Wednesday, August 17, 2022

Split First Circuit panel holds dormant Commerce Clause applies to federally illegal marijuana businesses

In a notable ruling today in Northeast Patients Group v. United Cannabis Patients and Caregivers of Maine, No. 21-1719 (1st Cir. Aug. 17, 2022) (available here), a split First Circuit panel applied the dormant Commerce Clause to a provision of Maine's Medical Marijuana Act. Here is how the majority opinion gets started:

This appeal concerns whether the Maine Medical Use of Marijuana Act, 22 M.R.S. §§ 2421-2430 (2009) ("Maine Medical Marijuana Act"), violates what is known as the dormant Commerce Clause of the United States Constitution by requiring "officers" and "directors" of medical marijuana "dispensar[ies]," id. § 2428(6)(H), operating in Maine to be Maine residents.  The United States District Court for the District of Maine held that Maine Medical Marijuana Act's residency requirement does violate the dormant Commerce Clause, notwithstanding that Congress enacted the Controlled Substances Act ("CSA"), 21 U.S.C. § 801 et seq., to "eradicate the market" in marijuana, see Gonzalez v. Raich, 545 U.S. 1, 19 n.29 (2005).  The District Court concluded that is so, because the residency requirement is a facially protectionist state regulation of an interstate market in medical marijuana that continues to operate even in the face of the CSA.  We affirm.

Here is how the dissent by Judge Gelpi starts:

I respectfully dissent from the affirmation of the district court's opinion. I agree that Maine's residency requirement, that "[a]ll officers or directors of a dispensary must be residents of this State" set forth at 22 M.R.S. § 2428(6)(H), incontestably constitutes protectionist legislation. Indeed, at oral argument, counsel for Defendant-Appellant Kristen Figueroa conceded as much. Moreover, Figueroa does not assert that the measure could meet the strict scrutiny standard to which protectionist legislation is ordinarily subject. Indeed, the Supreme Court and this court have routinely invalidated similar protectionist legislation in markets ranging from liquor store licensing to egg products. See, e.g., Tenn. Wine & Spirits Retailers Ass'n v. Thomas, 139 S. Ct. 2449, 2457 (2019); United Egg Producers v. Dep't of Agric., 77 F.3d 567, 57172 (1st Cir. 1996). Following this caselaw, the majority affirms the district court by concluding that Maine's measure fails under the dormant Commerce Clause, because defendants have not satisfactorily demonstrated Congress's "unmistakably clear intent to allow otherwise discriminatory regulations," United Egg Producers, 77 F.3d at 570 (citing Wyoming v. Oklahoma, 502 U.S. 437, 458 (1992)), or demonstrated that Congress has otherwise consented to such protectionist legislation.  In the ordinary course, in an ordinary market, I would agree that such a measure is unconstitutional under well-trodden dormant Commerce Clause principles and caselaw.

But the national market for marijuana is unlike the markets for liquor licenses or egg products in one crucial regard: it is illegal. Congress in 1971 enacted the Controlled Substance Act (CSA) pursuant to its Commerce Clause powers, designating marijuana a Schedule I controlled substance. See 21 U.S.C. § 841; id. § 812(c)(Schedule I)(c)(10); Gonzales v. Raich, 545 U.S. 1, 22 (2005). Under the CSA, it is a crime "to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance." 21 U.S.C. § 841(a)(1). It is here that I part ways with the majority, because I disagree that the test we have developed for the mine-run of dormant Commerce Clause cases apply automatically or with equal vigor when the market in question is illegal as a matter of federal law. As such, I do not believe that the United Egg Producers test -- which, prior to today, we have only ever applied in cases involving legal markets -- extends to national markets that Congress has expressly made illegal.  Instead, I start from the premise that we should vindicate the principles that animate the dormant Commerce Clause -- and I conclude that the same constitutional precepts that led us to articulate the United Egg Producers test counsel against its application here.

Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink


For two years, I've been saying that the courts will effectively repeal prohibition if Congress doesn't act. Then, with no regulatory system in place, we'll have some real problems.

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