Federal Court: The residency requirement for cannabis licensees (which is stupid) may be unconstitutional

Federal Court: The residency requirement for cannabis licensees (which is stupid) may be unconstitutional


An interesting thing about marijuana law is how much it relates to the “first principles” or the basic principles of the U.S. Constitution. Our lawyers write about transactions and prosecutors (always with good reasons) and defend clients (which is always nonsense) every day, so we rarely re-examine the first principles.But these principles include very important things, such as the legal conflict between the supreme cause of the constitution (in favor of the federal government) and the “reserved” rights of the states. According to the Tenth AmendmentAs far as today’s blog post is concerned, the constitutional issue is the dormant commercial clause (“DCC”) related to cannabis residency requirements.A federal court in Missouri just Freeze these requirements.

Before starting, I want to confirm that I am not a litigation lawyer, and certainly not a great constitutional scholar.The closest I got to these two things are: 1) writing the difficult letter before handing over the documents to a very smart litigator we are lucky enough to have in the law firm, and 2) teaching one Marijuana Law and Policy Course At the local law school. In addition, I mainly provide people with business advice and help them solve out-of-court problems.

In any case, DCC is a fascinating little legal point that we have been discussing on this blog At least since 2015. DCC is derived from the U.S. Constitution, but it is not actually written there. On the contrary, DCC is a judicial doctrine inferred by the court from the (non-dormant) commercial clause in Article I. In short, DCC prohibits state legislation that discriminates against interstate or international commerce. Our favorite example? Residential requirements for cannabis business ownership.

In addition to thinking that these nativist requirements are legally problematic, our position is usually that restricting residency rights is a bad idea. They are difficult to draft (and usually by lawyers without a commercial seal); they are more difficult to enforce; they rarely achieve the protectionist results they want. People play them like crazy! But if your goal is to prevent someone from borrowing from their out-of-state grandmother to start a small business, or if you want to ensure that minority communities with limited access to funds have a lower chance of success, then the residency requirement, I think, Great.

When we do find ourselves working in states that require residence (such as Washington), we usually find that lawyers and regulators work more, and the industry is affected.In my opinion, Oregon was basically a fiasco until The residency requirement was abolished in 2016. Everyone should follow suit. Ultimately, they will; Ultimately, the cannabis program residency requirements will follow the federal cannabis ban.

In any case, back to the ruling of this federal court. In view of what I wrote above, I am very happy to see this important decision come to an end a few days ago. On June 21, the Central Chamber of the District Court for the Western District of Missouri initially prohibited (prevented) local regulators from implementing the state’s poorly conceived 51% residential ownership requirements. The basic reason of the court is that the plaintiff Mark Togo, the plaintiff who sued to cancel the residency requirement, is likely to win the case on the grounds of DCC at the end of this lawsuit. As a result of this ruling, the Missouri Department of Health and Human Services (DHSS) cannot enforce residency requirements on Mr. Togo or anyone else until the case is fully decided or resolved.

I would like to know whether DHSS pursues the long-standing management strategy of slow trading while the lawsuit is pending, or whether the institution will abandon this bozo rule. The latter course of action was followed by Maine last year. The state has also been sued for the DCC theory of residency requirements. In response, the country (according to the advice of its lawyers) Decided to stop execution Complete residency rules. Presumably, Maine is now like Oregon or California or Nevada or any other common sense state that does not discriminate against neighbors.

Will the Missouri lawsuit eventually succeed? Hard to say. Like I said, the ruling is promising because the court believes that Mr. Togo may win the case (and the court only requires him to pay a security deposit of $10,000, which is very small for these matters). In other words, other plaintiffs in other states have all failed.For example, in Oklahoma, a federal judge recently Dismissed one of the DCC lawsuits It was filed by the Washington plaintiff that the state is protected from litigation by the Eleventh Amendment. Therefore, as the litigation lawyer said, we may be ready to split the circuit.

We will release information on this interesting topic for you in time. In the meantime, for more information about cannabis and DCC, check out the following blog posts:

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