It was a pleasure interviewing professor Douglas A. Berman. The professor talked about the legality of cannabis in America and how he sees the industry shaping up in the years to come.

What I found interesting was professor Berman’s answer regarding the legality of seed banks.

I was under the impression selling seeds was perfectly legal in the United States, but according to Professor Berman, it appears to be federally illegal.

State municipalities don’t seem to be enforcing those laws, but this is largely dependent on where in the country you’re located.

I’ve provided both YouTube and Soundcloud video/audio files.

Underneath those is a transcription of our conversation.

Interview with Douglas A. Berman on the legality of Cannabis in the United States

Transcription:

Hello, everybody, this is Shane from CheapHomeGrow.com. Professor, please introduce yourself.

I am Professor Douglas A. Berman of the Robert J. Watkins Proctor and Gamble Professor of Law at the Ohio State University Moritz College of Law.

What is cannabis law as it relates to the current marketplace?

Douglas A. Berman: That’s an open-ended and impossible to answer quickly question. There is a range of laws that are in place both criminal laws at the federal level, state laws that are both criminal and non-criminal that regulate in various ways. What is or is not permissible in state marketplaces and there’s an extraordinary amount of variation from jurisdiction to jurisdiction about what is or is not permissible under state law concerning growing and manufacturing and distributing products with THC or CBD or other marijuana derivatives.

What do the federal laws against marijuana say?

Douglas A. Berman: They say that it is a federal crime to possess, possess with intent to distribute, distribute, transport, basically do anything that involves marijuana.

That’s why I tend to describe the federal law as blanket prohibition because there are no medical marijuana exceptions, no provisions for medical use or minimal possession that’s not subject to some kind of criminal prohibition.

However, there are some rules and regulations permitting researchers to obtain marijuana to do approved medical research.

Does federal law supersede state law?

Douglas A. Berman: So yes and no in the sense that federal law preempts the state law that conflicts with it unless a federal statute says we don’t preempt state law and with respect to the Controlled Substances Act. That being the main law that prohibits marijuana at the federal level.

It says this law doesn’t preempt state law which means states can develop their own laws.

Now that was mostly put in place largely to allow states to have their own prohibition laws. Without that non-preemption default in other words without the federal law saying states can do what they think is best in this area. It would be impossible for states even to have their own prohibitions.

Not only of marijuana but of other drugs that are federally and state prohibited. So the language saying the state law is not prohibited was I think largely designed to allow state laws to develop their own criminal laws to deal with marijuana and other substances.

But that language is part of the key to enabling states now to pass their own regulatory regimes for allowing the medical or recreational use of marijuana under their state laws. Even while that’s going on federal law still applies in the states in the sense that if federal authorities wanted to go arrest people in Colorado or California or other states that have legalized marijuana for various purposes they still could be subject to prosecution under federal law because federal law applies throughout the country.

But what can’t happen if a state amends its laws to make its own rules with respect to marijuana is the state won’t apply federal law. State actors have to comply with state law. If California makes marijuana legal for various purposes, state and local prosecutors who follow and apply state law state legislators all have to comply with state law rather than federal law.

I’m not a lawyer but as I understand it state law in many cases can supersede federal?

Douglas A. Berman: Supersedes is a word that I’d not be comfortable using. State law can in a sense for local needs and purposes supplant and in so doing helps to limit the restrictions on what an individual could or could do, and the real story is the vast majority of law gets applied and prosecuted at the state and local level.

So if state and local laws state and local law enforcers are permitting marijuana use and sales, then that means there’s unlikely to be anybody who is going to stop that at the federal level even though the persons who are involved are still breaking federal law.

How much tax revenue do you believe can be generated by the federal government legalizing marijuana?

Douglas A. Berman: Depending on how they set up the tax. I think there is a very significant portion of revenue available at the federal level. I don’t think it would be so massive as to radically change the budgeting of matters at the federal level even though there’s an awful lot of marijuana use even though there are a lot of potentials for marijuana industry and that can come with significant tax revenue.

It’s still going to be relatively small when compared to the amount of taxes the federal government takes in through income taxes or through a range of other significant business taxes.

But it still would be a noticeable sum, and there’s no doubt that states that have legalized recreational marijuana have started to see some pretty significant tax revenues that have been of a level that is quite consequential. Though still small when compared to the overall budget of a state.

Why do you think we should legalize marijuana? Should we focus on the medicinal versus the recreational? Please give me your thoughts.

