California Attorney General Issues Legal Opinion on Interstate Cannabis Commerce

by Omar Figueroa

December 21, 2023

 

On December 19, 2023, California Attorney General Rob Bonta issued a legal opinion addressing the question of whether an agreement between California and out-of-state licensees would result in significant legal risk to the State of California and its officials under the federal Controlled Substances Act:

Could state-law authorization, under an agreement pursuant to Chapter 25 of Division 10 of the Business and Professions Code, for medicinal or adult-use commercial cannabis activity, or both, between out-of-state licensees and California licensees “result
in significant legal risk to the State of California under the federal Controlled Substances Act” within the meaning of Business and Professions Code section 26308(a)(4)?

The conclusion was that yes, Interstate Cannabis Agreements pursuant to Chapter 25 would in fact result in significant legal risk:

Yes. State-law authorization for commercial cannabis activity between out-of-state licensees and California licensees could “result in significant legal risk to the State of California under the federal Controlled Substances Act” within the meaning of section
26308(a)(4) due to the risks of federal preemption of state law and criminal prosecution of state employees. Courts have disagreed about the scope of federal preemption in the cannabis context, and no court has ever considered a preemption challenge to a state law
authorizing interstate cannabis sales. The law is also unsettled as to whether state officials could be federally prosecuted for implementing state law in this area.

This is significant because, as the opinion itself notes at page 7, the Department of Cannabis Control requested the opinion in order to satisfy a provision of state law (Senate Bill 1326) requiring a favorable opinion in order to enable the Governor to begin entering into interstate cannabis commerce agreements:

The Department of Cannabis Control submitted this opinion request to obtain a legal opinion that would satisfy section 26308(a)(4)—and thereby enable the Governor to begin entering into interstate agreements. Mirroring the statutory language, the request
asks whether state-law authorization of interstate commercial cannabis activities between licensed cannabis businesses could “result in significant legal risk to the State of California under the federal Controlled Substances Act.”  The requestor included a legal
analysis explaining why, in its view, it would not. For the reasons that follow, we cannot agree.

Since the Attorney General’s opinion is that interstate cannabis agreements could result in significant legal risk to the State of California, interstate cannabis agreements cannot take effect, absent a change in federal law or policy.  See, Business and Professions Code § 26308, which states in relevant part:

(a) An agreement entered into pursuant to this chapter shall not take effect unless one of the following occurs:

(1) Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.

(2) 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.

(3) 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.

(4) 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.

(Emphasis added).

Given that the California Attorney General was unwilling to “play ball”, until there is a change in federal law or federal policy, interstate cannabis agreements cannot take effect and there will be little incentive to negotiate such agreements.  Yet, a change in federal policy, such as would occur if 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” (see Business and Professions Code § 26308(a)(3), supra) would enable interstate cannabis commerce agreements to take effect under California law.

The opinion can be read below and downloaded here.

CA AG Opinion 23-103

This is a developing story; please stay tuned.

This information is provided for educational and informational purposes only, and is not intended nor should be construed as legal advice. For specific questions regarding the interstate cannabis commerce agreements and/or Senate Bill 1326, please contact the Law Offices of Omar Figueroa at info@omarfigueroa.com or 707-829-0215 to schedule a confidential legal consultation.