California Supreme Court Rules Federal Prohibition Doesn’t Block Marijuana Businesses From Transporting Products

California’s Supreme Court delivered a victory for the state’s marijuana program, rescinding a lower court ruling in a case that suggested federal prohibition could be used locally to undermine the cannabis market.

The case in question concerns a lawsuit filed by a company in Santa Barbara County that objected to the use of an easement, which is a right to use another person’s property, for the transportation of state-legal cannabis products. A state appellate court sided with the company, ruling in January that federal law preempted the state’s and that the easement could not be utilized for marijuana transport.

But the highest court in the state has now reversed that decision, rescinding the ruling.

“We are pleased the Court agreed to address that Court of Appeal decision at the Department of Cannabis Control’s (DCC) request, supporting California law and its legal cannabis industry,” DCC Director Nicole Elliott said in a press release on Thursday.

While the case—JCCrandall v. County of Santa Barbara—was specific to the company and county, DCC said that the appeals court’s original decision “suggested more broadly that California’s cannabis regulations were unlawful because cannabis is federally illegal.”

Without an intervening decision from the state Supreme Court to rescind the opinion, that could have opened the state up to litigation challenging other parts of its marijuana laws.

“Other California courts of appeal have long upheld California’s cannabis regulations, ruling that they do not conflict with federal law,” DCC said. “In addition, the California Legislature has provided that commercial cannabis activity conducted in compliance with California law and local standards is lawful, and not a basis for voiding rights secured by an easement.”

The state Supreme Court ruling also comes just weeks after California officials unveiled a report on the current status and future of the state’s marijuana market—with independent analysts hired by regulators concluding that the federal prohibition on cannabis that prevents interstate commerce is meaningfully bolstering the illicit market.

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Gov. Gavin Newsom (D) did sign a bill in 2022 that would have empowered him to enter into interstate cannabis commerce agreements with other legal states, but that power was incumbent upon federal guidance or an assessment from the state attorney general that sanctioned such activity.

Following a review of the policy proposal, however, California Attorney General Rob Bonta’s (D) office ultimately determined in 2023 that the state could put itself and its employees at “significant legal risk” of federal enforcement action if it were to authorize interstate marijuana commerce.

Meanwhile, the Governor’s Office of Business and Economic Development (GO-Biz) announced this month that they’re awarding $18.4 million in marijuana tax-funded grants to cities and counties across the state to support equity programs and help remove barriers to entry in the cannabis industry.

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