which guarantees much stronger protections for property owners. 3

Pennsylvania and D.C. have prohibited agencies from participating in federal adoptions, period. 4 However, because adoptions make up a relatively small portion of equitable sharing forfeitures, these reforms are unlikely to have much effect on equitable sharing activity in those jurisdictions.

California and Colorado have attempted to decrease the size of the equitable sharing loophole by removing state and local agencies’ financial incentive for participating in the program rather than restricting participation outright. 5 Both states allow agencies to turn any property over to the federal government for forfeiture but prohibit agencies from receiving their cut of the proceeds unless the property meets a certain value threshold ($40,000 in California and $50,000 in Colorado) and other conditions are met. 6 (In a tidy illustration of the profit motive behind equitable sharing, Colorado’s reform prompted the creation of a grant program, funded by legislative appropriations, to reimburse law enforcement agencies for the proceeds they would lose from equitable sharing. 7 )

Wisconsin also allows state and local agencies to transfer seized property to the federal government but bars them from receiving proceeds unless someone is convicted of the crime that gave rise to the seizure. However, several exceptions undermine this reform. Most notably, if no one claims the seized property after nine months or if the defendant strikes an immunity deal with the prosecution, state and local agencies can receive the proceeds with no restrictions. 8

Drastically reducing the profitability of equitable sharing is likely to reduce agencies’ participation in the program. But while thresholds provide some protection, they are, at the end of the day, arbitrary. Carrying large amounts of cash or driving an expensive car is not a crime, and there is no good reason for police and prosecutors to treat properties on either side of an arbitrary threshold differently. 9 All property owners are entitled to the same due process rights under the U.S. Constitution, and until the equitable sharing program is eliminated, those rights remain at risk.