Cannabis Musings - February 6, 2024
Logic versus reality.
Friends, the past few weeks have been a bonanza if you’re a fan of cannabis dormant commerce clause policy. On the heels of last month’s decision in the Western District of Washington, the Northern District of New York similarly concluded last week that the concept doesn’t protect cannabis markets:
“Congress exercised its Commerce Clause power to pass the CSA and thereby prohibited a national market for cannabis. Given that the national market for cannabis is illegal, it would make little sense to apply the dormant Commerce Clause to New York’s cannabis licensing scheme. Doing so would only encourage out-of-state participation in the New York cannabis market, which would be contrary to Congress’s exercise of Commerce Clause power in enacting the CSA.”
In other words, it’s illegal, so it doesn’t count. Recall that the dormant commerce clause is purely a court-created doctrine that’s derived from the Commerce Clause of the U.S. Constitution (i.e., judicial activism), so it’s open to whatever policy interpretation the judge wants. Hence, we have one Federal appellate court (the First Circuit) that found that the clause applies to cannabis, while all of the other Federal courts have found otherwise. Ain sheitel holtz macht nit varem dem oiven (“A single log doesn’t warm the fireplace.”)
Taking the other side of the debate, Geoffrey Lawrence and Michelle Minton recently published “The Case for Interstate Marijuana Commerce,” a brief for the Reason Foundation clearly outlining the issues and its implications. If you want a deeper dive into the complexities of cannabis interstate commerce beyond what we’ve been talking about in these Cannabis Musings for the past five years or so (oh, yes, we first started discussing this issue in the early days of Cannabis Musings, when the newsletter was sent out as an Outlook email), I highly recommend this white paper.
I used to assume that the courts would act strike down state bans on cannabis interstate commerce because, logically, these prohibitions, in my non-legal opinion, fairly clearly violate the dormant commerce clause. Indeed, they’re the kinds of laws that the dormant commerce clause was created to address. That was early on in my cannabis career, however, and I’ve since learned that cannabis and logic don’t go hand-in-hand. The first key to understanding the industry.
So, what’s going to open up cannabis to the national marketplace? Sports! We’re likely still a ways away from seeing a dab bar at a stadium, but maybe someday we’ll (hopefully!) see the Cubs selling THC-infused Old Style in the bleachers. The Cubs partnered with Mynd, a CBD beverage company, last year, which recently announced partnerships with the New York Liberty and the Brooklyn Nets. The Royals partnered with Pure Spectrum last year as well, and Charlotte’s Web partnered with Major League Baseball in 2022.
What’s interesting about each of these CBD deals with sports teams is that none of the companies appear to be obviously selling hemp-derived THC products, instead staying on the side of non-psychoactive/psychotropic hemp cannabis goods. So, although we don’t yet have sports teams endorsed/endorsing the hard stuff, actions like this only serve to further normalize cannabis in the marketplace, something that’s critical to changing the narrative around cannabis.
Which brings us around to hemp-derived THC products. We’ve discussed this fraught issue before, and it’s been put into greater focus by a research published at the end of last year in the Journal of the American Medical Association, which discussed that “Higher Δ8-THC use in states without medical or adult-use cannabis laws suggests that cannabis prohibition may unintentionally promote Δ8-THC use.”
Azoy, so making something illicit somehow makes it more attractive? Go figure.
Whether or not hemp-derived THC survives the 2024 Farm Bill is anyone’s guess at this point (no, there’s still no word on when Congress will get around to it). But, recognizing the dialectic that’s been created between hemp-derived THC products (e.g., the stuff you can now buy in liquor stores) and non-hemp THC products (i.e., the stuff sold in dispensaries (we still don’t have a good term to truly distinguish hemp, which is a form of cannabis, from non-hemp cannabis), perhaps the synthesis is that, over the long term, non-hemp cannabis benefits from the fact that hemp-derived THC is now readily available outside of licensed dispensaries. Similar to how sports teams partnering with CBD companies helps the industry’s image, these products will hopefully also help normalize cannabis products in the minds of consumers. Which is what we’re all working towards.
These seemingly disparate threads have a sort-of common theme – nothing in cannabis works like it should. The second key to understanding the industry. Bans may be pushing people towards psychoactive/psychotropic products. Baldly-protectionist state laws aren’t violating the Constitution. Competitive products might actually help the plant-touching industry.
Farshtaist?
Be seeing you!
© 2024 Marc Hauser and Hauser Advisory. None of the foregoing is legal, investment, or any other sort of advice, a
nd it may not be relied upon in any manner, shape, or form.
FL Panthers arena selling Hemp D9 bevs as well as grocery stores, liquor stores, coffee shops and similar retail across US.