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By Kyle Jaeger
The California attorney general’s office has been soliciting input from local government and cannabis industry groups as it works to finalize an opinion on the potential legal risks of authorizing interstate marijuana commerce under ongoing federal prohibition, documents obtained by Marijuana Moment show.
At least three organizations representing local governments have so far answered the attorney general’s call, saying that they do not expect California would be at “significant risk” of facing federal enforcement action if officials were to authorize the import and export of cannabis with other consenting legal states.
California, Oregon and Washington State have all passed laws allowing officials to enter into cross-border cannabis trade agreements with other states, although Oregon’s and Washington’s laws both require some form of federal reform or guidance to proceed. California’s law, by contrast, contains a provision empowering Gov. Gavin Newsom (D) to craft interstate agreements if the state’s attorney general determines that doing so would not put the state in legal jeopardy.
The review now underway in the California AG’s Opinions Unit was initiated following a request from the state Department of Cannabis Control (DCC) in January. Emails and letters provided to Marijuana Moment in response to a Public Records Act request offer a sense of how the process has unfolded in the months since.
DCC’s January request asked whether “state law authorization, under an agreement pursuant to Chapter 25 of Division 10 of the Business and Professional 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.”
Matthew Lee, general counsel to DCC, told Marijuana Moment in a phone interview on Tuesday that he has “no concerns at all” about the amount of time that’s transpired since the department submitted the request, saying “we feel very confident that the longer and more carefully you look at this issue, the more likely you are to agree with the conclusion that that we reached.” That is, interstate cannabis commerce carries no substantial federal legal risk for the state.
“They have a very serious job. They need to make sure that they’re being very, very careful looking at all the angles that are necessarily when dealing with novel, complex areas of law where the stakes can be quite high,” Lee said of the attorney general’s office. “So I think that a huge part of giving them the time and space they need to do their job is recognizing that that process takes time. And and it should take time.”
After receiving the agency’s request, California Deputy Attorney General Karim Kentfield sent emails to several potentially interested parties in February, inviting feedback on the question. Kentfield said responses should ideally be submitted by April 4, but that “materials received after that date may nonetheless be considered.”
Records obtained by Marijuana Moment show that several organizations—including Rural County Representatives of California (RCRC), the California State Association of Counties (CSAC) and the California Cannabis Authority (CCA)—have shared their perspectives. Each group expressed to the attorney general’s office that it believes authorizing interstate marijuana commerce would not lead to federal enforcement action.
CCA—a joint powers authority representing local governments that promotes cannabis industry oversight and taxation—sent a letter in April saying it does not believe that repealing a law that bans interstate cannabis commerce carries any risk, “much less a ‘significant’ one,” of federal enforcement under the Controlled Substances Act (CSA).
“Because the express language of the CSA ‘preserves state laws except where there exists such a positive conflict that the two laws cannot consistently stand together, the implied conflict analysis of obstacle preemption appears beyond the intended scope of [the CSA],'” the letter says. “Without a foundation for the CSA to preempt California’s repeal of the present ban on the interstate sale of licensed commercial cannabis, the legal risk of the federal government suing the State under the CSA is effectively nullified.”
RCRC and CSAC, for their part, sent a joint letter in March which acknowledged that the “prospect of state-authorized interstate cannabis commerce often evokes skepticism on first blush.”
“How can a state permit interstate commerce that Congress itself has forbidden? Similar skepticism greeted California’s early efforts to authorize commercial cannabis activities in the first place,” it said. “However, in this case, as then, the skepticism evaporates upon closer examination.”
In their estimation, “federal CSA enforcement action against the State of California is unlikely to be brought as the ‘result’ of ‘state law authorization’ under Senate Bill 1326…and even more unlikely to succeed,” the groups said.
“In both legal analysis and the real world, this is not a ‘fairly large’ probability,” it continued. “Thus, state law authorization, under an agreement pursuant to this Senate Bill 1326, for commercial cannabis activity between foreign licensees and state licensees, will not result in ‘significant legal risk to the State of California under the federal Controlled Substances Act,’ and the Attorney General should therefore issue an opinion as requested by the Department.”
Lee of DCC said that it’s “always encouraging to see other smart, thoughtful lawyers reach the same conclusion that you have on a on a novel question.”
“One of the amazing things about interstate commerce is that it’s a way to grow the pie,” he said. “This is good for everybody. It’s a win for the state. It’s a win for local governments. It’s a win for licensees. It’s a win for just the whole project of legalization and everyone who benefits from it.”
None of the letters or emails that the attorney general’s office released indicated that any parties who were consulted believed there was a discernible risk of federal legal action against California for simply authorizing cross-border marijuana commerce. That said, certain records responsive to Marijuana Moment’s request were exempted from release under various provisions of the state’s public information law covering documents subject to the attorney-client privilege, work-product exception and deliberative-process privilege.
The attorney general’s office also invited comment from the American Trade Association of Cannabis and Hemp (ATACH), but the organization’s president told Marijuana Moment that they did not ultimately submit input on the issue.
Lee previously discussed the issue during a webinar hosted by the Alliance for Sensible Markets, at which he made the case that the there is already an interstate cannabis market that’s been effectively established in the U.S.. But so far it’s been unregulated, forcing operators to make the choice between staying legal—but keeping products within a single market—or engaging in illicit activity by selling across state lines.
On a separate but related legal question, a federal circuit court ruling in Maine last year affirmed a lower court’s ruling that state marijuana laws with residency requirements for cannabis businesses violate the U.S. Commerce Clause, part of the Constitution meant to prevent states from enforcing policies that unduly restrict interstate commerce.
In November, an Oregon marijuana business filed a lawsuit in another federal court, declaring that the state’s current ban on cannabis exports and imports to and from other states violates the Constitution.
Other states where cannabis is legal have considered passing similar legislation to allow cross-border trade. New Jersey’s Senate president introduced an interstate marijuana commerce bill last year. And a legislative committee in Maine recently rejected similar legislation, but the chair said the matter could be revisited through another vehicle.