In fall of 2023 I wrote about the lawsuit to end federal prohibition that wouldn’t really end federal prohibition. Last July, a federal district court ruled against Canna Provisions et al. in that case. On Wednesday, May 27th, the First Circuit Court of Appeals upheld the lower court’s ruling.
The First Circuit decision means the feds are still entitled to enforce the criminal provisions of the federal Controlled Substances Act (CSA) against against state-licensed marijuana businesses. The feds never seem to do that; so more importantly, it also means the following will continue to apply to state-licensed cannabis business: punitive taxation under IRC 280E (big deal), banking headaches (not as big a deal), and SBA loan ineligibility (frustrating).
The recent Canna Provisions rulings came down as expected– the courts are bound by U.S. Supreme Court precedent from a 2005 case, Gonzales v. Raich. That’s probably OK, because the goal of the Canna Provisions plaintiffs is seemingly to petition the U.S. Supreme Court for review and reversal of Raich. The basic argument is that “things have changed.” Specifically, plaintiffs argue that post-Raich, the feds have been restrained by Congress from CSA enforcement against medical marijuana actors (the Blumenauer bill); that Congress permitted D.C. to enact medical marijuana; and that 23 states have created non-medical, regulated cannabis markets.
Still, Wednesday’s ruling was no surprise. The Raich holding is clear, and none of these developments were going to persuade a federal court to break away from SCOTUS. The hope now is that SCOTUS grants certiorari (agrees to hear an appeal) and we get a reversal. As the plaintiffs repeatedly point out, Judge Clarence Thomas, a Raich dissenter, wrote back in 2021 that Raich should be up for reconsideration. The plaintiffs have latched onto Thomas’ key statement: “Once comprehensive, the federal government’s current approach is a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana.”
Thomas is right, of course. But the First Circuit was also correct on Wednesday to emphasize just how different the facts are in Raich and Canna Provisions. Most importantly, Raich featured what we lawyers call “sympathetic plaintiffs”; namely, two women who were seriously ill and grew marijuana for medical use in a limited network. There was nothing commercial about it. The stakes were real criminal liability, not insulation from theoretical prosecution that will never occur, plus wishes for tax relief, bank accounts, federal loans, etc.
So let’s see what happens. I have no idea how SCOTUS politicking works, or if Thomas or others on the bench can convince their colleagues to pick up Canna Provisions. If the case is taken up, I previously explained that:
Even if the plaintiffs prevail on all counts – and I hope they do! – the CSA would remain intact entirely. It would still be illegal to ship a single gram of marijuana from New York to New Jersey, from California to Oregon, or from Michigan to Minnesota. Or from anywhere to Canada. The focus of this lawsuit, instead, is application of the CSA to intrastate – and not interstate — marijuana activity and actors. A victory would help cannabis operators who are drawing within the lines, as long as they stay within those lines.
Remember that! And perhaps more importantly, remember this: marijuana reform is squarely a job for Congress or the executive branch. Not the judiciary. We need to Congress to act, especially in the context of stalled Schedule III proceedings, and we need broader reforms than what Canna Provisions seeks. Those reforms include not just interstate commerce, but decriminalization and ideally reparations of some sort.
Stay tuned and we’ll update with any developments.