Douglas A. Berman: My general thought, and it really grows out of my concern about the overcriminalization not just in the drug arena but in a variety of other arenas. I think we turn too quickly to criminal law as a means to deal with social problems or a range of other potential harms. Often when we do that we fail to fully appreciate all of the potential collateral consequences that can flow from trying to address a problem through our criminal justice system. We see that with marijuana particularly in terms of arrest rate and some of the consequences that flow from that significant racial disparities and who reject to arrest for low-level marijuana possession.

There is a range of other harms that flow from facilitating black markets. Fundamentally I look at the issue with the respect to marijuana quite similar to what we experienced as a country nearly 100 years ago with alcohol prohibition where we saw a significant problem with alcohol use and abuse in the country. We tried criminal prohibition, and we discovered pretty much within a decade that the harms of criminal prohibition may be more profound or where more profound than what the harms of alcohol use were.

I’m inclined to want to believe that if we were to repeal marijuana prohibition we come to the same conclusion that we’ve come to see at the end of the day, as I think we have with alcohol that whatever concerns we have about the use and abuse of a drug the problems that are created by criminalization are greater than the problems that arise from trying to continue to improve our regulation and education from a public health perspective of use of the drug.

That’s the sort of basic philosophy I take on the issue and then that leads me to generally speaking be supportive of those who are advocating for reform of our existing prohibitions.

But I tend to be less exuberant then some on believing that if we just repealed all the prohibitions, we’ll definitely get quickly to a better utopia when it comes to drug use and abuse.

I think there is a range of challenges that are going to come that we’re seeing already with the widespread commercialization of marijuana. I’m not sure those challenges are insurmountable or that we would want to turn back to prohibition even in those states that have experienced issues related to traffic fatalities with greater marijuana use or higher rates of use and abuse by different vulnerable populations.

Ultimately I think what we want to be doing and what I think we’re starting on the path to but that is always a challenge in any new area of law is to start learning lessons about what’s working best to facilitate, permit, responsible use of marijuana while addressing. Trying to remedy problematic use whether it’s problematic use by young people, problematic use by people who are struggling with addiction and things that that flow from that. Whether it’s people driving while intoxicated other sorts of concerns that arise. Those are all issues that need to be grappled with seriously that I think the law can help try to address and that we can continue to learn to improve existing practices to try to find the best state of public health and public policy affairs.

How do you think the current Attorney General is going to effect cannabis law?

Douglas A. Berman: An excellent question that really turns a lot on whether or not he and others in the current administration decide they want to really crack down on what they might perceive as serious problems in states that have legalized recreational marijuana. For starters, I don’t think there’s a robust appetite to crack down on states that have been developing medical marijuana regimes. That could change, and that could change in a variety of ways for a variety of reasons but at least right now I sense that if there is a significant concern on the attorney general’s part it’s based in the states where they have fully legalized marijuana, and there’s a concern that a marketplace is developing without adequate regulations and protections from the possible harms of misuse of marijuana.

I think it’s possible the attorney general will be comfortable encouraging his U.S. attorneys around the country in those states to become more aggressive in how they enforce federal law. But the fact that he hasn’t done that yet. We’re already a full year into the administration, and we haven’t seen a significant crackdown. We recently saw a change in policy, but that policy hasn’t really produced any real change in activity. I think the biggest impact probably is that this administration this attorney general has slowed down what seems still to be a fairly inevitable progression towards fewer and fewer restrictions on marijuana at the state level. My sense is that a lot of the momentum toward full legalization that has existed around the country has maybe slowed down a bit because of this attorney general and a new administration.

Ultimately he didn’t stop and didn’t try to stop California from getting its recreational laws in place this year.

The same went for Nevada last year.

My sense is that there might be an interest.

Ultimately the attorney general recognizes that public opinion seems to be favoring marijuana reform pretty significantly and that he wouldn’t likely have lots of political support if he were to crack down more aggressively on the industry as it’s developing.

As time moves forward, do you see local and federal laws restricting the study of cannabis and do you see those laws becoming more liberal?

Douglas A. Berman: I think they will. I think we’ll continue to see reform effort the part that relates to an earlier question you asked which I think is really significant and interesting is that sort of medical marijuana versus recreational marijuana story. But to me it’s so interesting and significant is the fact that we’ve seen no significant backlash of any sort.

