Is proposed Oregon marijuana export plan a solution to state’s cannabis glut – or a pipe dream?

The head of an Oregon marijuana trade group hopes to convince state legislators to permit local cannabis companies to export crops and products to other states, but MJ attorneys said the plan faces huge legal obstacles.

To shrink Oregon’s massive marijuana surplus, Adam Smith, the founder of the Craft Cannabis Alliance, is working with state lawmakers to pass a law allowing licensed cannabis companies to ship to other states with legal MJ programs by 2021.

The state’s marijuana glut has been driving down prices for months. It also has drawn unwanted attention from U.S. Attorney Billy Williams, who has vowed to crack down on out-of-state diversion.

Despite Smith’s efforts, legal experts doubt his export plan –  which would cover products ranging from marijuana plants to edibles – has a chance of succeeding anytime soon.

They note it is probably impossible to change Oregon law without an overhaul of federal marijuana laws and policy. The federal Controlled Substances Act, for starters, bars interstate shipments of marijuana.

Moreover, the amount of coordination that would be needed between agencies in Oregon and other states to enforce the export plan would likely prove to be a massive, and perhaps impossible, task.

“The amount of coordination between these state agencies is mind-boggling to think how that would work,” said Brad Blommer, a cannabis attorney at Green Light Law Group in Portland.

Stephanie Marshall, a cannabis attorney in Bend, noted that to legalize cannabis exports without a change in federal law would require states with legal programs to change their own laws – and ignore the possibility of a crackdown from the feds.

“It’s a super idea,” she said of the export plan. “But I don’t think you can cross all the hurdles you need to cross to actually see this as a viable industry solution to the overproduction in the state.”

How it would work

Smith is clearly an optimist. For his export plan to succeed, he doubts Oregon producers will have to wait for the end of the federal government’s cannabis prohibition.

Instead, Smith hopes for a change in federal law or policy.

The latter might include something like the Cole Memo, an Obama-era policy that instructed U.S. attorneys to adopt a hands-off policy toward state-legal marijuana because of the federal government’s limited resources. Former U.S. Attorney General Jeff Sessions revoked the Cole Memo last year, however.

“We need some indication from the federal government that allows this to happen,” Smith said. “We know we can’t do it without that.”

One lawmaker amenable to the idea is state Sen. Floyd Prozanski, a Democrat from Eugene, who proposed a similar piece of legislation, Senate Bill 1042, that died in the statehouse in 2017.

Under this proposed scheme, cannabis wholesalers would send product to other states with legal programs as long as Oregon’s governor signs a deal with the receiving state, according to the Salem Statesman Journal.

The states bordering Oregon with legal recreational cannabis programs are Washington, California and Nevada.

Smith is convinced that when the federal cannabis prohibition ends – assuming it does – the West Coast will be one of the major suppliers of cannabis across the country. His export plan is aimed at positioning Oregon growers for the day if and when that happens.

State-level plans such as Smith’s could also dovetail with legislation introduced by U.S. Rep. Earl Blumenauer.

The Oregon Democrat’s bill, Regulate Marijuana Like Alcohol Act (HR 420), would remove marijuana from the Controlled Substances Act and place oversight of the MJ industry under the Bureau of Alcohol, Tobacco and Firearms.

So, what do legal professionals in Oregon think about the legality and plausibility surrounding exporting – or lack thereof?

Here’s how Marshall and Blommer, the two Oregon attorneys, responded when Marijuana Business Daily asked that question.

The federal barrier

Marshall: When you cross state lines, you become subject to federal jurisdiction. We all know the Controlled Substances Act doesn’t allow that.

Stephanie Marshall

The Commerce Clause in the Constitution says anything that enters into interstate commerce becomes subject to federal law. You can’t claim federal constitutional protection to engage in that behavior. That’s a nonstarter.

For any state that’s legalized marijuana at the state level, there are no guarantees. If some federal agents want to come in and seize your property or take any legal action against you, you’re not immune from federal prosecution.

If they are aware this is happening, the importers or exporters would be subject to prosecution on the federal level.

State-level hurdles

Blommer: The OLCC (Oregon Liquor Control Commission) would need to completely rework all of their regulations, because all of the regulations are written to govern licensees within the state of Oregon.

