California’s Possiblities of Interstate Cannabis Commerce

Despite federal officials dragging their feet on the subject of the many reforms needed in America’s cannabis policies, states that have made billions from statewide cannabis sales are implementing their own lucrative and job-creating policies regardless. Washington and Oregon, two of the first states to legalize recreational cannabis nearly a decade ago, recently announced an interstate partnership for cannabis sales between the two states and it’s likely that several more neighboring states that have recreational cannabis will enter into similar partnerships in the next decade.

Interstate cannabis sales and commerce could be the next exciting frontier for the cannabis industry after cannabis consumption lounges such as the lounges that are eventually opening in Colorado and Nevada. Industry professionals could only imagine the economic and regulatory changes that will come with the inevitable implementation of interstate cannabis commerce possibilities. The prospect of being able to buy award-winning Nevada cannabis brands in Arizona and vice versa is already exciting enough by itself, much less all the other states whose products have put their own respective cannabis markets on the map.

The measure signed in Washington and Oregon seems promising and most recently, California is seeking a legal opinion from the state’s attorney general’s office to inquire if the state would be at risk of action by federal authorities regarding one of ten cannabis laws that Governor Gavin Newsom signed last year. The bill in question, Senate Bill 1326 also known as The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), that authorizes interstate cannabis commerce and the free import and export of cannabis products from across state lines, was apparently signed without first consulting the state attorney general’s office on the legality of the measure or how this measure could clash with the current incredibly strict federal policy where among many falsehoods, cannabis is considered more deadly than fentanyl.

Regardless of the attorney general’s eventual opinion, it won’t change the fact that this bill from last year is considered a trigger law, meaning that the implementation of this measure is entirely contingent on the federal law changing regarding cannabis.This is quite similar to the interstate commerce measure created in Washington and Oregon which is still contingent on federal cannabis reform somehow miraculously happening.

“This bill would make an exception to the above-described prohibition” the language of the bill read, “and would authorize the Governor to enter into an agreement with another state or states authorizing medicinal or adult-use commercial cannabis activity, or both.”

This bill could be groundbreaking from an economic standpoint for the California cannabis industry and neighboring state cannabis industries as the American cannabis industry.  Especially for a state that’s been so historic and powerfully influential in the subject of American cannabis such as California, the possibility to export their products that have been known for their high quality decades before Colorado legalized could revolutionize how the statewide industry operates.

However, because this is still a piece of legislation created by government officials, there are limitations in the language of the bill that may be disadvantageous for cannabis companies outside of California wishing to operate within the Golden State.

“The bill would make foreign licensees subject to the jurisdiction of this state for purposes of actions taken for violations of state commercial cannabis laws and regulations.” the piece of legislation reads. “The bill would prohibit an entity with a commercial cannabis license issued under the laws of another state from engaging in commercial cannabis activity within the boundaries of this state without a state license, or within a local jurisdiction without a license, permit, or other authorization issued by the local jurisdiction.” 

The language of the bill seems incredibly promising and the opportunities related to commerce and job creation from such a strong yet vitally needed reform seem to be almost endless, but the contingency clause is clearly written below. The clause states that most of the reforms that SB 1326 feature so heavily can’t be implemented until monumental change happens on the federal level. Luckily for any prospective cannabis business owners outside of California who wish to eventually sell their products in the state, the reforms needed on the federal level are explicitly stated to avoid the confusion that often arises when discussing federal versus state cannabis law and how the two often clash with each other. 

“The bill would prohibit an agreement, as defined, from taking effect unless, among other things, federal law is amended to allow for, or the United States Department of Justice issues an opinion or memorandum allowing or tolerating, interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses. The bill would require the department to notify the Governor and the appropriate policy committees of the Legislature upon the occurrence of an event that would allow an agreement to take effect and to post the notification on its internet website.”

At the end of January, Department of Cannabis Control General Counsel Matthew Lee and DCC Director Nicole Elliott sent an eight page letter to California Attorney General Rob Bonta’s office, which was an analysis of how the state could legally bypass issues with the federal government that exist when crossing state lines with cannabis. The DCC cites the anti-commandeering rule of the US Constitution, which prohibits the federal Legislative branch from instructing how a state may legislate, as a reason why interstate commerce may be allowed.

 “This remains true where, as here, the activity to be authorized under state law involves interstate commerce—such as commerce between in-state and out-of-state cannabis licensees,” the letter read. “The anti-commandeering rule does not rise or fall based on the strength of any underlying federal interest.”

Regardless of the outcome, it’ll be interesting what Attorney General Bonta’s office opinion on the matter is. However, given how undeniably strict the federal policies are for a plant that over half the country has decided to legalize in one form or another anyway, one shouldn’t be surprised if it’s several more years until interstate cannabis commerce is a possibility for California.