The Justice Department has announced that it will request that a federal judge dismiss a lawsuit filed by the cannabis industry to stop enforcement of the marijuana prohibition against state legal activity.
The DOJ informed the U.S. District Court for the District of Massachusetts Western Division that the Attorney General Merrick G. Garland would be filing a “motion to dismiss with supporting memorandum” on the Tuesday deadline.
Plaintiffs in the lawsuit claim that continuing prohibition on state markets is unconstitutional. This creates undue risks to public safety while preventing licensed marijuana businesses from gaining access to critical financial services and tax breaks that are available for other industries.
The Justice Department and plaintiffs, a coalition of marijuana business represented by an influential legal firm, jointly agreed to ask for a deadline extension.
Verano Holdings Corp. , a multi-state cannabis operator, and Massachusetts-based Canna Provisions & Wiseacre Farm are leading the lawsuit against the federal government. Treevit CEO Gyasi Sellers is also involved.
DOJ noted also in its motion of Monday that it was seeking permission to submit 25 pages of memorandum, which exceeds the 20 page limit set by the rules.
It says: “The memorandum presents legal arguments on multiple constitutional law issues.” The memorandum says, “The memorandum will present legal argument on multiple constitutional law issues.”
Plaintiffs are represented by the law firms Boies Schiller Flexner, Lesser Newman Aleo & Nasser LLP and Boies Schiller Flexner. David Boies is the chairman of the former law firm. He has had a number of clients in the past, including the Justice Department, Al Gore, the plaintiffs of a lawsuit that invalidated California’s same-sex marriage ban, and others.
The lawsuit claims that Congress banned marijuana under the Controlled Substances Act in an effort to eliminate interstate commerce. This was ostensibly to give the government a base to enforce prohibition on the state level. However, since then, legislators and the executive branch “abandoned’ that mission, as more states have enacted the legalization.
The complaint filed in October states that “despite these changes, federal criminal prohibitions on intrastate marijuana remain in place. This is an unjustified remnant of a policy long abandoned.” This unjustified interference of federal power is harmful to Plaintiffs and threatens communities that they serve. It also lacks any rational reason.
The fact that state-licensed cannabis businesses are still facing unique financial challenges, such as the lack of banking services, access to credit cards, and the inability to claim federal tax deductions thanks to the Internal Revenue Service code 280E, was repeatedly mentioned.
State-regulated marijuana businesses are forced to rely on cash because they do not have access to online or credit card payment. This poses serious risks for public safety. The original lawsuit states that “state-regulated marijuana dispensaries are becoming targets for robberies”. These collateral harms increase costs for state-regulated cannabis businesses and reduce participation on state-regulated markets. There is less innovation, and less choice for consumers.
Attorneys said that the existing prohibition on cannabis under CSA is “an unconstitutional imposition of state sovereignty.” While Congress can ban marijuana in interstate commerce it does not have the power to regulate marijuana that is grown, transported and distributed within state borders. The Commerce Clause and the Necessary & Proper Clause do not permit Congress to go this far.
The lawsuit examines the history of cannabis law in the United States, noting that prohibition was a relatively new policy that came after more than 100-years of permissible use and cultivation. The lawsuit then turned to the federal government’s justification of banning marijuana under CSA. This was to prevent interstate trade, as was argued by the U.S. Supreme Court in 2005 case Gonzales v. Raichconcerning access to medical cannabis for California patients .
The companies claim that this justification is no longer valid. Congress has not only renewed the appropriations riders that prohibit the Justice Department to use federal funds to interfere in state medical cannabis program, but also attorneys general have expressed their disinterest in criminalizing marijuana-related activities sanctioned by states.
The suit claims that “what was once a singleminded federal crusade to eradicate the cannabis plant, has now been replaced by a ambivalent and inconsistent set of policies, some designed to reduce federal interference in state efforts at marijuana regulation.”
“In summary, the federal government abandoned its goal to eliminate marijuana from commerce long ago. “Congress does not have a comprehensive, or even consistent and rational approach to marijuana regulation,” the report continues. This inconsistent and patchwork approach to marijuana regulations does not allow Congress to regulate marijuana within states.
