Cannabis Musings - October 9, 2023

Cannabis takes to the skies.

Friends, I wanted to quickly highlight an interesting little story from Marijuana Moment last week, which reported that a Hawaiian cannabis company has started transporting products between islands by plane, now permitted under that state’s law. 

What’s so interesting about the fact that a state-licensed operator is schlepping cannabis across the water by airplane?  Well, as the article notes, air travel in the US is heavily regulated by the Federal Aviation Administration, so that kind of cannabis logistics directly implicates even more federal laws than usual. 

It’s not clear if the FAA knows this is now happening.  It’s also not clear if the FAA will do anything about, if and when it finds out.  But it’s something to watch because the agency’s response (or lack thereof) could have profound implications for the efforts of some states to implement interstate commerce. 

We talked early this year about how, following the lead of others, California took a bold step towards setting the stage for agreements with other states allowing for the transport of cannabis across those states’ lines.  If that actually happens, one of the practical questions is how those logistics would actually work.  It’s easy if the states are contiguous – it’s harder if they’re not. 

Let’s say California and New York have agreed to allow transport between states – you couldn’t ground ship those products because the states in-between wouldn’t allow them within their borders (they’re not part of the compact).  So, you’d have to fly the products between California and New York.  But how would that work if the FAA doesn’t allow the transport of cannabis on airplanes? 

Good question!  That’s why this little story about Hawaii is so interesting.  Transporting state-licensed cannabis violates federal law anyway; however, that doesn’t mean that an airline would want to risk losing its federal operating licenses by further breaking the law.  But if the FAA doesn’t stop these interisland flights in Hawaii, maybe it will lead some risk-tolerant air freight companies to jump into the fray to make interstate compacts work. 

Of course, it’s one thing to make short flights between Hawaiian islands, which is all still intrastate, and another thing to haul cannabis by plane across the country.  So perhaps the conclusion I’m drawing within this thought experiment is a step too far (though isn’t that the beauty of thought experiments?).  But if states enter into interstate commerce agreements because the Department of Justice has acknowledged that it won’t take action against those activities (which is basically what California is seeking before it will move forward), maybe the idea that the FAA similarly wouldn’t take action isn’t that farfetched.

Be seeing you!

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Hauser Advisory provides advice and strategy on business lifecycle events and cannabis industry navigation, tapping into a deep, national network and twenty-five years of dealmaking and capital markets experience.

© 2023 Marc Hauser and Hauser Advisory.  None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form.