With respect to medical marijuana reform in a range of states in fact what we’ve generally seen is state after state expanding the reach of its medical marijuana programs over time. Because I think though there is lots of controversies and potential harms that are identified in recreational marijuana states there have been seemingly very little harm and lots of benefits identified to date in medical marijuana regimes in most jurisdictions. Now the challenge then becomes when advocates for broader reforms come into states that have had success medical marijuana and say Now it’s time to turn to recreational marijuana. That’s where it’s uncertain and debatable. What happens next. But I’m inclined to predict that we’re going to continue to see an evolution in state laws that are more permissive of a range of marijuana use rather than sticking with traditional prohibition.

Do you see local municipalities regulating and taxing small home grow operations, for example, a grow box?

Douglas A. Berman: I doubt it because that would awfully be fairly hard to enforce on a regular basis. I think home grow is an intricate and complicated issue and one that might over time be the subject of lots of new kinds of laws and debates but in the short term, bigger picture issues seem to come up in the regulatory conversation. How to regulate bigger grows? How to regulate the industry? What is a permissible use for whom? Home grow has largely been forgotten in a lot of cases though there are certainly been movement in different states to try to restrict home grow for fear that it is an issue that should be a concern and should be subject to more regulation and maybe more taxing than it is now.

Are you a supporter of home grow?

Douglas A. Berman: I am uncertain about it. I tend to think that a very limited home grow allowance for true home personal use makes some sense. Again it gets back to my own field of prohibition never working so well having to enforce limits against home grow and the challenges that create strike me as a bit misguided.

I also recognize that if you’re going to have a sensibly regulated industry allowing people to have multiple plants have a significant legal home grow opportunity without being subject to regulation creates real challenges for a regulatory regime. And marijuana is challenging in a sense in a way that alcohol isn’t in a way that some other products aren’t. Where there are lots of people, who can probably reasonably home grow a product that is comparable to what’s in the marketplace at least right now. And that creates its own sets of dynamics for the industry and for regulators. I tend to be kind of open-minded but uncertain about where home grow should be located in a broader regulatory regime. I’m continuing to be interested to hear more reports from states that have different home grow rules about the challenges or opportunities that creates.

What’s does decriminalization mean?

Doulgas A. Berman: An excellent question that is subject to some debate at times. I tend to use the term decriminalization, and I think this is the common usage to describe efforts to reduce but not entirely eliminate the criminal penalties that are associated with marijuana possession. Typically we see a state propose or an act or locality propose or an act decriminalization where what’s said is now it’s no longer an arrestable offense to be found with marijuana it’s no longer a misdemeanor it’s now something subject only to a citation something comparable to a parking ticket or maybe a speeding ticket. And in that way, not something that would have the serious criminal justice consequences that even a misdemeanor can have. And so the idea is to really limit the impact of criminalization. I think would be a more accurate way to describe it because technically it’s not decriminalizing something it’s just lowering the criminal sanction that comes with it. That’s often how that term is used. I think it’s a useful term I certainly think it’s a movement that I support heartily because jurisdictions are not going to get rid of prohibition lessening the sanction on low-level possession seems like a sound way to moderate existing law.

But there’s lots of uncertainty both about what decriminalization really means and what its impact is often states and localities that decriminalize have a weight threshold.

So possession of more than an ounce or possession of more than a certain quantity can still be subject to arrest misdemeanor even felony charges. It’s frequently the case even as jurisdictions decriminalize, they don’t entirely eliminate the threat of criminal justice enforcement dynamics, that surround a low-level possession of marijuana.

What are some of the pros and cons of legalization?

Douglas A. Berman: Well, we’ve talked about a few of them and impossible to provide a comprehensive list. But on the pro side certainly the opportunity for tax revenue the opportunity for developing a lawful regulated industry that can be good for consumers that can be good for workers and businesses. Fundamentally I think most folks who favor marijuana reform and full legalization believe that it’s just appropriate to allow individuals who are eager to utilize marijuana in their lives to be able to have safe and ready access to it and to do it in a way that’s not subject to criminal law and possible punishment.

The flipside of all of that is the cons that are often emphasized by skeptics or proponents of legalization is that marijuana is a mind altering drug and there is no shortage of individuals who struggle to behave responsibly while using marijuana. That can be a problem in terms of people going to work or complying with other responsibilities they have in their life that marijuana can interfere with somewhat similar to what some people struggle with alcohol.

