There is no "substantial effects" clause. That logic, and I use the term loosely, is a creation of the FDR era Supreme Court. The Congress was given the power to regulate Interstate Commerce, which means two things, an activity must be commerce in the first place, and secondly it must take place across state lines, that is be "interstate". Making your own machine gun, or growing your own pot, satifies neither of those conditions. The Court itself recognized this in US vs. Lopze when it struck down the Gun Free School Zones Act, on the grounds that local schools were not engaged in "interstate commerce", and thus Congress could not regulate their activities, directly at least.
Yes, I mistyped. I meant to type "theory," not "clause."
Not really. The principle was introduced in 1914 (20 years before FDR) in the The Shreveport Rate Cases:
"It is for Congress to supply the needed correction where the relation between intrastate and interstate rates presents the evil to be corrected, and this it may do completely, by reason of its control over the interstate carrier in all matters having such a close and substantial relation to interstate commerce that it is necessary or appropriate to exercise the control for the effective government of that commerce."
"Wherever the interstate and intrastate transactions of carriers are so related that the government of the one involves the control of the other, it is Congress, and not the state, that is entitled to prescribe the final and dominant rule, for otherwise Congress would be denied the exercise of its constitutional authority, and the state, and not the nation, would be supreme within the national field."
Granted, Shreveport concerned carriers of commerce not the commerce itself, but prior courts ruled that Congress may regulate the carriers.
Shreveport, I believe, was the first case when the USSC mention both "a close and substantial relation" and "necessary or appropriate". The two phrases are used in conjunction to regulate intrastate activities.
You are correct when you say the Commerce Clause only allows Congress to regulate a)commerce that b) crosses state lines. That is the only power given to Congress by the Commerce Clause. BUT, Congress also has the power, under the Necessary and Proper Clause, to legislate those activities (not necessarily commerce) that "substantially affect" their ability to execute their other powers -- in this case, regulating interstate commerce.
"[T]he New Deal Court’s own constitutional justification for its radical expansion of the scope of federal power over commerce was that the congressional measures in question were valid exercises of the power granted by the Necessary and Proper Clause and were not direct exercises of the power to regulate commerce among the several states. That is, the Court did not simply and directly enlarge the scope of the Commerce Clause itself, as is often believed. Rather, it upheld various federal enactments as necessary and proper means to achieve the legitimate objective of regulating interstate commerce."
-- Stephen Gardbaum, Rethinking Constitutional Federalism, 74 Tex. L. Rev. 795, 807-08 (1996)