California Seeks Formal Opinion Regarding Interstate Cannabis Commerce

Department of Cannabis Control asks State Attorney General for Opinion Regarding Commercial Cannabis Activity Between California and Out-of-State Licensees

By Omar Figueroa and Lauren Mendelsohn

January 30, 2023

On January 27, 2023, the California Department of Cannabis Control (DCC) sent a letter to the State Attorney General’s Opinion Unit seeking guidance regarding commercial cannabis activity between California and out-of-state licensees.

The DCC letter — which sets forth in detail the DCC’s legal reasoning for concluding that the DCC can lawfully regulate commercial cannabis activity between California and out-of-state licensees — came into the public discussion on Monday, January 30. The Law Offices of Omar Figueroa immediately requested a copy from the DCC pursuant to the California Public Records Act.  That afternoon, a copy of the letter was made available by the DCC.  The letter is below and can be downloaded here.

AG opinion request – SB 1326

 

The impetus for this request was Senate Bill 1326 (2022 – Caballero) which was adopted by the State legislature and signed into law by Governor Gavin Newsom last year. (We previously mentioned SB1326 in our 2022 recap here.) The bill addresses a topic that has come up more frequently in the industry: the possibility of interstate cannabis commerce between states that have legalized the plant, despite current federal prohibition which has let to the development of siloed, intrastate cannabis marketplaces. The State of Oregon adopted a similar measure in 2019, and other jurisdictions are likely to follow.

SB1326 added a new chapter, Chapter 25, to the California Business and Professions Code. The new language, codified in Bus. & Prof. Code §§ 26300 – 26308, provides for the establishment of interstate cannabis commerce through agreements with other states that have enacted similar measures once one of the following occurs:

1. Interstate cannabis commerce is allowed under Federal law;
2. Enactment of a Federal law that prohibits the use of federal funds to prevent interstate cannabis commerce activity;
3. The United States Department of Justice issues a memorandum or opinion saying interstate cannabis commerce is acceptable; or
4. The California Attorney General issues a written opinion stating that interstate cannabis commerce does not result in significant legal risk to the State.

(Bus. & Prof. Code §26308.) The January 27 request sent by the DCC to Attorney General Rob Bonta’s office is an attempt to achieve the final option. In the letter, the DCC makes constitutional and other legal arguments for why interstate cannabis commerce authorized in accordance with §26308 would not pose a significant risk to California. How the Attorney General will respond to this inquiry is yet to be determined.

Please stay tuned; this is a developing story.