Justyna Jensen v. Maryland Cannabis Administration et al.Justyna Jensen v. Maryland Cannabis Administration et al.
Before the Court is Plaintiff Justyna Jensen‘s motion for a temporary restraining order and preliminary injunction against Defendants the Maryland Cannabis Administration and William Tilburg, its acting director. ECF 19. The Court has reviewed Plaintiff‘s motion, ECF 19, Defendants’ response in opposition, ECF 25, and Plaintiff‘s reply in support, ECF 26. All motions included memoranda of law and exhibits.1 This Court held a hearing on this matter on February 22, 2024. ECF 28. For the reasons below, Plaintiff‘s motion is DENIED.
I. BACKGROUND
In 1970, Congress passed the Controlled Substances Act (CSA), which, among other things, prohibited the use, distribution, manufacturing, and possession of cannabis. See Gonzales v. Raich, 545 U.S. 1, 11-13 (2005); see also Controlled Substances Act (CSA), 84 Stat. 1242,
Under the new cannabis regulation scheme passed by the legislature, the first round of recreational-use cannabis retail licenses is to be issued by lottery to “social equity” applicants.2
(1) has at least 65% ownership and control held by one or more individuals who:
(i) have lived in a disproportionately impacted area3 for at least 5 of the 10 years immediately preceding the submission of the application;
(ii) attended a public school in a disproportionately impacted area for at least 5 years; or
(iii) for at least 2 years, attended a 4-year institution of higher education in the State where at least 40% of the individuals who attend the institution of higher education are eligible for a Pell Grant[.]
Plaintiff is a citizen of California who has never lived in Maryland. ECF 1, at 1. She applied for Maryland‘s social equity lottery on November 6, 2023. ECF 19-6, at 20. Plaintiff based her application on the third eligibility prong of the lottery (the “Pell Grant provision“): her attendance at a 4-year institution where at least 40% of students were eligible for Pell Grants. Id. at 17, 21-24; ECF 19-15, at 7. In her application, Plaintiff certified that she did not meet the criteria for the first eligibility prong (living in a disproportionately impacted area), and she provided no information indicating that she met the second prong criteria (attending a public school in a disproportionally impacted area for five
Plaintiff claims that the Pell Grant provision and its implementing regulations unconstitutionally discriminate against out-of-state residents under the dormant Commerce Clause, and she seeks declaratory and injunctive relief. ECF 1, at 5-7. Specifically, Plaintiff seeks an injunction preventing Defendants from running the lottery and issuing the resultant licenses based on the existing criteria and a declaration that
II. LEGAL STANDARD
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (citing Munaf v. Geren, 553 U.S. 674, at 689-90 (2008)). “The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.” Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981). To succeed on a motion for a preliminary injunction, a movant “must establish [1] that [s]he is likely to succeed on the merits, [2] that [s]he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in h[er] favor, and [4] that an injunction is in the public interest.” Centro Tepeyac v. Montgomery Cnty., 722 F.3d 184, 188 (4th Cir. 2013) (alteration in original) (citing Winter, 555 U.S., at 20). “To secure a preliminary injunction, a plaintiff must ‘make a “clear showing” that [she is] likely to succeed at trial, [but she] need not show a certainty of success.‘” Ass‘n of Am. Publishers, Inc. v. Frosh, 586 F. Supp. 3d 379, 388 (D. Md. 2022) (quoting Pashby v. Delia, 709 F.3d 307, 321 (4th Cir. 2013)).
