Till now, lots of states have treated participants inside their legal cannabis industries as second-class citizens, depriving these enterprises of particular constitutional protections that apply in any other marketplace. Standard wisdom mentioned that cannabis enterprises had been either so grateful to be operating in the light of day, in a legal marketplace, that they would take these abuses with out 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 for the reason that, now, we are at a pivotal moment exactly where the complete landscape appears poised to adjust. Let me clarify.
The most apparent instance of states overstepping when it comes to cannabis regulations are the residency needs popping up about the nation. By residency needs, 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 contact items that are apparent and incontrovertible, that residency needs are not permitted in ‘normal’ industries for the reason that 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 choice, known as Tennessee Wine & Spirits Retailers Ass’n v. Thomas, created it quite clear that state laws are unconstitutional if their “predominant effect” is “simply to protect” citizens of that state “from out-of-state competitors.”
Residency needs in the cannabis business are clearly intended to shield residents from out-of-state competitors and, below the conventional evaluation, are unconstitutional. But they are widespread and commonplace. A couple of examples incorporate Oklahoma which prohibits non-residents from owning far more than 25 % of a licensed health-related marijuana business enterprise Washington which has a six-month residency requirement for its adult use system and Portland, Maine (close to household, for me) which not too long ago established licensing criteria that favors Maine residents more than other folks.
There’s no fantastic explanation for the widespread disregard for the Constitution in cannabis regulation, except possibly that lots of state and regional regulators have assumed that the Controlled Substances Act and its federal prohibition on cannabis somehow immunizes the business from the usual constitutional safeguards. Certainly, lots of a commentator has shared this view that the Constitution, or at least components of the Constitution which includes the dormant Commerce Clause, do not apply to state-legal cannabis markets. There are lots of troubles with this viewpoint, beginning with the truth that, at least in particular contexts, its naturally incorrect. A state could not exclude persons of a particular race, religion or nationality from owning cannabis enterprises, for instance. Nor could a state revoke someone’s correct to cost-free speech merely for the reason that that particular person was a health-related cannabis patient or caregiver. These constitutional safeguards clearly stay intact, unbothered by the Controlled Substances Act .
When we establish that the Constitution applies in all the apparent strategies (cost-free speech, equal protection of the laws, and so on.) to the cannabis business, we have to query the standard wisdom that regulators can take particular liberties with cannabis, like residency needs, that the Constitution would ordinarily prohibit. This reality is that this business is not so diverse than lots of other hugely regulated trades. Federal illegality is the apparent 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 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 seriously fought back and constitutional rights only matter when they’re enforced. Regulators, possibly not illogically, have regulated state-legal cannabis markets having said that they want, Constitutional issues aside, for the reason that no one particular has meaningfully challenged these laws. Not too long ago, that has changed.
Sticking with the instance of residency needs, cannabis operators are fighting back in a significant 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 one particular sort 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 speedily just after Maine decided that, rather than litigating, it would cease enforcing the state’s two-year residency requirement for its adult use industry. This was on the guidance 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 complete? Of course that depends in portion on how they turn out, but my intuition is that, regardless, regulators will start to believe 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 far more thoughtful strategy, balancing the rights of the business against the other crucial policy ambitions in each state-legal industry.
This report has focused on residency needs, largely for the reason that that is exactly where the action is at the moment. But the business is starting to challenge other sorts of state regulations far more frequently, and far more effectively as properly, which includes laws that favor particular classes of enterprises or business enterprise-owners more than other folks, and laws that are overly restrictive of marketing or advocacy by cannabis operators. The similar logic applies regardless of the precise legal correct 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 ought to not be afraid to invoke federal law and the federal Constitution when suitable, to make certain they are becoming treated legally and relatively. As the business trends toward broader legalization, this is a important step along the way.