Interstate commerce is the buying and selling of goods across state or territory lines. It encompasses any commercial transaction that touches more than one state or territory of the United States or involves commercial transactions to or from a foreign country. The concept is defined and controlled by the Commerce Clause of the U.S. Constitution.
The drafters of the Constitution gave the power to regulate interstate commerce to the federal government to prevent individual states from enacting discriminatory laws and regulations that would favor one end of a commercial transaction that involved individuals and businesses from different states. Once a transaction is found to involve interstate commerce, federal laws apply to the activity, according to the Commerce Clause. For example, if a person transports drugs across state lines for the purpose of distribution and gets caught, federal drug trafficking laws apply rather than the state-based drug laws of the origin or destination state. When a crime involves an instrumentality of interstate commerce, such as a telephone or the U.S. Postal Service, the federal prosecutor typically has the right to pursue the perpetrator under federal laws or allow the state where the crime occurred to prosecute the crime under state laws.
Interstate commerce is the functional opposite of intrastate commerce. According to the U.S. Department of Transportation, intrastate commerce involves the purchase and sale of goods and services where the entire transaction and everything related to it happens within one state or territory.