III. ANALYSIS
This case comes before the Court amidst a backdrop of opposing case law from districts all over the country regarding the dormant Commerce Clause‘s application to the cannabis industry. Cannabis occupies a unique, paradoxical position in our nation right now, existing in a liminal legal space where its recreational use is legal at the state level in half the country and illegal in the other half; its medical use is legal in most of the country at the state level; and it remains illegal in all contexts at the federal level. See State Medical Cannabis Laws, supra;
Amidst this legal uncertainty, Plaintiff now asks this Court for a preliminary injunction prohibiting the issuance of licenses from the social equity lottery, ECF 19, at 1, and, ultimately, for an injunction prohibiting the enforcement of the social equity lottery statutory provisions and their implementing regulations, as well as a declaration that the same are unconstitutional under the dormant Commerce Clause, ECF 1, at 6-7. Plaintiff claims that the Pell Grant provision‘s limitation to only Maryland institutions where 40% of the student population is eligible for a Pell Grant discriminates against out-of-state residents and therefore violates the dormant Commerce Clause, and asserts that Plaintiff is entitled to a preliminary injunction to prevent the distribution of new licenses. ECF 1, at 1-4; ECF 19-15, at 8-18. Defendants counter that (1) Plaintiff lacks standing to bring this action; (2) Plaintiff does not meet the equitable requirements of a preliminary injunction, particularly due to Plaintiff‘s delay in bringing this case; (3) the dormant Commerce Clause does not apply to state recreational cannabis laws; and (4) even if the dormant Commerce Clause did apply, the Pell Grant provision does not violate it. ECF 25-1, at 12-31. The Court addresses each of these arguments in turn.
A. Plaintiff has standing.
Whether a plaintiff has standing to sue is a threshold inquiry for any lawsuit. Hein v. Freedom From Religion Found., Inc., 551 U.S. 587, 597 (2007). It is the plaintiff‘s burden to establish standing. Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). To do so, a plaintiff must demonstrate that they have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. Here, Defendants claim that Plaintiff lacks injury and that the injury she alleges is not redressable.6 ECF 25-1, at 12-15.
1. Plaintiff has demonstrated injury.
“To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.‘” Spokeo, 578 U.S. at 339.
When a plaintiff alleges unconstitutional discrimination in the awarding of a government contract or employment, they need not “translate [their] desire . . . into a formal application where that application would be merely a ‘futile gesture.‘” Carney, 592 U.S. at 66 (cleaned up) (quoting Teamsters v. United States, 431 U.S. 324, 365-66 (1977)). Instead, they need only demonstrate that they were “able and ready” to apply and that “a discriminatory policy” prevented them from doing so on equal footing with their competitors. Gratz v. Bollinger, 539 U.S. 244, 262 (2003) (quoting Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. Jacksonville, 508 U.S. 656, 666 (1993)).
Defendants’ argument is based on their assertion that the lottery application actually consisted of two separate processes: first, the “verification request” to certify that an applicant met the social equity criteria, and then the formal application, which could be submitted only by those who successfully verified their social equity eligibility. ECF 25-1, at 9. Defendants asserted at the hearing that Plaintiff was not “ready and able” to apply for the lottery because she failed to submit all of the documentation that was required as part of the formal application. The Court is unpersuaded by this reasoning. Plaintiff and Defendants agreed at the hearing that Plaintiff was unable to submit the formal application without first receiving social equity applicant verification, even if she could have begun that application without the verification. Plaintiff was well aware that she would not receive social equity verification, and she was not required to begin an application that would have obviously been a “futile gesture” in order to establish injury. See Carney, 592 U.S. at 66 (holding that job applicants alleging discrimination need not submit application that would obviously be futile in order to establish injury so long as they are ready and able to apply). As was discussed at the hearing, Plaintiff is a successful retail cannabis professional who has applied for cannabis licenses in several states and was easily “ready and able” to provide the business plans and other documentation the application required, had such an endeavor not been obviously doomed to fail. That she did not take the time to complete an application she knew she would be unable to submit does not negate the injury she suffered when she was denied social equity applicant eligibility. Plaintiff has demonstrated injury.
