Till now, quite a few states have treated participants inside their legal cannabis industries as second-class citizens, depriving these firms of particular constitutional protections that apply in any other marketplace. Traditional wisdom mentioned that cannabis firms had been either so grateful to be operating in the light of day, in a legal marketplace, that they would take these abuses without the need of a fight, or that they had been as well stoned to know or care what to do about it. It turns out the traditional wisdom was incorrect mainly because, now, we are at a pivotal moment exactly where the entire landscape appears poised to adjust. Let me clarify.
The most clear instance of states overstepping when it comes to cannabis regulations are the residency specifications popping up about the nation. By residency specifications, I imply these laws that exclude non-residents from totally participating in a state’s cannabis marketplace. It is black letter law, as we lawyers like to contact points that are clear and incontrovertible, that residency specifications are not permitted in ‘normal’ industries mainly because the dormant Commerce Clause of the federal Constitution prohibits such protectionism. As not too long ago as final year, for instance, the U.S. Supreme Court struck down a Tennessee law that restricted Tennessee liquor licenses to these who had been residents of the state for at least two years. This selection, known as Tennessee Wine & Spirits Retailers Ass’n v. Thomas, created it extremely clear that state laws are unconstitutional if their “predominant effect” is “simply to protect” citizens of that state “from out-of-state competitors.”
Residency specifications in the cannabis business are clearly intended to safeguard residents from out-of-state competitors and, beneath the classic evaluation, are unconstitutional. But they are widespread and commonplace. A couple of examples involve Oklahoma which prohibits non-residents from owning additional than 25 % of a licensed healthcare marijuana small business Washington which has a six-month residency requirement for its adult use plan and Portland, Maine (close to household, for me) which not too long ago established licensing criteria that favors Maine residents more than other people.
There’s no excellent explanation for the widespread disregard for the Constitution in cannabis regulation, except maybe that quite a few state and neighborhood regulators have assumed that the Controlled Substances Act and its federal prohibition on cannabis somehow immunizes the business from the usual constitutional safeguards. Certainly, quite a few a commentator has shared this view that the Constitution, or at least components of the Constitution such as the dormant Commerce Clause, do not apply to state-legal cannabis markets. There are quite a few troubles with this viewpoint, beginning with the truth that, at least in particular contexts, its of course incorrect. A state could not exclude people today of a particular race, religion or nationality from owning cannabis firms, for instance. Nor could a state revoke someone’s suitable to absolutely free speech merely mainly because that individual was a healthcare cannabis patient or caregiver. These constitutional safeguards clearly stay intact, unbothered by the Controlled Substances Act .
As soon as we establish that the Constitution applies in all the clear methods (absolutely free speech, equal protection of the laws, and so forth.) to the cannabis business, we have to query the traditional wisdom that regulators can take particular liberties with cannabis, like residency specifications, that the Constitution would commonly prohibit. This reality is that this business is not so unique than quite a few other very regulated trades. Federal illegality is the clear distinction, but there’s no properly-established or even properly-articulated explanation that the nominal federal prohibition on cannabis would strip the business of its constitutional rights.
But there’s one more explanation, beyond the academics of no matter if and when the Constitution applies, that regulators have been so bold when it comes to cannabis. The business, till not too long ago, hasn’t genuinely fought back and constitutional rights only matter when they’re enforced. Regulators, maybe not illogically, have regulated state-legal cannabis markets having said that they want, Constitutional issues aside, mainly because no a single has meaningfully challenged these laws. Not too long ago, that has changed.
Sticking with the instance of residency specifications, cannabis operators are fighting back in a huge way. This year lawsuits have been filed against the State of Maine, the City of Portland, Maine, the State of Oklahoma, and the State of Washington, all difficult a single kind of residency requirement or one more. (Disclaimer right here: I have been involved as a lawyer for plaintiffs in 3 of these lawsuits against Maine, Portland and Oklahoma.) The lawsuit against the State of Maine ended rapidly following Maine decided that, rather than litigating, it would cease enforcing the state’s two-year residency requirement for its adult use marketplace. This was on the suggestions of the state’s Lawyer Basic that the residency requirement was “subject to considerable constitutional challenges and is not most likely to withstand such challenges.”
What will the sensible impact of these lawsuits be on the business as a entire? Of course that depends in aspect on how they turn out, but my intuition is that, regardless, regulators will start to consider twice when crafting cannabis laws in their jurisdictions. As the business shows that it is prepared and prepared to stick up for itself, and not afraid to ask the courts for assist as required, lawmakers will take a additional thoughtful method, balancing the rights of the business against the other crucial policy objectives in just about every state-legal marketplace.
This post has focused on residency specifications, largely mainly because that is exactly where the action is at the moment. But the business is starting to challenge other kinds of state regulations additional generally, and additional effectively as properly, such as laws that favor particular classes of firms or small business-owners more than other people, and laws that are overly restrictive of marketing or advocacy by cannabis operators. The similar logic applies regardless of the precise legal suitable or Constitutional protection we’re speaking about – an business that is additional prepared to invoke these rights and protections is going to be treated additional pretty by lawmakers.
The sensible takeaway right here, I hope, is that cannabis operators must not be afraid to invoke federal law and the federal Constitution when proper, to make certain they are getting treated legally and pretty. As the business trends toward broader legalization, this is a essential step along the way.