February 12, 2023 | Written By Jay Kotzker
Interesting development out of CA where on January 27, 2023, the CA Dept of Cannabis Control (“DCC”) sent a letter to AG Rob Bonta seeking a formal opinion on interstate commerce of cannabis, which the Dept argues would not pose a threat to the State of California. This comes on the heels of other states (Oregon and Washington) toying with this likely reality. However, this is the clearest step yet that states will not stand by waiting for the federal government to act. Will this provide a roadmap for other states or simply be a token gesture? If the AG simply responds to the question asked and avoids getting into the weeds on the federal illegality of cannabis, issues surrounding federal preemption and the dormant Commerce Clause need not be addressed.
This letter seeking a formal opinion comes on the heels of Senate Bill 1326’s passage, which took effect January 1, 2023. The new law creates a pathway to allow California cannabis licensees to engage in commercial cannabis activity with businesses licensed in other states. The commercial cannabis activity involved would specifically include the transportation of finished cannabis and cannabis products to other state-legal states. However, before allowing these types of transactions to occur, the law requires the California Attorney General Bonta to sign off on the legality of this undertaking. At a minimum, the AG must advise that California does not face serious legal risk under federal law.
The language the opinion California’s officials are seeking is:
“Whether state law authorization, under an agreement pursuant to chapter 25 of Division 10 of the Business and Professions Code, for medicinal or adult-use commercial cannabis activity, or both, between out-of-state licensees and California licensees, will result in significant legal risk to the State of California under. the federal Controlled Substances Act.”
DCC officials are clear that they’re not disputing that Congress can directly legislate and enact federal laws prohibiting people for conducting marijuana-related activity, be it wholesale shipping marijuana across state lines as part of an interstate commerce agreement or simple possession. The question ultimately it whether allowing interstate cannabis commerce to proceed under California law would put the state itself at “significant risk.” And, to be clear, this request applies solely to the State of California and does not address private individuals and businesses participating in such activity.
The letter also provides that the Controlled Substances Act includes explicit immunity for states and its officials in the enforcement of state and local laws related to controlled substances. “This provision is broad and unqualified: on its face, it would seem to encompass all state laws relating to federal controlled substances, including state laws legalizing and regulating those controlled substances as a matter of state law,” the letter reads. “And courts have confirmed this straightforward reading,” the DCC asserts.
As a final point, the letter also addresses the implications of the Rohrabacher-Farr/Blumenauer Amendment, a long-standing federal appropriations rider that, with certain exceptions prevents the Department of Justice from using federal funds to interfere in the implementation and execution of state-approved medical cannabis programs. On this point, the DCC states, “[i]t is undisputed that, at its core, the rider prevents the U.S. Department of Justice from ‘taking legal action against the state.’ Thus, the Rohrabacher-Farr/Blumenauer Amendment further insulates the State of California from ‘significant’ legal risk as to agreements concerning medicinal cannabis.”
All this said, this letter, or even AG Bonta’s sign-off, alone, will not open the floodgates of interstate commerce. Indeed, the fact is that no other states has established a legal or regulatory framework to allow the import of California’s surplus cannabis. To be sure, no state has even gotten close to allowing this type of transaction – New Jersey Senate President, Nicolas Scutari, introduced a bill in September 2022 which would allow the governor to authorize certain interstate commercial cannabis activity. The bill has been referred to the Senate Judiciary Committee but has yet to receive any attention.
While this development will not signal the start of massive interstate cannabis commerce, it will very likely set the tone for state legislation in the months and years to come. If states can now contemplate cannabis imports and exports, state regulations and licensing requirements will be drafted much differently. And perhaps the state and federal attention and debate resulting from this letter are equally as valuable in the short term.
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