2. Plaintiff‘s injury is redressable.
“[T]he plaintiff must not only establish an injury that is fairly traceable to the challenged conduct but must also seek a remedy that redresses that injury.” Uzuegbunam v. Preczewski, 141 S. Ct. 792, 796 (2021). To satisfy the requirements of standing, it must be “likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Doe v. Va. Dep‘t of State Police, 713 F.3d 745, 755 (4th Cir. 2013) (quoting Friends of the Earth, Inc. v. Laidlaw Env‘t Servs. (TOC), Inc., 528 U.S. 167, 181 (2000)). “The burden imposed by this requirement is not onerous. Plaintiffs ‘need not show that a favorable decision will relieve [their] every injury.’ Rather, plaintiffs ‘need only show that they personally would benefit in a tangible way from the court‘s intervention.‘” Deal v. Mercer Cnty. Bd. of Educ., 911 F.3d 183, 189 (4th Cir. 2018) (quoting Sierra Club v. U.S. Dep‘t of the Interior, 899 F.3d 260, 284 (4th Cir. 2018)). Declaratory and injunctive relief are appropriate to redress ongoing or future harm. Kanuszewski v. Mich. Dep‘t of Health & Hum. Servs., 927 F.3d 396, 407-08 (6th Cir. 2019) (explaining that damages are an appropriate remedy for completed, past harm, but injunctive and declaratory relief are appropriate when there is an “allegation of a real or immediate threat” of future or ongoing injury); City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983) (explaining that injunctive relief is only available when there is a “real or immediate threat the plaintiff will be wronged” in the future).
Defendants argue that Plaintiff‘s injury is not redressable because even “[i]f the Court finds that the Pell Grant criterion is in violation of the dormant Commerce Clause and enjoins its enforceability, Plaintiff still is ineligible for the lottery because she does not qualify under either of the other two [social equity applicant] criteria.” ECF 25-1, at 12. Other courts have applied similar logic in considering dormant Commerce Clause challenges to cannabis regulations. In Variscite, Inc. v. Los Angeles, the Central District of California held that the plaintiffs in that case lacked standing to seek a preliminary injunction because the plaintiffs failed to demonstrate redressability. Civ. No. 2:22-08685-SPG-SK, 2022 WL 18397510, at *5-7 (C.D. Cal. Dec. 8, 2022). That case centered around Los Angeles’ social equity lottery for cannabis licenses, which required applicants to provide evidence of “a qualifying California Cannabis Arrest or Conviction” as well as evidence of either ten years residing in a “Disproportionately Impacted Area” (in California or elsewhere) or “low income in the 2020 or 2021 calendar year.” Id. at *2. The plaintiff in that case claimed that the “qualifying California Cannabis Arrest or Conviction” prong violated the dormant Commerce Clause as he had a cannabis arrest or conviction from Michigan that would have qualified had it occurred in California. Id. at *3. The court there held that the plaintiff lacked standing because he had not demonstrated that he met either of the other prongs required to enter the lottery, and a plaintiff “cannot establish either causation or redressability where another statutory provision not subject to challenge would cause the plaintiff to continue to suffer the same injury.” Id. at *6 (citing Orion Wine Imps., LLC v. Appelsmith, 837 F. App‘x. 585 (9th Cir. 2021)).