There is a small but still significant percentage of marijuana users who struggle with addiction in ways that can diminish their quality of life.

There’s still an incredible amount of debate that can be subject to all sorts of studies thrown on both sides about whether or not use of marijuana makes one more likely to use harder drugs. There are anecdotes and studies that can support whichever side of this equation you want. I’m generally skeptical of the so-called gateway drug theory, but there’s enough medical evidence and anecdotal evidence to support a concern about whether significantly more marijuana use might lead to greater use of other drugs that cause more problems in people’s lives.

There’s also the concern that legalization will create easier access for under-age users and there’s medical evidence to suggest that while young brains are still developing which they do through people in their early 20s marijuana use might create harm although again the exact degree of harm in the particulars of how much marijuana use is necessary to cause brain development issues is still in need of a lot more research. Again there’s the issue of driving under the influence, and a range of other social problems that opponents of legalization will say are only going to get more and more significant. If we not only have legalization as the law of the land but allow industry players to market and aggressively develop products that are likely to create more addicted users and create more problems that people can have with the use of marijuana.

What challenges and headwinds the U.S. for the industry at large?

Doulgas A. Berman: I think legalization in the state of the law at both the federal and state level is always going to be a concern though. I don’t think that’s unique to the marijuana industry. Every industry has to worry about legal developments and social developments in their sphere. I think in some sense there might already be too much exuberance and competition in the space. Here in Ohio where we recently opened up licenses. A Licensing regime for being part of our developing medical marijuana program.

We had five times the number of applicants even at a very high price for the application then the number of licenses that we’re going to be awarded and that suggests to me that an awful lot of people are excited about the possibility of getting involved in this industry, but it’s not clear to me that’s itself healthy for the industry either from an industry player perspective. All that competition means the fight over prices, fights over customers. But it may not be healthy either for the relationship between the industry and society. That we often see complaints once a jurisdiction has legalization in place.

There are more dispensaries than there are fast food restaurants or just that there’s a huge presence for the industry because there’s a belief that there’s so much money to be made. I’m not sure it’s true that there’s not much money to be made. I am sure that there are lots of people who are interested in being part of a legal market.

What that will mean going forward is itself part of what’s interesting for me as an academic to watch.

What advice would you give to a cannabis entrepreneur that wants to get into the business?

Douglas A. Berman: You’d have to ask somebody who’s much more tuned into the industry dynamics than I am as an ivory tower academic. But I give a little bit of my sense that this is a very competitive field. There are a lot of big and small players already in the space, and I think that means lots of people who have experience and what I’ve heard from those individuals is that this is a challenging business environment no matter how supportive you might have laws in a jurisdiction or other players. There is an array of challenging business issues and on top of the legal issues and a range of other issues that arise when moving forward and say.

What are some unique challenges in the state by state patchwork to legalization?

Douglas A. Berman: The challenges are again the combination of different business rules and different market restrictions that the law puts in place in each individual jurisdiction at the state level.

There are also lots of localities that have authority in some states to ban the industry from developing either in the form of growers or dispensaries.

There is looming concern about federal law and federal prohibition, and that just adds an extra dimension to the inability of any kind of regional or national business planning taking place. Business based in Ohio can’t ship its product if the product is marijuana over to Pennsylvania. Even if the same company has a business developing in Pennsylvania, they can obviously do other things that don’t involve marijuana plant itself. But the range of challenges that come from each state having its own individual regulatory regime and then federal law being out there in the prohibition of stature contributes to an environment that makes doing business in this space radically different than what a chain or some other large retailer or manufacturer can develop in other areas where there still may may be different laws in different jurisdictions. But you don’t have the fear of a federal prohibition to prevent you from trying to effectively coordinate activities in multiple states.

Most of the legal pot centers around the plant itself. Let’s shift gears and talk about some of the adjacent businesses that don’t actually touch the plant.

What is the legal standing of seed banks?

Douglas A. Berman: That’s a good question. If seeds still are arguably prohibited under federal law. That is a version of touching the plant it creates its own sets of issues. I’ve not spent much time working with seed banks or lawyers for seed banks so I can’t tell you for sure what they think the lay of the land is but the conversation here in Ohio centers to some extent on the fact that there were no provisions for getting the seeds to start growing marijuana under a licensing regime. The joke was how is that going to happen because where the seeds are going to come from since they’re not allowed to be brought from other jurisdictions under federal law. The simple answer is well it happens all the time now on the black market, and so it’ll find a way to happen. But I think seeds count as part of the plant from a federal perspective.

