Cannabis Policy Experts Argue for Interstate Commerce at MJBizCon 2019
A growing number of U.S. states have legalized marijuana for recreational use, but federal restrictions around interstate commerce have forced the industry to develop in a way that could prove problematic in the years to come.
Speaking to cannabis industry professionals during a panel discussion at last week’s MJBizCon event in Las Vegas, Craft Cannabis Alliance founder Adam Smith made a strong case for the licensed transfer of cannabis between legal markets.
“The single and most urgent question that we have to answer in the next 12 months is ‘are we building one cannabis industry or 30 cannabis industries?’” Smith said.
The panel, which also featured National Cannabis Industry Association public policy director Andrew Kline, Budding Solutions principal Shanita Penny, and Flow Kana vice president Michael Wheeler, examined the possibility of interstate commerce occurring ahead of federal cannabis legalization.
Currently, eleven states and the District of Columbia have legalized marijuana for recreational use. Meanwhile, 33 states have legalized medical cannabis sales and 47 states have reformed cannabis laws.
But unlike other mature industries, where the importing and exporting of product across state lines is perfectly legal, cannabis companies must build, buy or borrow if they want to expand into new markets.
In doing so, cannabis companies have poured millions of dollars into constructing indoor growing facilities in areas of the country that aren’t known for producing cannabis.
“Telling people where to grow cannabis is not economically or environmentally sustainable,” Smith said.
Indeed, only the most well-financed operations are able to operate across multiple markets under the current framework, and that has prevented the cannabis industry from evolving in a more efficient way, Smith argued.
According to Smith, sun-grown cannabis produced in what he called the “Emerald region” spanning between Northern California’s Emerald Triangle and Eugene, Oregon is higher-quality and more abundant.
“That is the best cannabis producing region on the planet right now,” he said. “It produced 90% of the cannabis on the market.”
But instead of exporting those crops to new legal markets, the industry has been forced to invest millions of dollars into regions where outdoor cannabis growing is difficult or impossible. At the same time, other areas of the country are grappling with overproduction and continuing to supply the illicit market in an attempt to curb losses.
“Before we set up an economic disaster that is not going to be good for anyone, we need to talk about moving cannabis from states where there is excess capacity to states where there is excess demand,” Smith said.
Earlier this year, Oregon Rep. Earl Blumenauer and Sen. Ron Wyden introduced the State Cannabis Commerce Act, which would allow for interstate commerce between legalized states and help solve supply and demand issues.
According to Kline, there would need to be a “perfect storm” in order for interstate commerce to get the green light ahead of federal legalization or decriminalization.
Meanwhile, Penny believes that “radical collaboration” will be required in order to make interstate commerce a reality.
“Things need to be overhauled before it is a reality and people will take it seriously,” she said.
For his part, Smith said legal transfers between states would help “normalize” cannabis pricing, particularly in areas of the country like Oregon where a surplus has driven down retail prices.
“If we can move products between states, you could fill shelves with world class products within a year,” Smith said, noting that it could take up to three years to stock dispensaries with enough product to supply demand in new legal markets.
Interstate commerce would also help bring growers out of the illicit market sooner, panelists argued.
“We have to kill the illicit market and bring taxes down on the legal market,” Kline said.
Smith added that his organization would be “forcing the conversation” next year, prodding policymakers to consider why “having 30 separate industries is a good idea.”
“We are going to make this the single most unavoidable issue in cannabis in 2020,” he said.