Small Marijuana Growers Could Sell Directly To Consumers Across State Lines Under New Congressional Bill
A pair of congressmen filed a bill on Wednesday that’s intended to help small marijuana growers compete against large corporations when cannabis is federally legalized, proposing to give them the ability to ship and sell products directly to consumers within and across state lines.
Rep. Jared Huffman (D-CA) is leading the legislation—titled the “Small and Homestead Independent Producers (SHIP) Act”—alongside Rep. Earl Blumenauer (D-OR).
As Congress continues to work toward ending cannabis prohibition, there have been concerns that smaller businesses will struggle to compete against the handful of multi-state operators that have the resources and infrastructure to quickly expand, threatening to further consolidate the market when the federal floodgates finally open.
The SHIP Act is designed to minimize that risk and maximize opportunities for those smaller farmers and producers.
“It is a daunting business environment that they’re facing. Markets are consolidating,” Huffman told Marijuana Moment in a phone interview ahead of the bill’s introduction. “The huge multinational corporations are certainly going to do very well, but we want to make sure that the smaller operations have a chance to compete and succeed.”
As policies change, we cannot leave our smallest family-farmers behind.
With my bill, these small businesses can have the chance to compete and succeed in a fully legalized cannabis market. https://t.co/9GG74Rs6cX
— Rep. Jared Huffman (@RepHuffman) September 14, 2022
Direct-to-consumer models have historically benefitted small farmers in traditional agriculture markets, allowing them to bring their products to market without going through third-party distributors or retailers that would require additional spending.
The SHIP Act would extend that marketing opportunity to the cannabis sector, but only after marijuana is federally descheduled. Huffman said that getting a policy ready for that “inevitability” is an important step “to provide some regulatory certainty and assurances for folks that want to be able to do business out of state.”
The text of the legislation states that a “small cultivator of marijuana and a small manufacturer of a marijuana product may ship and sell marijuana or a marijuana product to an individual located in that State or another State in which possession of marijuana or the marijuana product is lawful by that individual, using the Postal Service or any private or commercial interstate carrier.”
Small cultivators are defined as those who grow up to one acre of “mature flowering marijuana canopy” for outdoor cultivation, up to 22,000 square feet of cannabis canopy using greenhouses or up to 5,000 square feet for indoor cultivation.
For manufacturers, they would meet the definition of a small operation if they produce “a manufactured marijuana product, including a salve, “tincture, edible, or concentrate, with a gross annual revenue of less than $5,000,000, inclusive of all marijuana product manufactured by that person.”
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Huffman—who represents a large swath of California long associated with the cannabis trade, extending from San Francisco to Humboldt County—said that the definitions were developed with the input of small marijuana producers.
“I don’t think you’re going to see a lot of the mega farms in my district” when marijuana is federally legalized, the congressman said. “You’re going to see a lot of mom-and-pop operations trying to keep the lights on.”
For equity-focused advocates, the bill is being well-received as a much-needed means of giving small cannabis businesses a key tool to maintain their operations and promote economic diversity in a market that has already seen intrastate consolidation as large corporate interests establish sound footing and often acquire smaller firms that are unable to compete.
Shaleen Title, the co-founder of the Parabola Center and a former Massachusetts cannabis regulator who has advocated for equity-based solutions in the marijuana industry, said that her organization is “proud to endorse the SHIP Act—the first federal marijuana bill we have ever endorsed.”
Today we are endorsing a federal bill for the first time! We are proud to support the SHIP Act and all of the small business associations that developed it with @RepHuffman @repblumenauer. Craft growers should be allowed to ship directly to consumers. https://t.co/x6o7Lsxcl4
— Parabola Center for Law and Policy (@ParabolaCenter) September 14, 2022
“This is the only legislation so far that takes cannabis policy beyond the Big Tobacco model of industry domination and toward the craft cannabis model that benefits both small businesses and consumers,” she said.
At the state level, lawmakers across the U.S. have taken steps to prepare for federal descheduling in other ways, including recent efforts to lay the groundwork for interstate cannabis commerce once prohibition ends—or perhaps even sooner.
For example, a California bill to allow the governor to enter into agreements with other legal states to import and export marijuana was recently approved by the legislature and sent to Gov. Gavin Newsom’s (D) desk.
Senate President Nicholas Scutari (D) filed similar legislation last month. The proposal’s implementation is contingent on federal descheduling, or guidance from the U.S. attorney general that makes clear such interstate commerce would not be subject to federal enforcement action.
Oregon Gov. Kate Brown (D) signed an interstate marijuana commerce bill in 2019, and two members of that state’s congressional delegation, including Blumenauer, followed up on that action by filing a measure that would similarly allow for such activity.
That bill would have prevented the Justice Department from interfering in states that have affirmative agreements to sell marijuana across state lines, but it ultimately didn’t advance.
Last year, a coalition of cannabis organizations began rallying the business community to join them in asking governors from four key West Coast states to seek Justice Department guidance on interstate cannabis commerce.
Huffman, who also recently spoke to Marijuana Moment about his support for promoting therapeutic access to psychedelics, said that these state-level efforts represent another way of looking “over the horizon.”
“We have made great strides state by state in ending prohibition, but now we’ve got to figure this out this,” the congressman said, adding that interstate commerce rankly, the interstate commerce “continues to happen on the black market,” and so “we want to we want to bring that out of the shadows and into a legal framework.”
With respect to the SHIP Act, a number of trade organizations have already endorsed the proposal: Origins Council, Humboldt Country Growers Alliance, F.A.R.M.S. Inc, Washington Sun & Craft Growers Association, Vermont Growers Association, Maine Craft Cannabis Association, Farm Bug Co-Op, Big Sur Farmers Association, Nevada County Cannabis Alliance, Mendocino Cannabis Alliance, Trinity County Agricultural Alliance and the Sonoma County Growers Alliance.
“The direct-to-consumer model is a necessary resource for any small-scale craft-producing community that is deeply tied to the land on which it creates—whether it produces wine, whiskey, cheese, beer, cannabis, or honey,” Genine Coleman, executive director of Origins Council, said in a press release.
“The legacy cannabis community that has worked so long in the shadows should have the opportunity to join the ranks of other artisan producers across the United States and enjoy the privilege of connecting personally with their adult customers,” Coleman said. “As is always true with each step cannabis takes towards legality, the greater community stands to reap enormous benefit in the process.”
Ross Gordon, policy director of Humboldt County Growers Alliance, said “direct-to-consumer shipping is the critical tool that enables a diversified market to survive and thrive. Cannabis is no different.”
“The SHIP Act moves the conversation beyond the question of who can get a license to cultivate cannabis and addresses the practical reality of building an equitable and accessible market for small cannabis producers,” he said.
Read the text of the SHIP Act below:
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Photo courtesy of Mike Latimer.