The Fourth Circuit has applied similar logic in a different constitutional context. In Covenant Media of North Carolina, L.L.C. v. City of Monroe, 285 F. App‘x 30 (4th Cir. 2008), the Fourth Circuit considered a First Amendment challenge to the City of Monroe‘s sign ordinance that imposed three separate requirements on billboards in the city. Id. at 32. After determining that the first of the challenged requirements was constitutional, the court held that the plaintiffs lacked
Plaintiff here is in a position that, at first glance, looks similar to those of the plaintiffs in the above cases. There is, however, one key difference: in both Covenant Media and Variscite Inc., the plaintiffs there were challenging one provision of a larger statutory scheme as unconstitutional, but their applications were barred by other provisions that they had to meet concurrently with the challenged provision. See Covenant Media of N.C., L.L.C., 285 F. App‘x at 36 (“Because the permit applications were properly denied on the basis of the independently constitutional size restriction, the Appellants lack a redressable constitutional injury to support their challenges to the location and spacing restrictions.“); Variscite, Inc., 2022 WL 18397510, at *7 (“Plaintiffs have not shown that their alleged injury would likely be redressed by a favorable decision from this Court . . . given that they still would not be eligible for SEIA verification due to their failure to satisfy the requirements of the unchallenged provisions . . . .“). This rendered the courts unable to redress those plaintiffs’ injuries because their applications would have been denied independently based on the concurrent criteria. Covenant Media of N.C., L.L.C., 285 F. App‘x at 36; Variscite, Inc., 2022 WL 18397510, at *7. Here, Plaintiff challenges one independent provision of Maryland‘s cannabis lottery. ECF 1, at 5-7;
Even more importantly, Plaintiff here does “not ask the Court to order Defendants to include her in the lottery.” ECF 26, at 4. Rather, Plaintiff asks only that she not be “unconstitutionally excluded from [Maryland‘s] application program,” regardless of whether she is denied access on the merits of her application under the unchallenged provisions. Id. This is relief the Court can grant. See Peridot Tree, Inc. v. City of Sacramento, Civ. No. 2:22-00289-KJM-DB, 2022 WL 10629241, at *3 (E.D. Cal. Oct. 18, 2022) (finding that plaintiff had standing to request preliminary injunction against cannabis license lottery under dormant Commerce Clause because “equitable forms of relief would redress their alleged injury by preventing the City from giving any preference to current or former local residents“); Variscite NY One, Inc. v. New York, Civ. No. 122-1013-GLS-DJS, 2023 WL 1420662, at *3 (N.D.N.Y. Jan. 31, 2023) (“Variscite is not seeking a license from the court, but, rather, judgement restraining defendants from enforcing any portions of the Cannabis Law or Cannabis Regulations that favor New York residents over out-of-state residents, and a declaration that certain portions of the law and regulations violate the dormant Commerce Clause, relief which
Thus, Plaintiff‘s injury is redressable through the relief she seeks, and Plaintiff has standing to bring this challenge.
B. Plaintiff has satisfied the irreparable harm requirement.
“[T]he denial of a constitutional right, if denial is established, constitutes irreparable harm . . . .” Ross v. Meese, 818 F.2d 1132, 1135 (4th Cir. 1987); see also Leaders of a Beautiful Struggle v. Balt. Police Dep‘t, 2 F.4th 330, 346 (4th Cir. 2021) (“Because there is a likely constitutional violation, the irreparable harm factor is satisfied.“). The dormant Commerce Clause confers a right to the American people to “engage in interstate trade free from restrictive state regulation.” Dennis v. Higgins, 498 U.S. 439, 448 (1991).
Here, Plaintiff argues that the challenged provision violates her constitutional rights under the dormant Commerce Clause to participate in interstate commerce on equal footing with Marylanders. ECF 19-15, at 15-17. Given the Fourth Circuit‘s clear precedent, a violation of that right would be an irreparable harm. Thus, should Plaintiff show that it is likely that the challenged statute does indeed violate her constitutional right under the dormant Commerce Clause, she will have demonstrated a likelihood of irreparable harm.
C. The balance of equities and the public interest weigh against the granting of the preliminary injunction.
“When a plaintiff seeks preliminary injunctive relief against the Government, the balance of the equities and the public interest factors merge.” Coreas v. Bounds, 451 F. Supp. 3d 407, 429 (D. Md. 2020) (citing Nken v. Holder, 556 U.S. 418, 435 (2009), and Roe v. Dep‘t of Def., 947 F.3d 207, 230 (4th Cir. 2020)). This is so because “the government‘s interest is the public interest” in such a case. Ass‘n of Cmty. Cancer Ctrs. v. Azar, 509 F. Supp. 3d 482, 501 (D. Md. 2020) (emphasis in original) (quoting Pursuing Am. Greatness v. Fed. Elec. Comm‘n, 831 F.3d 500, 511 (D.C. Cir. 2016)).
