Decades after California legalized medical cannabis and launched an industry that would soon be worth billions of dollars in revenue, interstate cannabis is still virtually nonexistent. But even though America’s state-legal cannabis industry now employs hundreds of thousands of people and generates billions of dollars in taxes, there is little to no interstate commerce between states with legal markets. This is partly because most of these states included stipulations in their regulator frameworks that prevented them from trading with other states.
As a result, cannabis producers cannot ship their products across state lines or source cannabis-related raw materials from other states. However, analysts familiar with the matter say that this may soon change if a lawsuit against Oregon’s cannabis law is successful.
If Congress doesn’t move to legalize interstate cannabis trade, activists and industry players could go through the courts to make it possible for players in the cannabis industry to trade across state lines. Like many states with legal cannabis markets, Oregon has stipulations that require cannabis operators to conduct their business within state lines.
Jefferson Packing House, a distribution company based in Medford, Oregon, filed a lawsuit against Oregon state officials, including the governor, arguing that the state law prohibiting interstate trade was unconstitutional. Oregon officials seem quite willing to legalize interstate trade after Governor Kate Brown passed a law that would lift the ban on interstate trade if major changes were made to federal cannabis policy.
The recent lawsuit shows the industry’s impatience and lack of faith in reform at the federal level. It could be months or even years before Congress legalizes cannabis at the federal level and allows interstate cannabis commerce.
Jefferson Packing House is seeking to enact change as soon as it can without waiting for any action from the federal government. Lawyers from the company sent a letter to state officials on Nov. 14, 2022, arguing that only Congress had the authority to regulate interstate commerce.
The Dormant Commerce Clause bars states from preventing the free movement of goods, capital and people between states unless they have received express and limited approval from Congress. States may also receive Congressional approval to prevent interstate trade if there are real public health concerns that can’t be dealt with through other restrictive means.
If the lawsuit against Oregon officials is successful, it could encourage other states to fight for the approval of interstate cannabis trade through their respective courts. If the courts sanction interstate commerce involving cannabis, entities such as Flora Growth Corp. (NASDAQ: FLGC) would probably have to rethink their approach to expanding their footprint across the country.
NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC
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