Till now, several states have treated participants inside their legal cannabis industries as second-class citizens, depriving these companies of particular constitutional protections that apply in any other marketplace. Standard wisdom stated that cannabis companies have been either so grateful to be operating in the light of day, in a legal marketplace, that they would take these abuses with no a fight, or that they have 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 complete 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 market place. It is black letter law, as we lawyers like to get in touch with factors 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, named Tennessee Wine & Spirits Retailers Ass’n v. Thomas, produced it pretty 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 market are clearly intended to shield residents from out-of-state competitors and, beneath the classic evaluation, are unconstitutional. But they are widespread and commonplace. A couple of examples include things like Oklahoma which prohibits non-residents from owning a lot more than 25 % of a licensed health-related marijuana organization Washington which has a six-month residency requirement for its adult use plan and Portland, Maine (close to residence, for me) which not too long ago established licensing criteria that favors Maine residents more than other people.
There’s no fantastic explanation for the widespread disregard for the Constitution in cannabis regulation, except probably that several state and regional regulators have assumed that the Controlled Substances Act and its federal prohibition on cannabis somehow immunizes the market from the usual constitutional safeguards. Certainly, several a commentator has shared this view that the Constitution, or at least components of the Constitution like the dormant Commerce Clause, do not apply to state-legal cannabis markets. There are several difficulties with this viewpoint, beginning with the reality that, at least in particular contexts, its naturally incorrect. A state could not exclude people today of a particular race, religion or nationality from owning cannabis companies, for instance. Nor could a state revoke someone’s correct to absolutely free speech merely mainly because that individual was a health-related 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 market, we have to query the traditional wisdom that regulators can take particular liberties with cannabis, like residency specifications, that the Constitution would generally prohibit. This reality is that this market is not so distinctive than several other extremely regulated trades. Federal illegality is the clear distinction, but there’s no effectively-established or even effectively-articulated purpose that the nominal federal prohibition on cannabis would strip the market of its constitutional rights.
But there’s one more purpose, beyond the academics of regardless of whether and when the Constitution applies, that regulators have been so bold when it comes to cannabis. The market, till not too long ago, hasn’t actually fought back and constitutional rights only matter when they’re enforced. Regulators, probably not illogically, have regulated state-legal cannabis markets having said that they want, Constitutional issues aside, mainly because no 1 has meaningfully challenged these laws. Lately, 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 1 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 right after Maine decided that, rather than litigating, it would quit enforcing the state’s two-year residency requirement for its adult use market place. This was on the suggestions of the state’s Lawyer Basic that the residency requirement was “subject to substantial constitutional challenges and is not most likely to withstand such challenges.”
What will the sensible impact of these lawsuits be on the market as a complete? Of course that depends in component 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 market shows that it is prepared and prepared to stick up for itself, and not afraid to ask the courts for support as necessary, lawmakers will take a a lot more thoughtful strategy, balancing the rights of the market against the other crucial policy objectives in each state-legal market place.
This report has focused on residency specifications, largely mainly because that is exactly where the action is at the moment. But the market is starting to challenge other kinds of state regulations a lot more frequently, and a lot more effectively as effectively, like laws that favor particular classes of companies or organization-owners more than other people, and laws that are overly restrictive of marketing or advocacy by cannabis operators. The identical logic applies regardless of the precise legal correct or Constitutional protection we’re speaking about – an market that is a lot more prepared to invoke these rights and protections is going to be treated a lot more relatively 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 suitable, to assure they are getting treated legally and relatively. As the market trends toward broader legalization, this is a essential step along the way.