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Judge skeptical in case arguing national cannabis ban unconstitutional

The federal judge hearing a case in Springfield, MA, that challenges the federal ban on cannabis appeared unmoved by an argument that the proscription is unconstitutional, Reuters reports. U.S. District Judge Mark Mastroianni told lawyers representing a number of Massachusetts cannabis companies that the Supreme Court had previously upheld the position, tying his hands.

The case comes a month after the Justice Department submitted a proposed regulation to reschedule marijuana from a Schedule 1 drug—a class reserved for drugs with no known medical benefits and a high capacity for abuse—to the far less strident Schedule 3 classification.

State vs. Federal Laws on Marijuana

For the time being, though, the drug remains banned at the federal level, even as nearly half of all states have legalized the adult-use market and three-quarters have allowed sales for medicinal purposes. The discrepancy between state and national laws presents serious challenges to businesses operating within nominally open marketplaces.

Federally, marijuana remains classified as a Schedule I drug under the Controlled Substances Act, which prohibits its sale and distribution. However, numerous states have enacted laws that legalize or decriminalize marijuana for medical or recreational use. In other words, activities deemed legal by state law violate federal law.

One of the major issues arising from this conflict is the difficulty marijuana-related businesses face in accessing banking services. Since marijuana is illegal at the federal level, most federally insured banks are hesitant to service the industry for fear of facing criminal charges for money laundering or other federal crimes. This forces many marijuana businesses to operate on a cash-only basis. However, doing so poses significant risks such as theft and reduces the state’s ability to track and collect tax revenues efficiently. Additionally, the disparity in legal status complicates enforcement and creates confusion for individuals who may legally purchase cannabis in their state but could still face federal penalties.

Understanding the Regulatory Status Quo

This discrepancy has been the subject of legal scrutiny since states began legalizing medical marijuana some 20 years ago. In 2005, Gonzales v. Raich reached the Supreme Court. The case involved two California residents, Angel Raich and Diane Monson, who grew marijuana at home and used marijuana for it purposes. Doing so was legal under California state law but illegal under federal law. The plaintiffs argued that the federal Controlled Substances Act (CSA), which prohibits the cultivation and use of marijuana, should not apply to their use of marijuana.

The U.S. Supreme Court, in a 6-3 decision, ruled against Raich and Monson. The Court held that under the Commerce Clause of the U.S. Constitution, Congress had the authority to prohibit the local cultivation and use of marijuana, despite state laws to the contrary. The majority opinion, written by Justice John P. Stevens, posited that even if the marijuana in question was grown and consumed locally, it could still affect the broader interstate market for marijuana, justifying federal regulation. This decision underscored the supremacy of federal law in the realm of drug policy, affirming that federal authorities could enforce the CSA in states that have legalized marijuana for medical or recreational use, thereby maintaining a significant federal restriction on marijuana activities regardless of state laws.

Now, let’s fast forward by nearly two decades. Massachusetts-based cannabis retailer Canna Provisions, delivery owner Gyasi Sellers, producer Wiseacre Farm, and the publicly traded Verano Holdings have joined forces in an attempt to break the impasse.

Going to Court

Representing the marijuana companies, David Boies admitted that he was asking the Judge Mastroianni to make a “big step” in contradicting the 2005 Supreme Court ruling, but argued that Mastroianni would not be overruling the earlier decision. Rather, he said he was asking Mastroianni to conclude that the decision could no longer be applied because the situation regarding marijuana regulations had changed so much over the last 19 years. That ruling came nearly a decade after California became the first state to allow medicinal marijuana sales, and nearly a decade before Colorado and Washington became the first states to make adult-use legal at the state level.

Boies argues that federal enforcement of the Controlled Substances Act oversteps federal authority under the commerce clause and is unconstitutional as a result. “I think there can be no doubt that the predicates of that decision no longer exist,” Boies told Mastroianni. “You no longer have this comprehensive, unitary attempt to totally eradicate interstate commerce.”

Mastroianni disagreed with the size of the ask. The Obama appointee said it was not his place as a judge on a lower court to overrule case law settled in the highest court in the land. Pouncing on this, Justice Department lawyer Jeremy Newman urged Mastroianni to dismiss the case, saying that

Boies was quick to retort. He cited a 2021 statement made by Justice Clarence Thomas echoing Boies’s own argument. Thomas argued that, at this point, the earlier ruling “may no longer be necessary or proper.” It is worth noting that Thomas was on the Supreme Court in 2005 and that he wrote a dissent to its ruling in Gonzalez v. Raich. The dissent said, in part: “Monson and Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything—and the Federal Government is no longer one of limited and enumerated powers.” He went on to note that the plaintiffs’ “local cultivation and consumption of marijuana is not ‘Commerce … among the several States.'”

Where Things Stand

For now, the case in Springfield remains ongoing. As long as cannabis is illegal at the federal level, the state markets will face ongoing challenges. These restrictions severely hinder cannabis businesses’ ability to access basic banking services, forcing them to operate primarily in cash. This not only increases the risk of theft and fraud but also complicates tax collection and financial transparency. By challenging the prohibition, the Massachusetts cannabis companies seek to normalize their operations within the broader financial system. Their ultimate goal is to be able to secure loans, open accounts, and offer credit transactions like any other legal business.

Will the latest cannabis lawsuit be successful? If they are, you’ll find out here at Cannabutter Digest! Remember to visit us regularly for the latest news as well as other great resources.

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