This point is similar to what conservative Supreme Court justice Clarence Thomas stated in 2021. He criticized the “contradictory” and “instable” state-federal cannabis policy conflicts, which have gotten worse as the federal government has continued to take a “half in, half out” approach to this issue.
Plaintiffs’ attorneys said that, “without court intervention the CSA would continue to undermine state attempts to create safe and regulated markets for marijuana within states.” Plaintiffs, as well as the communities that they serve, will suffer irreparable damage so long the CSA continues its prohibition of intrastate marijuana cultivation, manufacturing, possession and distribution.
The lawsuit also mentions the negative impact that criminalizing marijuana has on communities with low incomes. It notes that because of the intrastate ban on marijuana commerce, cannabis products are not allowed to be delivered into public housing in Massachusetts.
The complaint claims that “this prohibition is detrimental to Plaintiffs, the citizens of the state, and the states themselves.” Not only are Plaintiffs at risk of being prosecuted, but their businesses face many obstacles that directly result from the CSA’s treatment of intrastate cannabis.
This prohibition has devastating consequences for the industry. Small businesses, in particular, cannot benefit from economies of scale or diversification.
Josh Schiller is a partner in the Boies Schiller-Flexner law firm, which represents the plaintiffs. He said in an X Spaces event in October, “Our clients have decided that we can still hope for a legislative change, but let’s determine whether we can make a permanent difference by going to court.” Schiller also added that Supreme Court ideologies have shifted towards a “federalist,” point of view, in a manner that could bolster the plaintiffs’ case.
He said that the court “is looking to enforce constitutional protections to allow states to regulate intrastate commerce, also known as intrastate commerce.” The Constitution does not give the federal government the right to regulate intrastate trade.
Schiller continued, “But we have built a suit that we want to bring back as soon as possible to the Supreme Court.” The factual evidence we provide in our complaint – which will be supported by a summary judgement motion that we hope to reach, hopefully not this year but early next year – will be the basis of going to the Supreme Court to demonstrate this evidence.
He also hinted at plans to file future lawsuits as a “second-step” in order to help marijuana companies recoup the losses they have incurred because of the “inequality they have suffered for years”, if the case is successful.
He said: “This case is intended to create a precedent that allows states – and only states – to let these businesses thrive under their regulations.”
According to a press release, Ascend Wellness Holdings (formerly TerrAscend), Green Thumb Industries (formerly Eminence Capital), Poseidon Investment Management, Eminence Capital, and Poseidon Investment Management were “foundational sponsors” of the lawsuit.
The lawsuit is filed as the Drug Enforcement Administration conducts a review of marijuana’s scheduling, after the U.S. Department of Health and Human Services recommended that it be moved from Schedule I to Schedule III in the CSA. This rescheduling would resolve some tax issues, but not allow intrastate trade or legalize marijuana.
Boies stated in a release that the federal criminalization in states where marijuana is legal expands production and sales of unregulated, unsafe marijuana. It is also likely to spread to other states. Federal criminalization denies small legal marijuana businesses access to SBA loan, investors, benefits to their employees, normal banking regulations, and other financial services (which, among other things forces them to use cash transactions, with all the dangers that result for them and the community) — as well as burdening these businesses with discriminatory tax.
“Americans think that cannabis should be available and legal, subject to reasonable regulations by the states.” He said that 38 states had legalized cannabis in some form. The federal government does not have the authority to ban intrastate cannabis trade. The Supreme Court has ruled that outdated precedents dating back decades no longer apply.
Cannabis executives announced their plans to challenge the constitutionality in enforcing the criminalization of intrastate cannabis activity , under the CSA, last year.
The CEO of Ascend Wellness Holdings, at the time of the interview with Marijuana Moment, said that the willingness of a leading constitutional law firm in the United States to take on this case spoke volumes about the potential for success. He also expressed his hope that the legal challenge could prompt Congress to pass cannabis bank legislation or other reforms.
He said: “Hopefully, this is another factor that will make the Senate say, ‘you’ve got to get off your asses or we’re going to lose this issue in the courts’.”
Below, you can read the Justice Department’s Motion in relation to the marijuana case:
Missouri sold more than $1.3 billion worth of legal marijuana in 2023, state figures show
The post Biden Administration Will Try To Dismiss Marijuana Lawsuit Challenging Prohibition – DOJ Tells Federal Court first appeared on Marijuana Moment.
