California takes baby step toward Interstate Cannabis Commerce

California takes baby step toward Interstate Cannabis Commerce

The state wants to ship its cannabis to another legal state.

California officials have taken the next step under state law in allowing licensed marijuana companies to export cannabis goods to other states, by requesting a formal opinion on the matter from the state attorney general.

The California Department of Cannabis Control’s executive director, Nicole Elliott, and general counsel, Matthew Lee, sent the eight-page letter to Attorney General Rob Bonta, asking him to issue a written opinion as to whether shipping cannabis products over state lines would run afoul of federal law, or if the state was on firm legal ground under the U.S. Constitution.

“New legislation … has created a pathway to allow California cannabis licensees to engage, for the first time, in commercial cannabis activity with cannabis businesses licensed in other states,” the letter reads, referring to the passage of House Bill 1326 last year.

But before Gov. Gavin Newsom can be allowed, per the terms of the bill, to strike any sort of agreement with another governor under which cannabis products could be shipped across state lines, HB 1326 requires that Bonta sign off on the legality of such a move. Or, at least, that he advise that doing so would not “result in significant legal risk” to the state of California under federal law, according to the letter.

It’s Ok – Really

The letter then goes on to summarize at length several reasons intended obviously to persuade Bonta that he’s not on thin ice, legally speaking.

Industry insiders hailed the move and said it’s an important – albeit incremental – step towards interstate commerce becoming a reality, even before federal cannabis prohibition is repealed.

“This is big news. Under existing state law, this is a necessary initial step towards unlocking interstate commerce,” said Jason Horst, the president of the International Cannabis Bar Association.

But, Horst noted quickly, “It’s the beginning of a very slow process. … This is not going to unlock interstate commerce tomorrow.”

No Imports Allowed

The reality is that, no matter how much legal interstate trade could help a lot of struggling cannabis farmers and brands within California, no other state has yet set up any process with which to import marijuana.

The closest so far that any state has come to formalizing any channel for cannabis imports is the introduction of a bill by New Jersey State Senate President Nicolas Scutari. But that bill, which Scutari unveiled in September, has not yet even had a committee hearing, let alone a vote.

“Interstate commerce won’t happen immediately, and it probably won’t even happen this year,” said Hirsh Jain, a Los Angeles-based cannabis consultant and founder of Ananda Strategy. “This is by no means the absolute green light.”

Even if Scutari’s bill becomes law, then the two governors would still have to go through a lengthy negotiation on a huge number of logistical details before interstate commerce could begin, and just those negotiations could take months, Jain warned.

Cali Leads

Still, Jain said, the DCC’s request to Bonta is still an incredibly valuable step, not just for what it could eventually mean as a possible relief valve for California’s oversupply of cannabis but also for how upcoming states craft their own cannabis markets. Future regulations very well could be written with California marijuana exports in mind, he said.

It’s also got political heft, and is noteworthy that interstate cannabis commerce is a goal that the Newsom administration – through the DCC – is choosing to throw its weight behind, Jain pointed out.

“The value of this is in the signal that it sends,” Jain said. “This starts the mechanics of a process, but the real value is it gets the attention of other states, it gets the attention of the federal government.”

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