Plaintiff argues that these factors weigh in her favor because the Fourth Circuit has held that “a state is in no way harmed by issuance of a preliminary injunction which prevents the state from enforcing restrictions likely to be found unconstitutional. If anything, the system is improved by such an injunction.” ECF 19-15, at 17-18 (citing Leaders of a Beautiful Struggle, 2 F.4th at 346). While this may be the general rule, there are unique factors at play in this case that complicate the analysis.
First, Defendants argue that Plaintiff‘s delay in bringing this suit counsels against the balance of equities weighing in her favor. ECF 25-1, at 15-17. Other courts faced with similar facts have held as much. The Seventh Circuit recently upheld a district court‘s finding that the balance of equities counseled against granting a preliminary injunction enjoining the issuance of cannabis retail licenses when the “plaintiffs had ample time and opportunity to challenge the Cannabis Act‘s residency-related criteria sooner, but they waited until the eleventh hour to file suit.” Finch v. Treto, 82 F.4th 572, 579 (7th Cir. 2023) (quotation marks and citation omitted). District courts in New York and Washington have applied similar reasoning to find that delays in seeking preliminary injunctions against cannabis licensing laws indicated “a lack of urgency” and therefore weighed against the issuance of the preliminary
Here, Plaintiff claims that she “learned about [Maryland‘s cannabis lottery] from someone who read about the program in an industry news source . . . around the time the social equity application verification period opened.”9 ECF 26, at 6. The verification period opened on September 7, 2023. ECF 25-1, at 9. Although Plaintiff‘s application was not rejected until December 13, 2023, Plaintiff was at least on notice that she would not qualify for the social equity lottery well before then, as Defendants published the list of schools that qualified (a list that did not include California State University at Long Beach) under the Pell Grant provision on September 1, 2023. Id. at 16. Thus, this information was available to Plaintiff as soon as she became aware of the lottery in September, and Plaintiff must have been aware of the criteria by November 6, 2023, at the latest, when she submitted her application. See ECF 19-6, at 20. Still, Plaintiff waited almost two months after submitting her doomed application—and almost four months after allegedly becoming aware of the program—to contact Defendants regarding the potential of a lawsuit; she did not file this litigation until January 26, 2024; and she did not file her motion for a preliminary injunction until February 6, 2024.10 ECF 19; ECF 25-1, at 16. This can hardly be said to be a timeline of “remarkable speed,” as Plaintiff asserts. ECF 26, at 6.
While Plaintiff waited to file this suit, Defendants were processing applications, and individuals were applying for Maryland retail cannabis licenses. ECF 25-1, at 29-30. Defendants have dedicated hundreds of thousands of dollars and hundreds of staff hours to processing nearly 2,000 applications from individuals hoping for a license. ECF 25-1, at 16, 29-30.11 Defendants’
This Court is also strongly persuaded by the District Court for the Western District of Oklahoma‘s reasoning that it is not the place of a federal court to facilitate federally prohibited activity. See Original Invs., LLC v. Oklahoma, 542 F. Supp. 3d 1230, 1234-35 (W.D. Okla. 2021) (quoting Cartlidge v. Rainey, 168 F.2d 841, 845 (5th Cir. 1948)). In Original Investments, the court declined to issue a preliminary injunction enjoining the state‘s residency requirement for medical marijuana use “[b]ecause the requested relief would facilitate [federally] criminal acts, [and] the court ‘[would] not lend its aid to the perpetration of criminal acts.‘” Id.
Here, as in Original Investments, the granting of a preliminary injunction based on the dormant Commerce Clause, according to Plaintiff‘s argument, would ultimately serve to encourage interstate participation in a federally illegal practice. This Court declines to use its equitable power to encourage participation in activities that Congress has expressly prohibited. The balance of equities and the public interest weigh against the granting of the injunction.
Because a preliminary injunction must satisfy all four Winter factors, the analysis could stop here and be complete. Centro Tepeyac, 722 F.3d at 188. However, for the sake of thoroughness, the Court will next turn to the likelihood of success on the merits.
D. Plaintiff has failed to demonstrate a likelihood of success on the merits.
The Commerce Clause of the United States Constitution empowers Congress “[t]o regulate Commerce . . . among the several States.”
