Oregon Bill Would Authorize Interstate Marijuana Commerce

This post was written by Kamran Aryah, an attorney with the Kight on Cannabis law firm.

Lawmakers in Oregon are currently considering a revolutionary bill that would allow the Governor to enter into compacts for the purpose of engaging in commerce between two marijuana legal states.  Senate Bill 582 is innovative in that it makes an attempt to build on the essentially non-existent federal enforcement of marijuana crimes in marijuana legal states, and throughout the country. Attorney General William Barr (while currently busy making headlines for other reasons) indicated prior to confirmation that he was essentially retaining the Cole Memo policy of allowing actors in marijuana legal states to cultivate and possess marijuana without federal prosecution.

Even if passed, the Bill does not become effective until federal law either explicitly allows for:

“…[a]interstate transfer of marijuana items between authorized marijuana-related businesses; or (b) The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of marijuana items between authorized marijuana related businesses.”

The Bill seems to be an attempt to force the Attorney General to make a definitive statement on marijuana enforcement, and takes a gamble that the AG and the DEA won’t object to this provocation and start enforcing marijuana crimes. The federal government is currently already “tolerating” the activities in marijuana legal states, and the Bill relies on an assumption that this would continue. Based on recent history, it appears the gamble might pay off.

If we read the subtext of this legislation, the sponsors of the Bill make a compelling argument. Some states that have recently legalized marijuana, such as Nevada, will have an extremely difficult time producing quality marijuana at a level anywhere near comparable to what is being produced in Oregon and Colorado. Even if Nevada can bridge that gap, and manage to produce enough marijuana to meet demand quicker than expected, the expense and environmental strain that this could put on Nevada’s agricultural network would be extreme. Growing large quantities of marijuana requires tremendous amounts of water. This is simply not sustainable in a state routinely facing drought conditions.

Meanwhile, millions of pounds of marijuana are sitting in warehouses in Oregon. It is stored in temperature controlled storage facilities in an effort to prevent mold. During this storage period marijuana farmers are watching the average price of marijuana products plummet. This Bill would also create a vital avenue for many struggling Oregon marijuana producers to avoid bankruptcy and dissolution. In a country that prides itself on free markets, it makes absolutely no sense to create closed markets for commodities between individual states. SB 582 argues that interstate commerce should be permitted between states that have legalized marijuana, provided that the federal government tolerates the activity.

The passing of this Bill likely would likely have significant downstream effects on the hemp industry as well. Absent broad-scale federal decriminalization of marijuana, allowing such compacts to proceed puts pressure on states to stop interfering in commerce in hemp products. If the federal government tolerates commerce in a federally controlled substance, it makes states that continue to enforce against hemp- the non-psychoactive, non-CSA controlled sister plant of marijuana- look completely out of step. Justifications by law enforcement for most of the state level hemp seizures still taking place is rooted in the concern that hemp is mischaracterized as marijuana, or that marijuana is being introduced for interstate commerce under the guise that it is hemp . This justification practically disappears if interstate commerce in marijuana is tolerated by the federal government.

SB 582 passed the Oregon Senate on May 15, and is currently awaiting debate on the house floor.

May 24, 2019

This post was written by Kight on Cannabis attorney Kamran Aryah. He works closely with clients to develop compliance strategies. Kight on Cannabis is a law firm founded by attorney Rod Kight that represents legal cannabis businesses. You can contact us by clicking here.