November 5, 2021 – Cannabis’ illegality at the federal level has created opportunities for the states to shape the legal landscape and create rules designed to capture the economic benefits of the cannabis industry for themselves while protecting their citizens against potential social harms. However, state residency requirements, used by many states to meet these goals, have been subject to a recent flurry of challenges based on the dormant Commerce Clause of the U.S.
But cannabis commerce is beginning to show signs that it is outgrowing its provincial roots, and recent challenges to state residency requirements are reflective of this trend.
Although federal illegality of cannabis has created an opportunity for the states, as demonstrated by the recent decisions below, the U.S.
More specifically, these courts have focused on the negative implication of the Commerce Clause.
Department of Health and Senior Services , the Western District of Missouri recently granted a permanent injunction restricting enforcement of Missouri’s cannabis license residency requirement.
City of Detroit , the Eastern District of Michigan granted a motion for a preliminary injunction against enforcement of Detroit’s recreational marijuana licensing ordinance, which granted preferential treatment to “Detroit legacy” applicants.
Oklahoma avoided ruling on the merits of the underlying constitutional claim and granted the State’s motion to dismiss based on the affirmative defense of illegality.
There, the non-resident plaintiff sought a medical marijuana business license.
As the trial courts above have not rendered final judgment on this issue, all eyes are on the 1st U.S.
In this case, the District Court of Maine enjoined Maine’s Department of Administrative and Financial Services from enforcing the state’s dispensary residency requirement, holding that it violates the dormant Commerce Clause.
The Maine court’s words may foreshadow the beginning of the end for many state residency requirements as currently drafted.
They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Joseph Cioffi is a partner at Davis+Gilbert LLP in New York City, where he is chair of the Insolvency, Creditors’ Rights + Financial Products Practice Group.
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