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The U.S. Supreme Court is being asked to resolve a split among lower courts about whether state marijuana business licensing systems can discriminate against out-of-state residents.<\/p>\n
The operator of companies that sought and were denied cannabis business licenses in Washington State and Sacramento, California due to his residency status filed a petition last week asking the justices to overturn an appeals court ruling that found that the Constitution\u2019s Dormant Commerce Clause does not apply to federally illegal activities.<\/p>\n
The Supreme Court has interpreted that clause to bar protectionist state laws that unduly restrict interstate commerce even in areas where Congress has not directly weighed in. Federal appeals courts have disagreed on its application to the marijuana industry, however.<\/p>\n
Now, Michigan resident Kenneth Gay wants the Supreme Court to step in and reverse a ruling from the U.S. Court of Appeals for the Ninth Circuit that upheld Washington and Sacramento officials\u2019 denial of licenses to his companies,\u00a0Peridot Tree WA, Inc. and Peridot Tree, Inc., because \u201cthe Dormant Commerce Clause need not be extended to facilitate interstate commerce that is illegal under federal law.\u201d<\/p>\n
The petition for a writ of certiorari notes that two other federal appeals courts\u2014the First Circuit and the Second Circuit\u2014have reached differing conclusions, finding that cannabis licensing schemes in Maine and New York, respectively, likely violate the Dormant Commerce Clause by favoring in-state residents.<\/p>\n
\u201cThese consolidated cases present a circuit split on an important question of constitutional law: whether the dormant Commerce Clause\u2019s nondiscrimination principle applies to state and municipal cannabis-licensing schemes. This Court should resolve that question now,\u201d it says. \u201cThe issue has arisen frequently in courts across the country and will continue to do so. States continue to enact discriminatory licensing laws that will spur future lawsuits. This petition is the ideal vehicle to resolve this circuit split because the consolidated cases raise a pure question of law, and no facts can resolve or moot it.\u201d<\/p>\n
The filing calls the Ninth Circuit\u2019s opinion \u201cwrong at its foundation,\u201d arguing that the Dormant Commerce Clause is a self-executing limitation on state power to burden interstate commerce. \u201cFederal illegality does not authorize discrimination,\u201d it says.<\/p>\n
It also argues that the circuit court\u2019s determination that applying the nondiscrimination principle to cannabis-licensing schemes encourages states to create markets for something that Congress has deemed to be illegal is \u201cbackwards.\u201d<\/p>\n
\u201cWhen considering whether to legalize cannabis\u2014or other vices\u2014lawmakers must weigh the costs and benefits of such markets,\u201d the petition says. \u201cImmunizing cannabis markets from the nondiscrimination principle tilts that balance in favor of legalization because the State\u2019s constituents will reap all the profits.\u201d<\/p>\n
The Ninth Circuit\u2019s ruling against opening up state markets is also \u201cat odds with the federal government\u2019s own regulatory actions\u201d on cannabis, it says, citing a recent Supreme Court opinion in case on marijuana consumers\u2019 gun rights<\/a> that noted the federal government \u201chas not just tolerated [state cannabis markets]; it helped fuel them.\u201d<\/p>\n The Trump administration\u2019s move to federally reschedule marijuana is no reason to allow the Dormant Commerce Clause issue in cannabis licensing to continue to percolate in lower courts, the petition argues.<\/p>\n \u201cThe Department of Justice\u2019s recent order rescheduling medical cannabis under the [Controlled Substances Act] does not warrant further percolation. The DOJ\u2019s order moves cannabis from Schedule I to Schedule III only for sellers who hold a state medical-marijuana license and register with the DEA. Cannabis otherwise remains illegal under federal law. Thus, the rescheduling order does not alter the question presented here. Likewise, any future broader rescheduling of cannabis from Schedule I to Schedule III will not resolve the circuit split. A Schedule III drug may be sold only under a prescription. Recreational cannabis is not sold under a prescription. Thus, recreational cannabis will remain nominally illegal under federal law even if the DOJ more broadly reschedules cannabis from Schedule I to Schedule III.\u201d<\/p>\n The petition also argues that the Ninth Circuit ruling contradicts Supreme Court precedents on alcohol following the end of prohibition, citing case law that found that while the 21st Amendment grants states \u201cvirtually complete control\u201d over alcohol sales within their borders, it does not \u201cdisplace the rule that States may not give a discriminatory preference to their own\u201d residents.<\/p>\n \u201cIf the nondiscrimination principle does not wane in the face of the Constitution\u2019s delegation of primacy over liquor regulation to the States, the CSA\u2019s prohibition of cannabis\u2014which confers no power to the States\u2014cannot implicitly displace it,\u201d it says. \u201cThe Twenty-first Amendment cases thus embody the principle that the States decide whether and under what system alcohol is sold within their borders. But the nondiscrimination principle governs who may compete in any market a State creates.