While much of the cannabis industry has its sights set on federal legalization of cannabis, not everyone is as excited about the tone that many of the conversations have taken.
“Excitement for federal legalization is mounting because state programs have led to good jobs and a lot of progress toward our goals of equity and justice,” Shaleen Title, founder and director of the Parabola Center for Law and Policy, said in a statement. “But flipping a switch to federally legalize marijuana would end all of that progress.”
The comment followed the release of a new report from the Parabola Center warning of the emergence of a U.S. marijuana monopoly if the federal government legalizes the drug.
Title suggested that gradual implementation that protects small businesses and workers is the fairest option for everyone. Such a strategy would focus on prioritizing social equity businesses, smaller enterprises, and worker-owned firms in the implementation of federal permission for interstate cannabis commerce.
“So, if you are in New York for example, the New York (intrastate) market would continue as is, but you could also order Oregon-grown marijuana,” Title told Green Market Report. “It could come from, say, a worker-owned collective there, transported by a small business, and be delivered to you by a locally owned delivery service. But Amazon wouldn’t be able to start shipping Amazon Basics weed to you yet.”
Tamar Todd, a seasoned drug policy attorney and lecturer at U.C. Berkeley School of Law, penned the report.
“How the nation will shift from dozens of individual state cannabis markets to one national market, and the implications of that shift, is unknown but likely to be dramatic,” Todd wrote. “It is also safe to assume that many advocates for federal de-scheduling are not aware of the consequences such a policy change portends for existing and entrenched state cannabis policies.”
Undermining Existing Schemas
Currently, most state cannabis markets are designed to support local businesses and foster justice-based initiatives. Many provide opportunities for historically marginalized communities and ensure a percentage of licenses go to small businesses.
However, Todd warned that such systems might violate the U.S. Constitution’s Commerce Clause, which restricts states from controlling interstate commerce.
If federal prohibition ends without the right measures in place, Todd posits that these state markets could be dismantled, resulting in domination by larger companies that could push out small businesses and undermine the equity initiatives states have carefully crafted.
But, Todd said, there’s a potential solution. Congress has the power to protect these state markets if it chooses to.
The Boston-based think tank recommends:
- Letting states maintain their current cannabis regulations without interruption.
- Prioritizing small, social equity, and worker-owned businesses in interstate cannabis trade.
- Implementing measures to prevent large corporations from dominating the market, including anti-monopoly rules.
“While a consolidated interstate market may have benefits, the cannabis industry would quickly become like many other industries, dominated by a handful of powerful corporations that control the vast majority of the market and profits,” Todd wrote.
Without addressing that concern, federal legalization could open up additional legal challenges.
“Not only will these small, equity-owned businesses no longer be able to compete against large multistate and multinational corporations, but the application of the Dormant Commerce Clause will invalidate the components of the state laws designed to protect small and equity-owned businesses,” she continued.
“Out-of-state corporations and multistate businesses will use the Dormant Commerce Clause to challenge state cannabis laws that burden interstate commerce through residency requirements, or any other state protectionist measures that aim to control the size, scale, or make-up of the intrastate cannabis market.”