Alfred Leo Smith and Galen Black were members of the Native American Church and counselors at a private drug rehabilitation clinic.

The Oregon Court of Appeals reversed that ruling, holding that denying them unemployment benefits for their religious use of peyote violated their right to exercise their religion.

In earlier rulings like Sherbert v. Verner (1963), the Court had decided that the government could not condition access to unemployment insurance or other benefits on an individual's willingness to give up conduct required by their religion.

To adopt a true "compelling interest" requirement for laws that affect religious practice would lead towards anarchy.The majority opinion was delivered by Justice Antonin Scalia.

Religious belief frequently entails the performance of physical acts—assembling for worship, consumption of bread and wine, abstaining from certain foods or behaviors.

The Court held that the First Amendment's protection of the "free exercise" of religion does not allow a person to use a religious motivation as a reason not to obey such generally applicable laws.

But those other restrictions themselves required consideration of individualized circumstances, such as when unemployment compensation was denied to a person who could not, for religious reasons, work on Saturdays.

Requiring claims for religious exemptions to be vetted by the legislative process might put less popular religions at a disadvantage, but the Court held that this situation was preferable to the relative anarchy that would result from "a system in which each conscience is a law unto itself."

Justice Sandra Day O'Connor disagreed with the majority's analytical framework, preferring to apply the traditional compelling interest test to Oregon's ban on peyote.

Thus the critical question in this case is whether exempting respondents from the State's general criminal prohibition "will unduly interfere with fulfillment of the governmental interest," O'Connor wrote.

"Although the question is close, I would conclude that uniform application of Oregon's criminal prohibition is 'essential to accomplish,' its overriding interest in preventing the physical harm caused by the use of a Schedule I controlled substance."

Peyote is a sacrament in the Native American Church; thus, members must "choose between carrying out the ritual embodying their religious beliefs and avoidance of criminal prosecution.

Despite this choice, "Oregon's criminal prohibition represents that state's judgment that the possession and use of controlled substances, even by only one person, is inherently harmful and dangerous," O'Connor wrote.

Blackmun framed the issue as he did because "failure to reduce the competing interests to the same plane of generality tends to distort the weighing process in the state's favor."

Oregon also claimed an interest in protecting the health and safety of its citizens from the dangers of illegal drug use, but there was no evidence that religious use of peyote actually harmed anyone.

Religious use was not recreational use; the Native American Church ritual in which peyote is consumed is heavily supervised, thus mitigating Oregon's health and safety concerns.

[9] In Fulton v. City of Philadelphia (2021), the Supreme Court ruled that certain services like foster care certification fell outside of public accommodations covered by the anti-discriminatory nature of Smith, and as a result, discriminatory policies related to these services could be reviewed through strict scrutiny; in the specific case of Fulton, the Supreme Court ruled that Philadelphia's policy not to contract a religious-based foster care agency because of its anti-same sex couple policy violated its freedom of religious exercise rights.