When HB582 first passed in Oregon, the concept of “interstate cannabis commerce” was still considered a little out there. The assumed logic, pretty universally, was that the federal government allowed states to do what they wanted within their own borders, but nationally we were at least a decade away from meaningful change in governance across state lines. Oregon had an “oversupply” problem, and very few people were talking about a “lack of market access” problem. Very few were ready to address that access to regulated markets was the most effective way to sort good actors from bad, and even fewer were ready to define those transition scenarios.
The conversation is no longer “if” there will be national and international markets and supply chains, the conversation is “when” and “how.”
Fast forward a couple years, and there are competing federal proposals about how to organize and regulate that national market, and California is on the precipice of passing their own bill to allow for exploration of new markets. At this point, it’s a relatively existential issue for the hundreds of legacy craft growers who have been beaten down again and again by the market conditions under which they operate, while patients and consumers clamor for high quality, tested products to treat “what ails ‘em” across the country and across the globe.
The conversation is no longer “if” there will be national and international markets and supply chains, the conversation is “when” and “how.” That’s why we want to take a deeper dive this month to compare the currently proposed regimes in a little more depth.
CANNABIS ADMINISTRATION & OPPORTUNITY ACT or STATES REFORM ACT
These are the current outline for a schema for federal legalization coming from the respective parties in congress. Both involve descheduling cannabis, and deputizing the TTB and ATF to regulate across state lines but the proposals prioritize different compliance regimes. They are not fundamentally incompatible and each have benefits to offer. The CAOA includes many additional restorative justice measures, but the limited governance model in the SRA provides hope to many small, craft businesses. At issue is which federal agencies will lean in to regulate parts of the supply chain, and how that might impact businesses at different sizes and points of maturity. Also unclear is how the speed of governance at a national level will keep up with markets that evolve as quickly as cannabis.
State-to-State Trade Deals
Many of the proponents supporting both the Oregon and California proposals, advocate for a “hands off” federal approach. States should be allowed to set their own rules for importing and exporting, more like an international regime. For example; New York State, under the direction of Governor Hochul, could decide what kinds of products they are willing to import, what packaging and testing regulations would have to be met for sale in their retail market and then the Administrations of Oregon and California could work with their producers to support and manage fulfilling that demand. This would allow for the most laissez faire approach, while continuing the state-market experimentation of the current regime. Advocates point out that the DOJ could issue an updated Cole memo allowing for this with an extension of their non-intervention policy, but its unclear if the Federal Executive would be willing to take such drastic action, especially when the Biden Administration isn’t a huge friend to the industry.
PREPARE Act
Recently introduce in the House, the PREPARE Act presents an interesting alternative path forward.
Supported and championed by House Rep Hakeem Jeffries and CPEAR (Coalition for Cannabis Policy, Education, and Regulation), the bill calls for the establishment of a federal cannabis commission to study “a prompt and plausible pathway to the Federal regulation of cannabis, and for other purposes.
Like the other Federal proposals, it uses alcohol regulation as the basic model for interstate trade, and includes provisions for representation by most of the Federal Agencies with vested interests in development of the national market. Notably, it also includes provisions to protect Tribal interests, consider restorative justice measures, enhance access to resources for entrepreneurs and investment in research in medical applications.
The goal is less to create specific laws and rules, and more to understand what good might look like in this space.
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In all three scenarios many questions remain outstanding that are top of mind for operators. While many supply chain businesses are eager to access new markets, many are rightly afraid of the competitive consequences to how these policies are implemented, and experienced in how regulations privilege particular parts of markets while causing headaches elsewhere in the ecosystem.
At Indiva Advisors we are monitoring these developments closely, and will continue to advocate for common-sense, low bureaucracy solutions to enable market access for the most diverse communities of entrepreneurs and consumers.
If you would like to discuss your personal situation in more detail or want to get more actively involved in policy advocacy, please reach out.