On September 18, 2022, California Governor, Gavin Newsom, signed ten (10) cannabis related bills into law in an attempt to “strengthen California’s cannabis laws, expand the legal cannabis market, and redress the harms of cannabis prohibition.” While a full list of the bills that Governor Newsom signed can be found on the Governor’s website, this publication focuses solely on Senate Bill 1326
Senate Bill 1326: Background
Senate Bill 1326, which was introduced by Senator Anna Cabellero (D-Merced), is informally known as the “cannabis interstate agreements bill” because it, generally, gives Governor Newsom the ability to enter into agreements with other states that a have also legalized commercial cannabis business to allow licensed commercial cannabis businesses in each state to do business with one another across state lines.
Interstate Cannabis Transportation and Distribution Law Before SB 1326
Prior to the passage of SB 1326, California’s Medical and Adult Use Regulation and Safety Act, which is codified in the California Business and Professions Code (the “BPC”), specified that none of its provisions could be construed to authorize or permit a California cannabis licensee to transport or distribute, or cause to be transported or distributed, cannabis or cannabis products outside the State of California, unless authorized to do so by federal law.
California Business and Professions Code Post Signing of SB 1326
With the passage SB 1326, section 26080 of the BPC is amended to read as follows,
- Except as provided in Chapter 25 (commencing with Section 26300), this division does not authorize or permit a licensee to transport or distribute, or cause to be transported or distributed, cannabis or cannabis products outside the state.
- A local jurisdiction shall not prevent transportation of cannabis or cannabis products on public roads by a licensee transporting cannabis or cannabis products in compliance with this division.
Although pursuant to the passage of SB 1326, state law now allows the Governor to enter into contracts with other states for the interstate commerce of cannabis (subject to many stringent restrictions), the Governor’s ability to do so is highly dependent on things that are outside of his control.
Legal Requirements Before Interstate Cannabis Agreements Can Take Effect
Specifically, SB 1326 requires one of the following things to occur before any agreement pursuant to passage of SB 1326 can take effect:
- Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses;
- Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses;
- The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses; or
- The Attorney General issues a written opinion, through the process established pursuant to Section 12519 of the Government Code, that state law authorization, under an agreement pursuant to this chapter, for medicinal or adult-use commercial cannabis activity, or both, between foreign licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions. (See: BPC section 26308(a))
The Likelihood of Necessary Legal Changes
Federal Cannabis Related Legalization
If you are keeping up with the federal government’s movement on cannabis legalization and cannabis related legislation, you know that it has been extremely difficult for even the most seemingly uncontroversial cannabis related legislation to successfully pass through both houses of Congress. Therefore, it is unlikely that the current Congress will take the action necessary to either:
- amend federal law to allow for the interstate transfer of cannabis or cannabis products between state authorized commercial cannabis businesses; or
- enact federal law to expressly prohibit the expenditure of federal funds to prevent the transfer of cannabis or cannabis products between state authorized commercial cannabis businesses in different states.
US Department of Justice Memoranda & Opinions
Additionally, it seems unlikely that the US Department of Justice (the “DOJ”) will issue an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between state authorized commercial cannabis businesses any time soon.
The Cole Memo, 2013
For those that are not aware, on August 19, 2013, during the Obama administration, the DOJ issued a memorandum written by then Deputy Attorney General James M. Cole (the “Cole Memo”), that addressed the federal government’s cannabis enforcement policies in light of the enactment of state laws authorizing cannabis possession and business. Though the Cole Memo stopped short of advising federal prosecutors not to enforce the Controlled Substances Act against state licensed commercial cannabis businesses or those possessing cannabis in compliance with state laws, it did assert, generally, that enforcing the Controlled Substances Act against compliant state authorized commercial cannabis businesses in states with strong and effective cannabis related regulatory and enforcement systems was not a priority of the DOJ.
Sessions’ Cannabis Memo, 2018
However, on January 4, 2018, during the Trump Administration, the Department of Justice under the direction of then Attorney General Jeff Sessions, issued a memorandum that rescinded the Cole Memo (the “Sessions Memo”) and directed all United States Attorneys to enforce the laws enacted by Congress, including the Controlled Substances Act, and to follow “well-established principles” when pursuing investigations and prosecutions related to “marijuana activities”.
Stuck with Sessions’ Status Quo, 2018 – Present
Jeff Sessions’ tenure as Attorney General ended in 2018, however, neither of the two Attorneys General that have served since he left the office (William Pelham Barr (2019 – 2020) and Merrick B. Garland (2021 – Present)) have issued memoranda reinstating or readopting the sentiments or guidance contained within the Cole Memo. Given the Biden administration’s failure to take any aggressive position on cannabis legalization and Press Secretary Karine Jean-Pierre’s statement on September 9, 2022, that she would not have any cannabis related information to share in the upcoming weeks (meaning prior to the mid-term election), it seems unlikely that either the DOJ or the President will come through for state authorized commercial cannabis businesses in any way anytime soon.
A Written Opinion by the California Attorney General?
Although it seems unlikely that the federal government will take any of the actions outlined in SB 1326, the California Attorney General may issue a written opinion that state law authorization, pursuant to an agreement executed by the Governor, for interstate cannabis business between foreign licensees (aka cannabis licensees from states other than California) and California state licensees will not result in significant legal risk to the State of California under the Controlled Substances Act. How likely it is that the California Attorney General will exercise his ability to issue such a written opinion is unclear, but even if he does, such an opinion would seemingly only apply to California’s potential liability under the Controlled Substances Act and not that of any licensed commercial cannabis businesses that choose to engage in interstate cannabis commerce pursuant to a contract executed by the Governor on behalf of the State of California.
The Path Forward
Alas, while the passage of SB 1326 is a promising step forward for the struggling regulated cannabis industry in California, it is unclear whether the type of agreements contemplated within it will actually be enforceable anytime soon. At the very least, SB 1326 gives state licensed commercial cannabis businesses confidence that if and when the federal government finally decides to recognize what the majority of states already know about cannabis, the path is clear for interstate cannabis commerce to begin.
The cannabis attorneys at Rogoway Law Group continue to monitor both state and federal cannabis legislation. Check back here for more updates about SB 1326 and important cannabis legislation and regulation.
