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‘Black market is thriving’: WA signs onto normalizing interstate cannabis commerce

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(The Center Square) – During this year’s legislative session, Washington state lawmakers passed a bill – and Gov. Jay Inslee signed it into law – to expand the cannabis market across state lines as part of an interstate compact.

Senate Bill 5069 gives Washington’s governor the authority to enter into an agreement with other states to allow business between state-licensed cannabis companies. Any products delivered from out-of-state businesses would still need to be tested in accordance with Washington regulations, including complying with state packaging and labeling rules.

Given that Oregon and California already have similar laws on the books, SB 5069 represents another step toward normalizing commerce in the legal cannabis industry.

Despite the growing acceptance of the use of cannabis, all three state laws authorizing entering into cross-border agreements with other legal-use states are contingent upon getting around the fact that marijuana remains federally classified as an illegal substance with no formally recognized medicinal value.

Washington legalized medical marijuana in 1998 and recreational cannabis in 2012.

Even if Washington, Oregon and California signed onto a multi-state marijuana market, it could only go into effect after one of three things takes place:

The U.S. Department of Justice issues an opinion stating that it will allow interstate transfers of cannabis between states where it is legal;Congress votes on and ratifies the interstate compact; orCongress removes or directs the Drug Enforcement Administration to remove cannabis from the Controlled Substances Act, ending federal prohibition entirely and allowing for interstate commerce.

Leslie Bocskor, CEO and chair of Austin, Texas-based Indoor Harvest Corp., is an advocate of interstate compacts when it comes to legal marijuana. He says if interstate compacts were allowed to become reality, it would mean that the rules and laws of the compact would supersede the federal law establishing marijuana as a Schedule 1 drug.

“At some point, I decided – I’m not an attorney, let’s be clear – and I have no formal education in any of these things, and my only interest is in being a good corporate citizen and trying to do what I can to help good policy establish itself in whatever way I can be helpful,” he said, noting he started paying attention to the legal marijuana issue in 2013.

Bocskor, who has a background in corporate finance and investment banking in public markets and is known as the “Warren Buffett of Cannabis,” said he’s dug into the issue even more over the last several years.

“Interstate compacts are extremely far-reaching in their economic effect and scope,” he said.

Bocskor has big hopes for interstate compacts in terms of the legal cannabis industry.

“What would it take for Oregon, Washington, California, Nevada, Arizona and New Mexico – all adult-use markets?” he asked. “You know, all one common border – like they’re all touching each other – and what would it take to establish compacts that allowed all of those states to create their own unified regulatory framework? And then the real economic driver is if they did that effectively.”

Bocskor pointed out what he claims would be another benefit of interstate compacts and the marijuana business.

“You see the issue really is a crime issue right now,” he explained, noting “the black market is thriving more than it ever has.”

Last year in Washington, there were at least 100 armed robberies of state pot shops, according to an unofficial tracker by greater Seattle area cannabis retailer Uncle Ike’s, the most in the past decade.

The conventional wisdom is the Evergreen State’s marijuana shops are targeted because they are all-cash businesses due to the federal government’s classification of cannabis as a Schedule 1 narcotic.

Bocskor says the federal government’s “ersatz policy” is completely out of line with the country in terms of enforcing laws against marijuana, pointing out that since 2014, federal lawmakers and law enforcement have generally taken a position of non-interference in large part due to the Rohrabacher-Farr Amendment, first introduced in 2001, prohibiting the Justice Department from spending funds to interfere with the implementation of state medical cannabis laws.

The result of this federal-state dichotomy in marijuana legislation has, according to Bocskor, resulted in reduced penalties and less chance of punishment for those involved in the black market marijuana trade, while also increasing demand for cannabis, so “the black market is in a better position to thrive than a regulated market.”

“And again the biggest solution is to just get federal law and state law to align, and actually that’s what a compact does, because it essentially creates a new tier of federal law,” Bocskor said.

Should the federal government give the okay, Washington’s governor is ready to act.

“In the event the federal government adopts legalization – and we can’t really predict when that will be – Washington wants to be ready to continue our success and be a leader in this realm,” Inslee spokesperson Mike Faulk emailed The Center Square.

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