\u201d<\/p>\n The petition<\/a>, which was first noted<\/a> by Law360, tells the justices that the issue at the center of the case is not an \u201cacademic or infrequent issue\u201d and is instead a \u201clive controversy unfolding across numerous states that has been addressed by numerous lower courts.\u201d<\/p>\n \u201cIrreparable damage to the burgeoning cannabis market will occur if the Court allows this question to percolate longer,\u201d it says. \u201cNearly all States with legal cannabis markets limit the number of licenses they issue.\u201d<\/p>\n \u201cAdditional decisions would add nothing but delay while protectionist schemes multiply. Allowing the question to percolate further will cause permanent damage because cannabis licenses are finite. If States issue licenses under the Ninth Circuit\u2019s ruling, they will \u2018bake in advantages for their residents\u2019 that will plague the market even if the federal government later legalizes cannabis.\u201d<\/p>\n A report published this month by the Congressional Research Service (CRS) said that the split among lower courts on the Dormant Commerce Clause\u2019s application to marijuana business licensing \u201clikely increases the odds\u201d that the Supreme Court<\/a> will take up and resolve the issue.<\/p>\n \u201cThe fact that all the cases discussed above were decided when all relevant state marijuana activities remained illegal under federal law, however, might make the Court less likely to grant certiorari,\u201d the report said.<\/p>\n The justices may instead \u201cwait to see how future lower court Dormant Commerce Clause analysis in this space evolves\u201d in light of the Trump administration\u2019s move to federally reschedule marijuana, CRS reasoned.<\/p>\n Attorney General Todd Blanche in April\u00a0issued an order that immediately reclassified state-licensed medical cannabis<\/a>, as well as marijuana products approved by the Food and Drug Administration (FDA) from Schedule I of the Controlled Substances Act (CSA) to Schedule III.<\/p>\n Under a separate order he signed, a Drug Enforcement Administration (DEA) hearing was held to consider more comprehensively moving marijuana<\/a> to Schedule III.<\/p>\n In any case, CRS said, lawmakers don\u2019t need to wait for courts to weigh in.<\/p>\n \u2014 \u201cCongress has the power to address the issue itself,\u201d the report said. \u201cAs the Supreme Court has explained, \u2018Congress has undoubted power to\u2026either permit the states to regulate the commerce in a manner which would otherwise not be permissible or exclude state regulation.’\u201d<\/p>\n \u201cCongress could thus pass legislation providing states and localities an \u2018unmistakably clear\u2019 authorization to implement protectionist marijuana policies,\u201d CRS said.<\/p>\n It could also \u201cdo the opposite and expressly bar states and localities from implementing marijuana-related laws that favor in-state residents over nonresidents,\u201d the report noted.<\/p>\n \u201cSimilarly, Congress could establish a federal regulatory system applicable to marijuana activities that fits more closely within the Supreme Court\u2019s existing Dormant Commerce Clause jurisprudence, as opposed to the current status where the Court has never weighed in on how the Clause applies to activities that are illegal under federal law,\u201d CRS concluded.<\/p>\n The Marijuana Policy Project, a pro-legalization advocacy group, recently said that it believes there could soon be a \u201csuccessful\u201d federal lawsuit concerning the Dormant Commerce Clause\u2019s applicability to interstate cannabis commerce in light of rescheduling<\/a>.<\/p>\n \u201cDCC protection would bar states with legal markets from discriminating against legal products from other states,\u201d MPP said. \u201cThe federal decisions finding no DCC protection have leaned on cannabis\u2019s federal illegality.\u201d<\/p>\n The move to reschedule cannabis \u201calmost certainly changes that for licensed medical operators,\u201d the group said.<\/p>\n \u201cWe expect stakeholders to sue states in multiple federal circuits (hoping to consolidate those into one suit), seeking to force open state markets on constitutional grounds,\u201d MPP said.\u201d Interstate commerce in Schedule III drugs between DEA-approved entities is clearly covered by the DCC. A federal case will take time, but assuming rescheduling stands, we expect federal litigation to be ultimately successful.\u201d<\/p>\n The post Supreme Court Asked To Overturn Marijuana Business Licensing Laws That Favor In-State Residents<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n
The U.S. Supreme Court is being asked to resolve a split among lower courts about whether state marijuana business licensing systems can discriminate against out-of-state residents. The operator of companies that sought and were denied cannabis business licenses in Washington State and Sacramento, California due to his residency status filedContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":459,"featured_media":86919,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18,81],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/86918"}],"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\/459"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=86918"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/86918\/revisions"}],"predecessor-version":[{"id":86920,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/86918\/revisions\/86920"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/86919"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=86918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=86918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=86918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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