Economic and Social Consequences of Interstate Commerce in Recreational-Use Cannabis reports that there are regressive and negative consequences for allowing the trade of cannabis between states that could erode state and local equity and revenue gains, including legal battles that will reverse equity efforts that were passed to benefit small entrepreneurs and minority groups.

The report found that if The Cannabis Administration and Opportunity (CAO) Act as currently drafted passes, the impact of interstate commerce would include:

• The complication of states’ ability to regulate the supply and price of adult-use cannabis.
• The complication of compliance with state regulations, such as track-and-trace systems, which are designed to prevent diversion and facilitate tax collection.
• The potential for allowing market entry and monopolization by Multi-State Operators (MSOs), or corporations with operations in more than one state, such as national retail giants.
• From 2019-2020, the top-10 earning MSOs were able to increase their share of total legal cannabis U.S. sales (recreational and medical) from 10.6% to 17.7%.
• Market forces producing impacts, such as the geographic concentration of production and accelerated consolidation of industry ownership.
• Policies that give preference to struggling local farmers or those who have been disproportionately impacted by the War on Drugs would be vulnerable to legal challenge.