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State Restrictions on Interstate Commerce in Cannabis are Unconstitutional

Posted by on Wednesday, March 3, 2021 in News, Updates.

The title of this post is the takeaway of a new law review article I have just posted on SSRN. The article challenges the widely held assumption that legalization states may ban imports of cannabis or otherwise prevent nonresidents from participating in their local cannabis markets.

Here is the link to a nearly final draft of the article:

Interstate Commerce in Cannabis

The article will be published in the Boston University Law Review in May, 2021.

Here is the full abstract, which teases why I have become so skeptical of state laws that restrict interstate commerce in cannabis, while permitting intrastate commerce in the drug:

A growing number of states have authorized firms to produce and sell cannabis within their borders, but not across state lines. Moreover, many of these legalization states have barred nonresidents from owning local cannabis firms. Thus, while cannabis commerce is booming, it remains almost entirely intrastate. This Essay provides the first analysis of the constitutionality of state restrictions on interstate commerce in cannabis. It challenges the conventional wisdom that the federal ban on marijuana gives legalization states free rein to discriminate against outsiders in their local cannabis markets. It also debunks the justifications states have proffered to defend such discrimination, including the notion that barring interstate commerce is necessary to forestall a federal crackdown on state-licensed cannabis industries. The Essay concludes that the restrictions legalization states now impose on interstate commerce in cannabis likely violate the Dormant Commerce Clause (DCC). The Essay also examines the ramifications of this legal conclusion for the future of the cannabis market in the United States. It suggests that without the barriers that states have erected to protect local firms, a new breed of large, national cannabis firms concentrated in a handful of cannabis-friendly states is likely to dominate the cannabis market. This development could dampen the incentive for new states to legalize cannabis and further diminish minority participation in the cannabis industry. To address these concerns, congressional legislation may be necessary, because individual states have only limited capacity to shape the national market and the firms that compete therein.

If you have any trouble downloading the article from SSRN, email me and I will send a copy. And as always, I am happy to receive comments and reactions.

I have discussed ongoing litigation against these state restrictions in some prior posts:

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  • Amy Nathan

    March 10th, 2021

    I’d love to read a copy of this article. My impression is that smaller ‘social equity’ businesses have a short window to thrive until the ban in intrastate commerce is lifted because they are essentially protected from the conglomerates. That send to be the opposite of what you argue.

    I’d love to read more. Thank you