When a plaintiff challenges a law under the dormant Commerce Clause, courts ask first “whether [the] challenged law discriminates against interstate commerce.” Davis, 553 U.S. at 338 (citation omitted). “A discriminatory law is ‘virtually per se invalid,’ and can survive the challenge ‘only if it “advances a legitimate local
It is an open question whether the dormant Commerce Clause applies to the cannabis industry, given that cannabis is still federally illegal. Courts around the country have considered challenges to cannabis regulations under the dormant Commerce Clause and have come to different results. It will be helpful to recount some of the major points of each of these lines of reasoning as no courts in the Fourth Circuit have yet considered this question.
1. The First Circuit held that the dormant Commerce Clause applied to the medical marijuana industry in Northeast Patients Group v. United Cannabis Patients and Caregivers of Maine.
The only circuit to directly address the question of the dormant Commerce Clause‘s applicability to the cannabis industry is the First Circuit with its decision in Northeast Patients Group v. United Cannabis Patients & Caregivers of Maine, 45 F.4th 542 (1st Cir. 2022). In that case, the court considered a dormant Commerce Clause challenge to a Maine law which required the “officers and directors of medical marijuana dispensaries operating in Maine to be Maine residents.” Id. at 544 (citation omitted). The defendants in that case argued that because cannabis, even medical marijuana, was federally illegal, there could be no lawful interstate market, and thus, the dormant Commerce Clause was inapplicable. Id. at 547.
The First Circuit rejected this argument. The court reasoned that there indeed was an interstate market for marijuana, medicinal and otherwise, regardless of whether it was legal. Id. The court highlighted the Supreme Court‘s decision in Gonzales v. Raich, 545 U.S. at 18-19, wherein the justices expressly acknowledged that an interstate market for cannabis existed and upheld Congress’ authority under the Commerce Clause to prohibit the possession, cultivation, and use of marijuana in a purely intrastate manner in a state where medical marijuana was legal. Id. The First Circuit also pointed to Congress’ passage of the Rohrabacher-Farr Amendment, which prevented the Department of Justice from using congressionally authorized funds to prevent states from implementing their own laws legalizing medical marijuana, as further support for the notion that a federally recognized interstate market for cannabis exists. Id. at 547-48 (citing
A number of federal district courts throughout the country have considered constitutional challenges to state cannabis laws under the dormant Commerce Clause. Many of these courts have considered challenges brought under the dormant Commerce Clause to state cannabis laws without conducting any explicit analysis of whether the dormant Commerce Clause should apply to state cannabis laws. See, e.g., Variscite NY One, Inc. v. New York, 640 F. Supp. 3d 232, 239-40 (N.D.N.Y. 2022) (striking down a residency requirement in New York‘s cannabis licensing laws under the dormant Commerce Clause without conducting any explicit analysis of whether the dormant Commerce Clause applied in such a situation), reconsideration denied, Civ. No. 122-1013-GLS-DJS, 2023 WL 1420662 (N.D.N.Y. Jan. 31, 2023); see also Variscite NY Four, LLC, 2024 WL 406490, at *11 (collecting cases). At least one court has chosen to abstain from deciding whether the dormant Commerce Clause applies to state cannabis laws pending a decision from its Circuit Court of Appeals. See Variscite, Inc. v. Los Angeles, Civ. No. 2:22-08685-SPG-SK, 2023 WL 3493557, at *1 (staying case pending appeal before Ninth Circuit). Plaintiff points to no cases where a federal court has explicitly considered the impact of cannabis’ federally illegal status in evaluating whether the dormant Commerce Clause applies to the recreational cannabis market and concluded that the dormant Commerce Clause does apply, nor is this Court aware of any such cases. See ECF 19-15, at 15 (citing cases); see also Variscite NY Four, LLC, 2024 WL 406490, at *11 (identifying four of the cases cited by Plaintiff as cases where the “courts performed a dormant Commerce Clause analysis without directly addressing the threshold question of whether the dormant Commerce Clause applies to a state licensing program for cannabis.“); Ne. Patients Grp. v. Maine Dep‘t of Admin. & Fin. Servs., 554 F. Supp. 3d 177, 183-84 (D. Me. 2021) (considering only medical marijuana industry); Attitude Wellness, LLC v. Vill. of Pinckney, 606 F. Supp. 3d 624, 630-32 (E.D. Mich. 2022) (applying dormant Commerce Clause to cannabis industry without explicitly considering whether the dormant Commerce Clause applies to federally illegal industries).
