Federal court ruling creates interstate cannabis commerce

Last week, a federal Court of Appeals reached a landmark ruling in Maine, ruling the prohibition of non-residents from owning and operating medical cannabis dispensaries in the state as an unconstitutional practice. The 2-1 decision was the result of a lengthy debate over the interpretation of the Constitution’s position towards interstate commerce.

The court’s ruling comes after a statement about the state’s thriving cannabis market, which they claimed was likely to attract distributors from across the country.

Some worry that the ruling will have consequences not only for the medical marijuana industry as a whole but also for the social equity programs, which many recent pieces of marijuana legislation have sought to implement.

The Constitutional Basis

The Constitutional clause in question is known as the Dormant Commerce Clause, which essentially gives Congress the power to oversee interstate commerce, superseding the states. Many leaders in the marijuana industry have long been proponents of this interpretation of Constitutional interstate commerce, particularly as it intersects with current marijuana legislation.

The court’s decision concerns Maine’s “residency requirement,” a licensing regulation that requires medical marijuana dispensary owners to be residents of the state before they can legally operate.

Thanks to a 2014 amendment that Congress has renewed every year since, the Justice Department is restricted from interfering in state-legal marijuana markets, just as it cannot create provisions for criminal enforcement. Just as there has been no federal provision for the legalization of the medical marijuana market, there will be no federal measures for criminal enforcement.

This ruling is not the first time Maine has faced a challenge over its residency requirement. Following the state’s 2016 legalization of marijuana products for adult use, Maine discarded the requirement when marijuana advocates pointed out that it violated the Dormant Commerce Clause. Now, nearly six years later, the state has been required to drop a similar requirement for how it licenses medical marijuana sellers.

The Implications of the First Circuit Ruling

This court ruling will allow sellers with residences anywhere in the U.S. to become licensed to sell in Maine.

Some would point to this ruling as a call to rethink the state’s regulations for the import and export of cannabis products, which are restricted. Because the state’s practice of regulating its sellers’ licensure based on their residency has been ruled unconstitutional, it follows that Maine’s restrictions for the import and export of marijuana products could also be construed as unconstitutional.

Import and Export Regulations Under the New Provisions

Although this ruling’s most direct implications are for the residency requirements in Maine, the appellate court that made this ruling also holds jurisdiction over New Hampshire, Rhode Island, Massachusetts, and Puerto Rico. If appellate courts whose jurisdictions lie over other circuits were to arrive at a different ruling, there’s a chance the issue could be brought before the Supreme Court.

Some would challenge this position, claiming that the ruling doesn’t necessarily imply broader reform for the state’s import and export regulations.

One of the biggest reasons for the import and export restrictions in the first place was the passing of the Controlled Substances Act, which effectively prohibits commerce between states where federally illegal drugs are concerned. Determining where the CSA’s injunction ends and the Constitutional clause begins is a Gordion’s knot.

Many other states whose governments are seeking to create specific provisions for their statewide marijuana markets are considering the implications of similar appellate rulings based on the Constitutional clause.

Maine regulators are hopeful that the ruling will only affect the state’s scope of medical marijuana commerce. However, its provisions will likely have to be made for the state’s market for recreational adult-use products, as well.

Implications for Maine’s Social Equity Programs

The ruling is potentially contentious because of its capacity to unravel the many social equity programs that are intertwined with the state’s legalization measures.

When Maine introduced provisions for legal adult recreational use of marijuana products, it also introduced regulations to privilege those disproportionately affected by drug enforcement laws by giving them entrepreneurial opportunities within the emerging cannabis market.

Many of these programs had been contingent upon the residency status of those who apply for their benefits. However, because the ruling effectively disallows this, the state will have to reimagine how it establishes its social equity benefits standards.

A National Push for Interstate Commerce

Many states have made efforts to define their regulations where import and export are concerned more clearly. In New Jersey, state senator Nicholas Scutari recently sought to authorize the legal import and export of cannabis products between other states.

This legislation resulted from the senator’s lengthy fight for a more accessible marijuana market in New Jersey and beyond. Scutari voiced his frustration in one tweet, saying, “These delays are totally unacceptable. We need to get the legal marijuana market up and running in New Jersey. This has become a failure to follow through on the public mandate and to meet the expectations for new businesses and consumers.”

Similarly, California state senator Anna Caballero recently drafted a bill to achieve the same level of interstate commerce. The proposed legislation reached the floor earlier this month, where it will be open for debate and a vote.

Other lawmakers have worked to create a broader marketplace, as well. Oregon Governor Kate Brown signed a 2019 bill that reimagined the state’s approach to interstate cannabis commerce, a move which she called “$25 million for a comprehensive, statewide plan to address the proliferation of illegal cannabis around the state and ease the associated humanitarian impacts.”

A More Innovative Approach to Cannabis Commerce Legislation

As more and more states move to increase legal access to medical and recreational marijuana, it will be up to lawmakers to determine how to regulate the manufacturing and distribution of cannabis products in the future.

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