Maine Challenges the Dormant Commerce Clause!
In a headline that's guaranteed NOT to get many clicks, High Times has included "Maine Aims to Disallow Out-of-Town Cannabis Business Owners", so we have added an exclamation point to ours. It's a shameless trick, but now that you're here...
The High Times article quickly links to another article in the Portland Press Herald ("Maine Appeals Ruling That Allows Out-Of-State Sellers of Medical Cannabis"), and I will try to capture the best from both.
"The state of Maine is determined to preserve its requirement that cannabis businesses be owned by its own residents, bringing the dispute into uncharted legal territory."
I remembered that I always liked the idea of residency requirements, especially for smaller states with big financial powerhouse states nearby. ‘Residency Requirement’ typically means that states want to limit ownership of cannabis businesses to residents of that state, the idea being that keeping the owners in-state keeps all the money inside-the-state.
That’s the idea anyway.
Now I know Jason Beck is hopping up and down like a contestant on Family Feud wanting to yell "Dormant Commerce Clause" – sorry Jason, you’ll have to make do with the Hello Kitty Samsonite Luggage while this story plays out.
A Delaware LLC called Wellness Connection of Maine sued the State last year. Even though it’s already the largest chain of medical dispensaries in Maine, it wanted MORE. Its sister company sued the State and the City of Portland because Portland kept residency requirements in its local adult-use licensing scheme.
The Delaware company complained that the scoring of the Portland licensing wasn’t fair. The State countered with “No one is prohibiting you from winning, if you were good enough…” and before the Legos started flying, everyone got put on Time-Out while the lawyers got called in.
THE DEEP DIVE
US District Court Judge Nancy Torresen "... sided with Wellness Connection in a ruling that [also] overturned the in-state residency requirement for medical marijuana dispensaries.”
She said: "… given the Supreme Court’s and First Circuit’s unmistakable antagonism towards state laws that explicitly discriminate against nonresident economic actors, I conclude that the Dispensary Residency Requirement violates the dormant Commerce Clause."
Not so fast, Jason, Beck; here’s where it gets tricky.
The issue is “Inter-state Commerce”. It IS unconstitutional for Maine to prohibit economic activity from another state.
However, Maine is being joined by the Maine Cannabis Coalition in appealing at least the Medical Market part of the decision based on this rather novel concept:
“The State argued that [the US] Congress has eliminated the interstate market for medical marijuana entirely by making cannabis illegal under federal law, so that clause cannot apply in this situation.”
From the appeal brief:
“Here, the dormant Commerce Clause does not apply to Maine’s intrastate market for medical marijuana,” the state’s brief says. “Nor do the residency requirements in the Maine Medical Use of Marijuana Act burden interstate commerce more severely than [US] Congress, because Congress has already eliminated that market. Because striking down Maine’s residency requirements at issue in this case would do nothing to expand legal interstate commerce in the United States, [the Residency Requirements] should stand.
“Wellness Connection and High Street have not yet filed their response to the 1st Circuit. “
THE LOOP BACK
A question for the lawyers in the room: what happens if the State of Maine prevails? Will all these other residency requirement cases go back to court?