Yet other courts across the country have held that the dormant Commerce Clause does not apply to state laws regarding recreational marijuana. These courts have nearly universally reasoned that the dormant Commerce Clause does not apply to the recreational marijuana market because Congress has specifically made that market illegal at the federal level. See Peridot Tree WA Inc., 2024 WL 69733, at *1 (“[T]he dormant Commerce Clause does not protect a right to participate in an interstate market that Congress has declared illegal.“); Variscite NY Four, LLC, 2024 WL 406490, at *12 (“Given that the national market for cannabis is illegal, it would make little sense to apply the dormant Commerce Clause to New York‘s cannabis licensing scheme.“); Brinkmeyer v. Wash. State Liquor & Cannabis Bd., Civ. No. C20-5661 BHS, 2023 WL 1798173, at *11 (W.D. Wash. Feb. 7, 2023) (“The dormant Commerce Clause does not apply to federally illegal markets, including Washington‘s cannabis market and, thus, it does not apply to Washington‘s residency requirements.“), appeal dismissed, No. 23-35162, 2023 WL 3884102 (9th Cir. Apr. 11, 2023).
Though Plaintiff would have this Court extrapolate from the First Circuit majority‘s opinion in Northeast Patients Group that the dormant Commerce Clause applies to the recreational marijuana market as well as the medical marijuana market, this Court declines to do so. The First Circuit‘s decisions are not binding on this Court, and Northeast Patients Group dealt exclusively with the medical marijuana market, which differs from the recreational cannabis market in important ways. While there is undeniably an interstate market for recreational cannabis, the First Circuit‘s observation that Congress has acknowledged an interstate market for medical marijuana through the passage of the Rohrabacher-Farr Amendment has no applicability to this case, as Congress has passed no analogous provision relating to recreational cannabis.12 Peridot Tree WA, Inc., 2024 WL 69733, at *8; Variscite NY Four, LLC, 2024 WL 406490, at *1. Thus, “[t]o the extent that Northeast Patients Group hinges on the impact of the Rohrabacher-Farr Amendment, this case is distinguishable.” Peridot Tree WA, Inc., 2024 WL 69733, at *8.
Though it is admittedly a close call, this Court now joins with those courts across the country that have found that the dormant Commerce Clause does not apply to state recreational cannabis laws. In so doing, this Court finds Judge Gelpi‘s dissent in Northeast Patients Group particularly persuasive. As Judge Gelpi said, there may be an interstate market in recreational cannabis, but the fact this market is illegal makes it fundamentally distinct form interstate markets for other goods and renders it “constitutionally different in kind.” Northeast Patients Grp., 45 F.4th at 558-59 (Gelpi, J., dissenting). The dormant Commerce Clause seeks to “preserve a national market for competition undisturbed by preferential advantages conferred by a State upon its residents or resident competitors” because such an unencumbered market is presumably in the public interest, but this goal is not served by encouraging such a market for a good that Congress has already expressly declared to be illegal and against the public interest. Id. (Gelpi, J., dissenting) (citing Gen. Motors Corp. v. Tracy, 519 U.S. 278, 299 (1997)). Put simply, it defies common sense to find that the dormant Commerce Clause, drawn from Congress’ power to regulate interstate commerce, prevents the states from passing laws which inhibit a market which Congress has already declared prohibited. As the District Court for the Northern District of New York explained, applying the dormant Commerce Clause to the recreational cannabis market “would only encourage out-of-state participation in the [in-state] cannabis
This conclusion is further bolstered by an additional logical inconsistency that would result from the dormant Commerce Clause‘s application to the federally illegal cannabis market. It is established that Congress can authorize states to discriminate against interstate commerce. See S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87-88 (1984) (explaining that “Congress may redefine the distribution of power over interstate commerce by permitting the states to regulate the commerce in a manner which would otherwise not be permissible.” (internal citation omitted) (cleaned up)). If the dormant Commerce Clause applies to recreational cannabis laws, however, the only way Congress could so authorize the states would be to “speak out of both sides of its mouth on this issue, simultaneously illegalizing marijuana while affirmatively granting states the power to ‘burden interstate commerce in a manner which would otherwise not be permissible.‘” Northeast Patients Grp., 45 F.4th at 559 (Gelpi, J., dissenting) (quoting New England Power Co. v. New Hampshire, 455 U.S. 331, 341 (1982)). This contradiction further supports a finding that the dormant Commerce Clause does not apply to the federally illegal recreational cannabis market.