With the legal status of marijuana as a murky subject. What do you think about the legal status of head shops, smoke shops, and stores that sell marijuana paraphernalia?

Douglas A. Berman: That can that can vary dramatically based on state law and also based on the potential aggressiveness of law enforcement. Ohio has a range of laws that prohibit the sale of drug paraphernalia. Other states have similar laws that can be the basis always for trying to crack down on the classic head shop or other places that sell items that obviously are intended to be used in conjunction with illicit drugs.

Frequently it’s said and not illlegitimately said that there are also legal uses for those products and that the way in which those stores can even if they know some of their customers are going to use their product illegally can say we’re not selling something that is itself illegal because it’s not only drug paraphernalia that can only go so far if a prosecutor wanted to be very aggressive in asserting t he user, the owner of the store, the seller of the goods, knows and in fact intends for the customers to be using their products for illicit drug use. But more often than not there are other bigger concerns for law enforcement than trying to work through that or put it differently. Usually, those sorts of stores will only get in trouble if they, in fact, are also involved in providing a source of illegal drugs. That’s long been an issue even in a world where marijuana was categorically illegal in every state across the country. Head shops still proliferated and avoided at times too much criminal trouble by emphasizing that the product could be used for legal activities as well. Those debates don’t go away. They become actually I think the biggest risk for those sorts of stores is they may get sloppy and either allow on their premises or be involved with drug transactions that they’re not legally entitled to do, and that may then capture the attention of law enforcement.

There has been an uproar over Jeff Sessions resending the Cole Memorandum. Can you give me your thoughts on this? What impact will that have on dispensaries, warehouse grow shops, extractors, etc.?

Douglas A. Berman: What was in place before the rescission of the Cole memo was a set of regulations that said the federal government wasn’t going to be too interested in prosecuting any state law-compliant businesses as long as there weren’t any problems with a set of identified priorities. Sales to minors. Sale or use involvement with federal lands, the involvement of other illegal drug activities on site.

The sorts of things that not only the federal government cares about, but I think state regulators care about as well. The Cole memo gave the marijuana industry a belief; I don’t think that was an accurate belief but an understandable belief that as long as they complied reasonably with state law, they’d always be safe from federal prosecution. The rescission of the Cole memo which didn’t include an order to go after state-compliant businesses but just pulled back on the formality. Of what was in place from the federal government saying these are our priorities and this is what we’re concerned about when it comes to state-legal marijuana businesses. That created the impression that perhaps Jeff Sessions was thinking about eager to order his U.S. attorneys to crack down even on state-compliant businesses fundamentally though and ultimately were only six weeks out from the rescission of the Cole memo. But I think that’s already getting to be long enough to start saying its so far not that big a deal unless and until federal prosecutors aggressively pursue state-legal marijuana businesses for prosecution under federal law. I don’t think it should have much of an impact on responsible players in the industry. I think the folks who should be concerned are anybody who was taking advantage of a poorly regulated industry in a particular jurisdiction to cut corners or to be less than responsible and compliance with existing law. For example in Oregon, there have been significant reports of black market sales from licensed growers and a range of concerns about diversion from the legal marketplace into the black market marketplace. I would think that among the goals of the rescission of the Cole memo is for the U.S. attorneys around the country to feel more comfortable looking into those concerns.

In fact, that’s what we’ve seen in Oregon where the U.S. attorney there called all of the local industry players together for a summit to talk about concerns about what was going on in the state with what I think was perceived to be a poor regulatory enforcement on some of these issues. I think what the rescission of the Cole memo really represents is a statement by the attorney general that the federal government is going to be taking a harder look at whether they’re comfortable with what’s going on at the state level. Given the reality of existing federal prohibition and I know that it’s gotten lots of grief I know that there’s plenty of people who are troubled.

That it might chill activity in the industry, create more of a risk-averse approach to moving forward in this space. But I think until we see any significant actual new prosecutions. That are reasonably linked to the decision to rescind the Cole memo for right now I don’t think it will have much of an effect other than to signal that all industry players need to be attentive to the fact that the federal government is still keeping a close eye on what’s going on here and still contemplating what it thinks would be good public policy going forward.

I would like to thank Professor Douglas A. Berman for taking time out of his busy day for answering my questions. We hope to have him on the show again.