{"id":56860,"date":"2022-08-27T06:55:33","date_gmt":"2022-08-27T14:55:33","guid":{"rendered":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/2022\/08\/27\/legalization-vs-the-constitution-why-most-states-cannabis-laws-are-at-risk\/"},"modified":"2022-08-31T19:45:56","modified_gmt":"2022-09-01T03:45:56","slug":"legalization-vs-the-constitution-why-most-states-cannabis-laws-are-at-risk","status":"publish","type":"post","link":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/2022\/08\/27\/legalization-vs-the-constitution-why-most-states-cannabis-laws-are-at-risk\/","title":{"rendered":"Legalization vs. The Constitution: Why Most States\u2019 Cannabis Laws Are at Risk"},"content":{"rendered":"

<\/p>\n

Americans confused and frustrated by the conflicting and contradictory mishmsash of state and federal cannabis law can take solace: US Supreme Court Justice Clarence Thomas\u00a0doesn\u2019t like it either.<\/a>\u00a0But for argumentative types and fans of litigation, good news is here. Thanks to a recent federal court decision, anyone dissatisfied with the status quo in certain states\u2019 cannabis regulatory schemes has more cause to sue and overturn those laws. The era of the cannabis lawsuit has arrived.<\/p>\n

The Aug. 17 First Circuit Court of Appeals decision that invalidated a residency requirement in Maine\u2019s medical-marijuana law won\u2019t allow for cross-border shipments of cannabis in between states anytime soon, despite some\u00a0misleading (or confused) analyses.<\/a>\u00a0What it does do, legal experts and federal lobbyists told Cannabis Now, is make it easier for Big Weed to take over otherwise protected state markets\u2014while also, in a twist, putting their current business models at risk.<\/p>\n

The decision also set state and local regulators scrambling for their lawyers to see where they\u2019re most exposed. Unfortunately for the social justice minded, well intentioned efforts to ensure minority participation in the cannabis industry\u2019s so-called \u201cequity\u201d programs may be most at risk.<\/p>\n

Interstate Commerce vs. Shipping Weed<\/strong><\/h4>\n
\"\"<\/a><\/figure>\n

First, the court case. Like several other states, Maine\u2014which legalized adult-use cannabis in 2016\u2014had on its books residency requirements for anyone seeking a cannabis permit. That\u2019s problematic, as any law that favors locals over out-of-staters violates what\u2019s called the\u00a0\u201cDormant\u201d Commerce Clause<\/a>\u00a0regulating \u201cinterstate commerce.\u201d\u00a0<\/p>\n

As Scott Bloomberg, an associate professor of law at the University of Maine wrote, \u201cOur nation\u2019s current system of regulating marijuana would ordinarily be unconstitutional.\u201d<\/p>\n

Recognizing this flaw\u2014one that legal experts\u00a0have identified as vulnerable<\/a>\u00a0for years\u2014an out-of-state Delaware company called High Street Capital that wished to buy out Northeast Patients Group, owner three of Maine\u2019s seven medical dispensaries, sued the state to overturn the residency requirement.\u00a0<\/p>\n

Maine regulators dropped the residency requirement for recreational cannabis but tried to defend the residency requirement for medical cannabis\u2014and lost, twice, first in federal district court and then again Aug. 17 on appeal.<\/p>\n

The state could try to appeal to the Supreme Court; it\u2019s unclear if they will. A spokesman for Maine\u2019s Office of Cannabis Policy referred Cannabis Now to the state Attorney General\u2019s Office. A spokesperson for the Attorney General declined to comment.\u00a0<\/p>\n

But in the short term, states with restrictions on \u201cinterstate commerce\u201d can expect lawsuits to overturn those restrictions. \u201cI worry,\u201d Bloomberg tweeted, \u201cthat [the court] just opened the door to interstate trade via judicial decree.\u201d<\/p>\n

Other observers were more circumspect. They pointed out that the decision alone doesn\u2019t mean that multi-state operators can start shipping bud across state lines, as the federal Controlled Substances Act is very much in play.\u00a0<\/p>\n

This may sound like mental gymnastics, but bear with us as we walk through the kind of situation that drives Clarence Thomas up a wall: Though cannabis is illegal, Congress has also tacitly acknowledged an interstate market in marijuana.\u00a0<\/p>\n

\u201cThey aren\u2019t saying it\u2019s legal,\u201d said\u00a0Shane Pennington<\/a>, a New York-based attorney at Vicente Sederberg LLP, one of the nation\u2019s foremost cannabis-focused law firms. \u201cThey\u2019re just saying it exists.\u201d<\/p>\n

Congress still classifies cannabis as illegal, and anyone trafficking in an illegal substance across state lines still commits a federal crime.\u00a0<\/p>\n

Several states, including Oregon in 2019 and California this year, have passed laws in anticipation of federal legalization that would allow permit holders to ship cannabis across state lines, provided they hold permits in both states\u00a0and<\/em>\u00a0federal law changes. But those provisions also require major, as-yet unseen changes in federal policy to take effect.\u00a0<\/p>\n

