States Preparing for Interstate Pot Transactions Despite Risks

Several states with decriminalized recreational marijuana have pushed pot legalization to the next level by actively making preparations for interstate transactions. Furthermore, they have done so despite the inherent risks of such action. Do they know something the rest of us don’t know about federal decriminalization?

California, Oregon, and Washington have all enacted legislation to authorize governors to enter cross-border import and export agreements in the event the federal government decriminalizes marijuana. California has gone one step further by authorizing its governor to move ahead should the state attorney general determine that doing so would not result in federal enforcement action. That is a slippery slope.

A Siloed Industry for Now

As things stand, legal marijuana is very much a siloed industry. Each state has been left to create its own rules and regulations out of necessity. Why? Because marijuana is still a Schedule I controlled substance according to federal law. As such, it cannot be legally transported across state lines.

Even if California and Oregon want to facilitate imports and exports between themselves, they could not do so in any way that would be deemed federally legal. Any such transactions would be immediately subject to federal enforcement. As to whether any enforcement action would actually take place, that is a matter of debate.

The siloed nature of the marijuana market does present both good and bad. On the good side, it has largely prevented the corporate takeover of both medical and recreational cannabis. While there are some corporate entities out there, interstate issues have prevented them from dominating the industry nationwide.

On the bad side, we are left with a patchwork of regulations that often conflict from one state to the next. That says nothing of the fact that the entire concept of legal marijuana conflicts with federal law.

The Ongoing Federal Question

Even as other states look to California, Oregon, and Washington as possible examples of how to craft future interstate commerce rules, the federal question lingers. Will Congress ever get around to decriminalizing marijuana? And if so, will the sitting president at the time sign such legislation?

You could make a case either way. Five years ago, no one seriously believed decriminalization was possible. We are much closer to it today, yet there is still too much contention in DC to get a bill through. Every time the House passes meaningful legislation, the legislation ends up dying in the Senate.

The more important question is whether interstate agreements would even be necessary following federal decriminalization. Let us say Utah entered an agreement with Arizona so that operators like Beehive Farmacy could purchase less expensive medical cannabis from Arizona suppliers. The only reason such an agreement would be necessary following federal decriminalization would be to get around state laws that still make imports and exports illegal.

Ending Interstate Transport Bans

The truth of the matter is that states like Utah only have bans against imports because they do not want to risk federal enforcement. By not allowing importation of any kind, Utah lawmakers are making it clear that they do not support interstate transport. Any such transport is still illegal and can be pursued by state prosecutors.

If federal lawmakers eventually decriminalize marijuana, the interstate transport ban would disappear by itself. Unless, of course, they kept the ban in place for regulatory purposes. That is not likely to happen though.

The states know all of this, which makes the decision to authorize interstate deals in California, Oregon, and Washington even more curious. What do they know that the rest of us do not?

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