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Federal Cannabis Legalisation Could Wipe Out State Markets, Says Report

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A new report from the Parabola Center for Law and Policy has outlined concerns that federal cannabis legaliastion “would wipe out current state markets and replace them with a national monopoly”.

The report – How to Federally Legalize Cannabis Without Violating the Constitution or Undermining Equity and Justice – provides a blueprint for Congress to protect cannabis businesses in the country.

The blueprint consists of three constitutional policy solutions along with a model language that would “protect states’ efforts toward equity and justice, and preserve the progress these states have already made in those areas.”

The report reads: “Without federal prohibition as a justification, these small state-based markets would likely be forced to merge into one large interstate cannabis market. A small number of large companies will monopolize the market, consolidating and buying up small businesses, wiping out social equity businesses, and undermining the equity and justice focused goals of the state programmes.

“If federal legalisation is not coupled with explicit federal protections for state-based intra-state markets, everything will change once cannabis is de-scheduled. The world of legal cannabis will look nothing like it does now.”

However, if cannabis is legalised at the federal level, Congress could choose to protect intrastate markets, it notes, highlighting that the Dormant Commerce Clause prohibits states from enacting laws that discriminate against out-of-state businesses or burden interstate commerce in a way that is excessive or unreasonable.

The report puts forward three proposals that aim to aimed advance goals that it suggests should be stated by Congress, including:

  • Explicitly allow existing state cannabis laws to operate as designed and without disruption.
  • Allow bona-fide social equity businesses, small businesses, and worker-owned businesses to engage in interstate commerce.
  • Limit large corporations.

It reads: “Without specific efforts by Congress to protect state-level cannabis equity programmes, and to limit market consolidation and monopolization, state efforts to create an equitable and inclusive industry will be wiped out.

“Not only will these small, equity-owned businesses no longer be able to compete against large multi-state and multi-national corporations, but the application of the Dormant Commerce Clause will invalidate the components of the state laws designed to protect small and equity owned businesses.

“Out of state corporations and multi-state businesses will use the Dormant Commerce Clause to challenge state cannabis laws that burden interstate commerce through residency requirements, or any other state protectionist measures that aim to control the size, scale, or make-up of the intrastate cannabis market.”

The report also puts forward draft bill language intended to provide policy ideas related to the issues discussed in the report that could become part of a federal legislative proposal.

To read the full report please visit: https://www.parabolacenter.com/img/interstate.pdf

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