The Court is sympathetic to Plaintiff‘s overarching point that the federal government has not prioritized the prosecution of marijuana crimes. Indeed, even a brief review of recent history yields a patchwork of executive branch declarations, statements, and even pardons attempting to establish a workable framework for the co-existence of the CSA‘s flat prohibition on the sale, production, or use of cannabis and the many states and territories whose statutory schemes hold differently.13 See, e.g., United States v. Dayi, 980 F. Supp. 2d 682, 686-87 (D. Md. 2013) (charting changes in federal enforcement of marijuana laws). Moreover, the Department of Justice‘s use of its discretion to refrain
Because this Court finds that the dormant Commerce Clause does not apply to the recreational cannabis industry, Plaintiff is not likely to succeed on the merits of her claim, and it is not necessary to analyze whether the challenged provision is discriminatory.15 Still, having come to this conclusion, the Court acknowledges the changing nature of the legal landscape around cannabis and the difficulties both parties faced in making arguments on a novel issue before this Court.
E. Plaintiff‘s request for an injunction pending appeal is denied.
At the hearing before this Court, Plaintiff‘s counsel asked that, if the Court decided to deny Plaintiff‘s motion for a preliminary injunction, the Court order Defendants to refrain from issuing the social equity lottery licenses pending appeal of this case. The Court initially suggested that additional briefing might be ordered on this question, but upon further reflection, more briefing is unnecessary.
IV. CONCLUSION
Because Plaintiff has not demonstrated that she is likely to succeed on the merits of her claim and because the balance of equities and the public interest weigh against the granting of the requested preliminary injunction, Plaintiff‘s motion for a preliminary injunction, ECF 19, is DENIED. Plaintiff‘s request for an injunction pending appeal is DENIED.
Dated: February 27, 2024
/s/
Brendan A. Hurson
United States District Judge
Notes
The Supreme Court has made clear that the preference is for courts to “sever [a statute‘s] problematic portions while leaving the remainder intact.” Ayotte v. Planned Parenthood of N. New England, 546 U.S. 320, 328-29 (2006) (citing United States v. Booker, 543 U.S. 220, 227-29 (2005)). “Indeed, [a court] must retain those portions of the [law] that are (1) constitutionally valid, (2) capable of ‘functioning independently,’ and (3) consistent with [the legislature‘s] basic objectives in enacting the statute.” Booker, 543 U.S. at 258-59 (citing Regan v. Time, Inc., 468 U.S. 641, 652-53 (1984) (plurality opinion), and Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987)). Because a court must narrowly tailor its relief to target only the unconstitutional provisions of a statute so as to preserve the intent of the legislature as much as possible, see Ayotte, 546 U.S. at 328-29, it would not be appropriate to declare unconstitutional the entire statute at issue here, when only one component of one subpart is challenged. As such, Plaintiff‘s requested relief as stated by Plaintiff‘s counsel at the hearing is unlikely to be granted.