California Rules May Make Weed Shippers Report Themselves To The Feds

Photo Credit: Alvin Jornada

Imagine driving through California, your vehicle packed with Mendocino County’s finest kush. That scenario might once have induced a panic attack or—depending on your temperament—an adrenaline spike. Now that medical and adult-use recreational cannabis is legal, it’s a legit way to make a paycheck, and hitting the road with a trunk full of the devil’s lettuce is mostly cool.

Cool, but complicated.

It’s not just that the federal government still considers transporting cannabis very much a crime. It’s not even that California has never finalized rules for moving the leafy greens, even two decades after legalizing medical toking. (Insert joke about the duration of an average Phish song here.) It was only in January, a year after Californians voted to legalize recreational marijuana, that the state issued temporary regs.

These laid the groundwork for a digital track-and-trace system, which will be outlined in full once the state’s weed agency, the Bureau of Cannabis Control, releases the final regulations in the next month or so. A crucial part of the system will be licensing every vehicle used to traffic transport weed across the state.

This has the weed transport industry equal parts excited and anxious. On one hand, legitimate cannabis capitalists using armored vehicles will no longer have to compete with that shady dude who swears his Honda CRX can outrun any jackers. On the other hand, California’s pre-existing laws require many commercial vehicles operating within the state register with the federal Department of Transportation—by telling them exactly how the vehicle will be used.

When California first decriminalized marijuana with the 1996 Compassionate Use Act, it simply “encouraged the federal and state governments to implement a plan to provide for the safe and affordable distribution of marijuana to all patients in medical need of marijuana.” Over two decades, the state built up structure and oversight for the medical cannabis system—except the whole to-and-from thing. “It was really the wild west in terms of transportation because there were zero regulations,” says Alison Malsbury, a cannabis industry lawyer with Harris Bricken in San Francisco.

The sun began to set on California’s cannabis transport free-for-all in November 2016, when voters passed Proposition 64, allowing state-licensed dispensaries to sell cannabis and cannabis-infused products to adults age 21 and up. (It also allows grown ups to grow their own crops, give small amounts of weed as gifts, and carry up to an ounce without worrying about tripping up the law.)

The law also came with a requirement that vehicles used to transport cannabis must be owned, or leased, by someone with a permit issued by the Bureau of Cannabis Control. For now, those permits are temporary, dictated by an emergency set of rules the agency set out in January. This permitting system is integral to digital track-and-trace, the centerpiece of California’s cannabis regulation that demands every bit grown and sold in the state is accounted for, from seed to smoke.

Each plant gets a serial number, as does the bud that it produces, as do all the oils, tinctures, dabs, cookies, candies, lotions, extracts, and whatever other products the young industry’s mad alchemists create from the raw material. Anyone transporting the stuff will have to scan an RFID tag upon pickup and delivery. They’ll have to deliver it in a GPS-equipped vehicle and stick to a predetermined route, no unplanned excursions or unscheduled pit stops.

Beyond that, the temporary regulations offer little in the way of specifics. The transport will be commercial but small scale. Big rigs, or any other vehicle over 10,000 pounds, gets regulated by the federal government, so as long as California’s legal cannabis transporters stick to smaller vehicles (think unmarked Sprinter vans or armored cars) the feds should turn a blind eye.

But California’s regulations contain at least one glaring oversight that could force some would-be cannabis couriers to snitch on themselves. Anyone hoping to commercially transport cannabis in California must apply for a Motor Carrier Permit (the only exception is for companies transporting their own goods). The catch is, beginning in 2016, the state’s Department of Transportation began requiring any commercial vehicle seeking a Motor Carrier permit to obtain a federal DOT number. That involves explaining to the federales—who are not so cool with this marijuana thing—exactly how the vehicle will be used.

Photo Credit: Jesse Tinsley

“How am I supposed to tell the feds I’m going to starting up a criminal conspiracy to transport cannabis?” says Debby Goldsberry, the CEO of Magnolia Wellness, an Oakland cannabis company, who is hoping to add cannabis transport to her company’s roster of services. She might be able to get around this requirement, as long as she is only transporting her company’s own products. But Goldsberry wants to be able to transport anyone’s goods, so the state’s limits her potential to grow as a business.

Unless she wants to start another business altogether. There’s another way around the rule: Own a preexisting transport company. Or, in the state’s legal parlance, a licensed motor carrier. For instance, many cannabis transport companies started out as traditional armored car services. “We currently have four armored vehicles loaded with product at the moment,” says Jeff Breier, COO of HardCar Security. His company offers an elite transport, staffed by combat veterans. This overlap in cash and cannabis transport is actually pretty beneficial—most weed companies deal in cash, because federal rules bar them from having bank accounts.

Technically, motor carrier companies are supposed to report what they are shipping when they apply for their federal DOT number. Existing transport companies don’t have to worry about this, because they are already registered. However, new transport companies that hope to specialize in cannabis will have to get … creative with their applications. Goldsberry says, she’d prefer if California just update its transportation statute, so it doesn’t require cannabis transport vehicles under 10,000 pounds register with the federal government. “We don’t believe in building a business based on violating federal law,” she says.

For the time being, she is stuck with her dilemma. “We can’t change what’s written in statute with our regulations,” says California Bureau of Cannabis Control spokesperson Aaron Francis. The state’s DOT and DMV aren’t likely to make an exception without serious political pressure. Until that happens, cannabis transport companies hoping to take the high road better keep things on the low-down.