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 standard wisdom was incorrect mainly because, now, we are at a pivotal moment exactly where the entire landscape appears poised to transform. Let me clarify.
The most apparent 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 completely participating in a state’s cannabis industry. It is black letter law, as we lawyers like to get in touch with items that are apparent 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, referred to as Tennessee Wine & Spirits Retailers Ass’n v. Thomas, created 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 business 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 consist of Oklahoma which prohibits non-residents from owning far more than 25 % of a licensed healthcare marijuana company Washington which has a six-month residency requirement for its adult use system and Portland, Maine (close to property, for me) which not too long ago established licensing criteria that favors Maine residents more than other individuals.
There’s no fantastic explanation for the widespread disregard for the Constitution in cannabis regulation, except maybe that quite a few state and nearby 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 complications with this viewpoint, beginning with the truth that, at least in particular contexts, its of course incorrect. A state could not exclude folks of a particular race, religion or nationality from owning cannabis firms, for instance. Nor could a state revoke someone’s appropriate to absolutely free speech merely mainly because that particular person 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 apparent approaches (absolutely free speech, equal protection of the laws, and so forth.) to the cannabis business, we have to query the standard wisdom that regulators can take particular liberties with cannabis, like residency specifications, that the Constitution would generally prohibit. This reality is that this business is not so diverse than quite a few other hugely regulated trades. Federal illegality is the apparent distinction, but there’s no properly-established or even properly-articulated purpose that the nominal federal prohibition on cannabis would strip the business of its constitutional rights.
But there’s a further purpose, beyond the academics of no matter whether 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 definitely 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 major 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 a further. (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 industry. This was on the suggestions of the state’s Lawyer Basic that the residency requirement was “subject to considerable constitutional challenges and is not probably to withstand such challenges.”
What will the sensible impact of these lawsuits be on the business as a entire? Of course that depends in element on how they turn out, but my intuition is that, regardless, regulators will start to feel 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 enable as necessary, lawmakers will take a far more thoughtful method, balancing the rights of the business against the other essential policy targets in just about every state-legal industry.
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 sorts of state regulations far more usually, and far more effectively as properly, such as laws that favor particular classes of firms or company-owners more than other individuals, and laws that are overly restrictive of marketing or advocacy by cannabis operators. The similar logic applies regardless of the precise legal appropriate or Constitutional protection we’re speaking about – an business that is far more prepared to invoke these rights and protections is going to be treated far more relatively by lawmakers.
The sensible takeaway right here, I hope, is that cannabis operators really should not be afraid to invoke federal law and the federal Constitution when acceptable, to make sure they are becoming treated legally and relatively. As the business trends toward broader legalization, this is a important step along the way.