Cannabis Benchmarks report
Washington State has all but finalized their version of a cannabis interstate trade bill, SB 5069, with the House passing the bill this week after it cleared the state Senate last month. In an interview this week with Cannabis Benchmarks, Adam Smith, a cannabis attorney heavily involved in cannabis policy and legislation, said Governor Jay Inslee has indicated he will sign the bill.
West Coast states are looking for relief from the relentless sell-off in cannabis prices and an outlet for their massive overproduction. Harvests and the number of licenses seem to have come down somewhat in western states, but industry participants see interstate commerce as the future of cannabis.
Smith noted the Washington State bill is “substantially like Oregon in that it relies on an indication of tolerance from the Department of Justice (DOJ).” Smith said U.S. Attorney General Merrick Garland, on March 1, 2023, indicated a DOJ opinion will be very much like the Cole Memo that was done away with in 2017 by then-U.S. Attorney General Jeff Sessions. On one level this comes down to the DOJ saying those operating within the cannabis laws of their state will not be prosecuted. On another level, the DOJ opinion might be used to justify interstate trade.
What Smith and other activists would like to see is a new memo that explicitly leaves the door open for interstate commerce. The Cole Memo specified “preventing the diversion of marijuana from states where it is legal to other states” as one of the DOJ’s “enforcement priorities” at the time, which could be construed as preempting interstate trade. Smith pointed out “there is no difference between in-state and interstate commerce,” provided both states have legal cannabis, and noted “there’s not a cannabis exception to the Commerce Clause of the Constitution.”
On a longer lens, Smith sees the production of cannabis in states lacking a hospitable climate as a fool’s errand, citing very expensive production and real estate costs. Meanwhile, “we are in the process of wiping out the best and most skilled and experienced producers in a region of the country where the best and cheapest cannabis is grown, because these producers can’t access markets (interstate trade).” He said in his state he can buy very good cannabis for $50 per ounce, illustrating the price difference between Oregon and East Coast states where cannabis frequently sells for $60 per one-eighth ounce at retail.
He sees the response to the push for interstate trade “as a political decision,” where the DOJ is the fulcrum from which balance can be found in the market and a decision from which interstate trade might be deemed acceptable among states that have legalized cannabis. Smith has helped write a great deal of cannabis legislation and knows that change in the industry has always come from the states, not the federal government, so a push from states for the DOJ to take a “hands off” approach to the industry would necessarily include interstate commerce.