California Officials Take Key Step Toward Interstate Marijuana Commerce, Requesting Legal Opinion On Federal Risk

January 30, 2023 ·

California officials are seeking a formal opinion from the state attorney general’s office on whether allowing interstate marijuana commerce would put the state at “significant risk” of federal enforcement action.

The request for guidance from the Department of Cannabis Control (DCC) is a key step that could eventually trigger a law that Gov. Gavin Newsom (D) signed last year, empowering him to enter into agreements with other legal states to import and export marijuana products.

Part of that legislation stipulates that no such agreements can be made until either federal law changes, federal guidance is put into place allowing the commerce or the state attorney general affirms that there wouldn’t be a sizable risk in doing so.

DCC General Counsel Matthew Lee and DCC Director Nicole Elliott sent the letter to California Attorney General Rob Bonta’s (D) office on Friday, as Politico first reported. It contains an eight-page analysis in which the department lays out reasons it believes the state would likely avoid federal legal issues by clearing the way for cannabis commerce across state borders.

Here’s the language of the opinion the officials are seeking: 

“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.”

The letter explains that the anti-commandeering rule in the U.S. Constitution makes clear that Congress cannot direct a state to legislate one way or another, regardless of federal policy. This “protects California from liability, under federal law, for choosing to legalize and regulate commercial cannabis activity as a matter of its own state laws.”

“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,” it continues. “The anti-commandeering rule does not rise or fall based on the strength of any underlying federal interest.”

The officials emphasized that they’re not disputing the idea that Congress can directly legislate and enact federal laws prohibiting people for conducting marijuana-related activity, whether that’s simple possession or shipping marijuana across state lines as part of an interstate commerce agreement.

The question is whether allowing interstate cannabis commerce to proceed under California law would put the state itself at significant risk, aside from the implications for private individuals and businesses participating in such activity.

DCC further maintained in its letter that the federal Controlled Substances Act (CSA) provides explicit immunity for states and officials that enforce laws and municipal rules for 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,” they said. “And courts have confirmed this straightforward reading.”

The third part of the officials’ argument concerns a long-standing congressional appropriations rider that generally prevents the Justice Department from using its funds to interfere in the implementation of state medical cannabis programs.

“This protection extends even to private parties using, distributing, possessing, or cultivating medicinal cannabis in compliance with state law (though courts disagree as to how strictly private parties must comply with state law to avail themselves of that protection),” it states. “It 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.”

“We do not rely on the existence of the Rohrabacher-Farr/Blumenauer Amendment as dispositive: in our view, an agreement under SB 1326 would not result in significant legal risk to the State under the Controlled Substances Act even if the Amendment did not exist, for reasons we have already explained. Nevertheless, the existence of the Rohrabacher-Farr/Blumenauer Amendment further insulates the State from any hypothetical legal risk as to agreements involving medicinal cannabis, and thus further supports the conclusion that such an agreement presents no ‘significant’ risk to the State.”

The letter also briefly touches on the Commerce Clause of the Constitution, which generally restricts states from enforcing laws that unduly restrict interstate commerce unless given specific instruction from Congress.

In a relevant case last year, a federal appellate court ruled that Maine’s law prohibiting non-residents from owning medical marijuana businesses in the state violated that constitutional principle. Some experts believe the same rationale invalidating the residency restrictions comes into play with state-level bans on marijuana imports and exports.

Disallowing imports and exports of medical cannabis between consenting states could be construed as similarly protectionist and unconstitutional, the thinking goes.

In November, an Oregon marijuana business filed a lawsuit in federal court, declaring that the state’s current ban on cannabis exports and imports to and from other states violates the U.S. Constitution.

California isn’t the only state to have passed interstate marijuana commerce legislation, but it is the only one that authorizes the governor to forge such agreements simply with an official opinion from the state attorney general. The other states enacted measures that made interstate commerce contingent on federal action only.

Most recently, a Washing State Senate committee approved an interstate marijuana commerce bill.

Oregon was the first to take the step in 2019, when then-Gov. Kate Brown (D) signed interstate marijuana commerce legislation into law.

On the other side of the country, New Jersey’s Senate president filed a similar proposal last year, but it has not yet been enacted.

Adam Smith, founder of the Alliance for Sensible Markets, told Marijuana Moment on Monday that regulators’ move in the Golden State is “a California Earthquake,” saying that they “made a strong and cogent argument in favor of an opinion of ‘no additional legal risk’—practically writing the opinion for the” attorney general.

The letter challenges “the economically irrational and unsustainable state silo model that has caused so much harm to patients, consumers and the industry, particularly to small farms and businesses, and legacy operators who have done everything right to get legal but now face a politically created economic crisis,” he said. (Full Story)

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