Some legal experts did suggest that someone could\u00a0try<\/em>\u00a0to send a few packs across state lines and then use the First Circuit decision in a defense; other experts said that anyone trying this particular gambit ought to have a very good defense team ready.<\/p>\n

What this means is that restrictions that favor in-state residents over out-of-staters are vulnerable to lawsuits\u2014because \u201cinterstate commerce\u201d means companies based in other states doing business in other states.\u00a0<\/p>\n

No More Locals Only (Or Locals First)<\/strong><\/h4>\n

In this meaning, Facebook conducts interstate commerce. So do Cresco Labs, Trulieve and other cannabis companies with business in multiple states\u2014like, as soon as their sale is approved, High Street Capital.<\/p>\n

\u201cWhat this case says, consistent with case law in alcohol\u2026 is that residency requirements passed for state protectionism aren\u2019t allowed under the Commerce Clause,\u201d said Randal Meyer, the executive director of the Global Alliance for Cannabis Commerce, a Washington, D.C.-based lobbying group.\u00a0<\/p>\n

As Meyer and legal observers have said, Maine did not even attempt to find a defense for its residency requirement other than state protectionism, which the Dormant Commerce Clause specifically forbids.\u00a0<\/p>\n

\n
\n
\n

Just read through the 1st Cir.’s opinion in NE Patients Group invalidating Maine’s marijuana licensing residency restriction on dormant commerce clause grounds. I have a few preliminary thoughts:<\/p>\n

\u2014 Scott Bloomberg (@ScottBloomberg) August 18, 2022<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

\u201cThe 50 states are a free-trade union,\u201d Meyer added. \u201cStates simply aren\u2019t allowed to discriminate against other states.\u201d\u00a0<\/p>\n

There are various ways around this prohibition in the form of tax breaks and other favors a state can dole out to companies within its borders. Still, any major cannabis company with intrastate businesses in multiple states\u2014which may want to preserve that status quo as a way of protecting its investments; there\u2019s not much utility in having five massive weed grows in five states unless federal law means you have to\u2014should be prepared for their current business model to be disrupted.<\/p>\n

However, other laws, like state and local equity laws that use zip codes of residency or other techniques to reserve equity licenses for drug-war victims who may not be out-of-state residents, are absolutely in jeopardy as a result of this ruling, experts said.<\/p>\n

Equity at Risk<\/strong><\/h4>\n

There are yet other ways that licensing may be used (or abused) in ways that give preference to local residents. These include \u201cscoring\u201d systems that ultimately favor locals as well as the \u201carbitrary\u201d choices that local planning, zoning, or even cannabis regulatory boards or commissions may make.\u00a0<\/p>\n

(Oh, the local good old boy who bankrolled the Chamber of Commerce\u2019s pancake breakfast got his permit when the out-of-staters didn\u2019t? It just came down to the merits.)\u00a0<\/p>\n

That\u2019s a stickier situation than a state marijuana law with an explicit residency requirement or other form of protectionism\u2014such as some equity laws. Social equity laws are intended to fulfill marijuana legalization\u2019s unfulfilled promise of ensuring minority participation in the industry. Many of them use residency or an upbringing in local zip codes deemed to be hit hardest by the war on drugs.\u00a0<\/p>\n

\u201cThis isn\u2019t necessarily because they\u2019re trying to discriminate against out of state,\u201d Pennington said. \u201cThey might be arguing they\u2019re trying to help communities hurt by the War on Drugs\u2026 but a court might just say, you can\u2019t do that anymore.\u201d<\/p>\n

All of these could remain if, while legalizing marijuana federally, Congress chose to suspend the dormant commerce clause, as Bloomberg\u00a0wrote<\/a>\u00a0in a recent article, even for a short period of time while states experimented with the concept of a national weed market. Some states could opt out, others could opt in. But they can\u2019t now under current federal law\u2014and this spells turbulence ahead, for Big Weed as well as equity licensees.<\/p>\n

It sure looks like cannabis lawsuits are in the industry\u2019s immediate future.<\/p>\n

The post Legalization vs. The Constitution: Why Most States\u2019 Cannabis Laws Are at Risk<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n


\n
\nRead More: Legalization vs. The Constitution: Why Most States\u2019 Cannabis Laws Are at Risk<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Americans confused and frustrated by the conflicting and contradictory mishmsash of state and federal cannabis law can take solace: US Supreme Court Justice Clarence Thomas\u00a0doesn\u2019t like it either.\u00a0But for argumentative types and fans of litigation, good news is here. Thanks to a recent federal court decision, anyone dissatisfied with theContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":9,"featured_media":56861,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,2041,15654,5882,538,16436,90,65,16437,16438,4821,3841],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/56860"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=56860"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/56860\/revisions"}],"predecessor-version":[{"id":56862,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/56860\/revisions\/56862"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/56861"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=56860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=56860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=56860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}