California AG Nixes Interstate Cannabis Commerce Proposal

California's legislature and governor had hoped to provide another outlet for the state's oversupply issue.

California Attorney General Rob Bonta came out against a Democrat-backed proposal for the state to enter into compacts with other states to legally export cannabis. California has long had a glut of marijuana supply.

In Tuesday’s written opinion, which was more than a year in the making, Bonta said he believes that if California were to engage in such a step, that it would put the state in “significant legal risk,” SFGate reported.

The opinion – for now – effectively kills any immediate hope that legal California marijuana companies had of exporting their crops, edibles, vape cartridges, and other goods to states that many struggling California brands were hoping to break into, such as New Jersey or New York.

The opinion was the result of a 2022 bill that would have given Gov. Gavin Newsom, as the state’s chief executive, the authority to enter into such interstate compacts to allow for marijuana trade between specific states.

Interstate commerce in cannabis remains out-of-bounds for state-legal operators due to marijuana’s status as a Schedule I controlled substance. Even rescheduling to III, as the Biden administration may be about to do, wouldn’t solve the interstate trade obstacles.

The California Legislature posited that Newsom could get around that with specific state-to-state trade deals. The whole concept was contingent, however, on a legal opinion from Bonta’s office defending the policy, which Newsom’s office formally requested back in January.

The attorney general – who was a cannabis industry proponent in the legislature prior to taking the AG position – wrote in his opinion that the interstate commerce proposal would pose “risks of federal preemption of state law and criminal prosecution of state employees.”

“No court has ever considered a preemption challenge to a state law authorizing interstate cannabis sales,” Bonta wrote, adding that the entire question presented to him was “atypical.”

“We cannot conclude that the legal risk is insignificant,” Bonta wrote, pointing out that various courts across the nation have issued diverse opinions – both pro- and anti-cannabis – and as such, he couldn’t in good faith assure the governor that proceeding with such compacts wouldn’t pose some level of threat.

Despite the setback, California cannabis regulators insisted they would keep trying to find a legal path toward interstate trade, SFGate reported, but it’s not clear exactly how.

“We appreciate the Attorney General’s conclusion that the arguments supporting interstate agreements are ‘strong.’ Unfortunately, even strong arguments cannot put novel questions beyond all debate. If you are looking for certainty, you will not find it in cannabis,” Department of Cannabis Control spokesman David Hafner wrote in an email to SFGate.

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.


One comment

  • michael g mclaughlin

    December 21, 2023 at 9:10 pm

    The debt the cannabis companies have is dependent on high-ish prices to service debt. A prolonged depression of price will crush any company with too much debt. Supply and demand works everytime.

    Reply

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