US Circuit Court Ruling Demonstrates Cannabis Businesses’ Constitutional Rights, Attorney Says

A First Circuit Court of Appeals panel ruled 2-1 Aug. 17 to uphold a Maine federal judge’s August 2021 decision that the state’s residency requirement for cannabis business owners is unconstitutional, Law360 reports. An attorney for the plaintiff-appellee says the decision demonstrates that U.S. cannabis businesses are afforded constitutional protections.

Maine’s medical cannabis law required medical cannabis owners to be state residents, but U.S. District Judge Nancy Torresen ruled last year that the residency requirement violates the U.S. Constitution’s dormant commerce clause.

In the decision to uphold Torresen’s ruling, the 2-1 circuit panel majority stated Maine cannot restrict medical cannabis business ownership to Maine residents because the dormant commerce clause prevents the state from being able to do so, Law360 reports.

The dormant commerce clause “refers to the prohibition, implicit in the commerce clause, against states passing legislation that discriminates against or excessively burdens interstate commerce,” according to Cornell Law School.

The Aug. 17 decision marks a success for Acreage Holdings Inc. and its subsidiaries, plaintiffs Wellness Connection of Maine and High Street Capital Partners LLC, following High Street’s efforts to purchase all the equity in Wellness Connection, according to Law360. (The lawsuit also follows a similar development from 2020, Law360 pointed out. In May of that year, Maine cannabis regulators decided to stop enforcing a residency requirement for adult-use cannabis businesses.)

Cannabis Business Times spoke with Matthew S. Warner, partner at law firm Preti Flaherty Beliveau & Pachios LLP and attorney for the plaintiffs in the medical-cannabis case. Warner told CBT it is the first U.S. circuit court case applying the country’s constitution to state cannabis laws.

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Warner said of the ruling: “It confirms that the U.S. constitution applies to the marijuana industry like it does to any other. …  To have constitutional protections in place that every other industry has will be good for the industry in the long run, and it should certainly influence the way policymakers start doing their jobs, now."

The Aug. 17 decision should lead to more U.S. federal courts hearing cannabis cases, such as private contract cases, Warner said, adding, “If you don't have access to federal courts, that restricts your access to justice in much the same way you don't have access to banking, et cetera.”