Brad Blommer

You can’t do business as a licensed marijuana company in Oregon unless it’s with another licensed marijuana business.

If you’re talking about all of a sudden being able to do business with California or Washington, the rules and regulations don’t work. Everything is geared toward Oregon licensees doing business with other Oregon licensees.

Just take the packaging or labeling. That’s all specific to Oregon. Milligrams per dose, for example, that’s all Oregon-specific.

There could be a scenario where the companies in Oregon would learn the regulations of the other states.

But what about enforcement?

Let’s say there’s a company in California that’s not in compliance with all the security regulations of Oregon. The OLCC isn’t going to have jurisdiction to go down and issue fines in California.

To imagine the amount of coordination between these state agencies is mind-boggling.

Interviews were edited for length and clarity.

Bart Schaneman can be reached at [email protected]

10 comments on “Is proposed Oregon marijuana export plan a solution to state’s cannabis glut – or a pipe dream?
  1. Morgan Glenn on

    Floyd Prozanski is on the right track. When there’s a will there’s a way. Adjust and adapt the written laws or maybe this can motivate federal cooperation.

    Reply
  2. ian on

    i think the day will come when mj is a commodity just like anything else and at some point will be shipped nationwide like any other product, its already shipped to and from several other countries, for that to happen the federal laws must be changed, once its legal on a federal level, commerce will be commonplace for mj. i dont think it will happen anytime very soon and maybe not in my lifetime, (im 60) but there is hope that the federal govt. can do the right thing. with the fda approving epidiolex there is hope as they basically admitted that the plant has “medicinal value” and thats a big change.

    Reply
  3. Demitri downing on

    We have been advocating for this here in Arizona behind the scenes with legislators for many years. While we are years away from a bill or passage, we are now educating the decision makers and making them aware of the end and inevitable realities of marijuana policy. Both headlines are truths, yes it is a pipe dream, but it is also wise for Adam and those of us like the marijuana industry trade association of Arizona to be on the forefront of this and help educate others about eventual commoditization of the product. Imagine if it wasn’t for people like kris Krane Steve Fox Rob Kampia Cell Keith Stroup Or Ethan Nadelmann and others, where would we be now!? I thought they were crazy when I was prosecuting up until 2010! My apologies. I think this will get replicated in other states and is a great move. Well done Adam! You took my idea and ran with it lol!:)

    Reply
  4. jason teramoto on

    I doubt this is going to happen the way it’s laid out here. Realistically, and you’re seeing this happen in California, the growers in specific appellations are going to continue supporting provincial listings that protect their brand. California as a state has over 58 counties and hundreds of appellations.

    California consumers (by far the largest market in the US) haven’t shown a desire for anything north of Humboldt or Mendo. Granted, and we all know this, there’s still material flowing in from OR, WA, etc. into the California stream. But the regulated market consumer will see out-of-state cannabis as a novelty, and that doesn’t do anything to alleviate the drop in value for non-California cultivated cannabis.

    I also don’t see California sharing the taxes with Oregon at point-of-sale.

    Do we need normalization and full recognition as a commodity. Absolutely. But is this going to be the panacea that growers facing falling prices are hoping for? Nope. Further, by the time that does happen, we’re probably looking at 2020…In 2021 California’s moratorium on corporations coming in and owning the market is set to expire.

    Reply
    • Steve Stark on

      If you are talking about the legal market now, there ain’t much state north of Humboldt. In the illicit market, I hardly expect dealers to be honest about the appellation even if there is regional demand. I also expect most of the market to be value driven, like wine or tobacco.

      With Federal legalization all but a given, states need to figure out a reasonable taxation scheme. But, I suspect it will be a race to the bottom and CA producers will be very disadvantaged with the current production taxation scheme.

      Pot farmers are pretty much hosed in the long term, but it’s unlikely that corporate farms will be much of a thing. That’s not the pattern in other industries where family farms are contracted to distributors.

      Reply
  5. Silverado on

    Oregon too should have looked north to figure out how to have a successful legal cannabis industry that’s already gone through this. Too many smart guys growing too much weed. You’d think they could figure out that’s a good thing when it comes to their concentrates and edibles markets. Too much legal weed on your hands?? Turn it into VALUE ADDED products like concentrates and edibles. While cutting back on the amount planted. It’s not rocket science…

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *