Marijuana Companies Appeal Case Challenging Federal Prohibition Following District Court Dismissal

Major marijuana companies are officially appealing a federal court’s recent ruling dismissing a case where they sought to block the government from enforcing prohibition against their in-state activities.

Just two days after the U.S. District Court for the District of Massachusetts’s Western Division dismissed the case against the federal government, plaintiffs gave notice that they are appealing the ruling to the U.S. Court of Appeals for the First Circuit.

This development doesn’t come as a particular surprise, as plaintiffs had generally indicated that they expected the case to move up to higher courts. With the district court’s rejection of the suit, those wheels are now in motion.

Even the district court judge had conceded that there are “persuasive reasons for a reexamination” of the current scheduling of cannabis, while asserting that his hands were effectively tied by past U.S. Supreme Court precedent dictating the federal government’s authority to regulate controlled substances even within state borders.

To that end, Judge Mark G. Mastroianni, an Obama appointee, granted the Justice Department’s motion to dismiss the case earlier this week.

The actions come over a month after the district court held oral arguments in the case. Ahead of the hearing, the judge had granted the marijuana firms’ request to make the proceedings accessible to the public and press.

The suit against the federal government—Canna Provisions v. Garland—was led by multi-state operator Verano Holdings Corp. and the Massachusetts-based cannabis businesses Canna Provisions and Wiseacre Farm, along with Treevit CEO Gyasi Sellers. Plaintiffs were represented by the law firms Boies Schiller and Flexner LLP and Lesser, Newman, Aleo and Nasser LLP.

Litigator David Boies—whose list of prior clients includes the Justice Department, former Vice President Al Gore and plaintiffs in the case that led to the invalidation of California’s ban on same-sex marriage—led the suit.

In the latest filing, the plaintiffs said simply that they “hereby appeal to the United States Court of Appeals for the First Circuit from the order granting Defendant’s motion to dismiss, which was entered in this action on July 1, 2024.”

At issue in the case is the degree to which in-state cannabis activity affects interstate commerce, with the government arguing that cannabis legalization attracts out-of-state tourists.

DOJ argued in a filing in April that “it is rational to conclude that the regulated marijuana industry in Massachusetts fuels a different kind of marijuana-related interstate commerce: marijuana tourism.”

“As the Supreme Court held decades ago, Congress has the authority to regulate businesses that cater to tourists from out of state, even if the businesses’ transactions occur wholly in-state,” DOJ said in the brief.

Plaintiffs, meanwhile, contend the Constitution’s Commerce Clause should preclude DOJ from interfering in state-legal activity because it is regulated within a state’s borders.

Even while dismissing the case, the court did rule that the plaintiffs have standing to bring it.

“Plaintiffs have alleged they variously engage in the cultivation, manufacture, distribution, and possession of marijuana, wholly within Massachusetts and the CSA makes such activity a federal crime,” Monday’s order said. “In the absence of any dispute regarding redressability, the court finds Plaintiffs have demonstrated that they have standing under Article III to challenge the portions of the CSA applicable to intrastate activities related to marijuana.”

“The court also finds Plaintiffs have shown there is a causal connection between their economic injuries and the CSA,” the judge said. “When credited, Plaintiffs’ detailed allegations about their financial injuries meet that burden. Though individual decisions by specific third parties are the final link in the causal chain, the economic injury actually flows from the multitude of similar decisions made by many third parties, all responding to the CSA.”

Nonetheless, the court sided with the government in its motion to dismiss based on a failure to state a claim for relief.

“Given the scale of Plaintiffs’ operations, the court cannot find Congress lacks a rational basis for concluding Plaintiffs’ activities substantially affect interstate commerce without ignoring the Supreme Court’s broadly-worded holding” in Gonzales v. Raich, the court said. In that case, justices held that state marijuana laws do not protect people from federal prosecution because of Congress’s interest in preventing illegal marijuana from entering interstate commerce.

Josh Schiller, a lawyer on the case, called Monday’s decision “thoughtful” and said that “on appeal we will continue to press our case that the federal government lacks any rational basis for banning state-regulated marijuana.”

At the same time that the marijuana industry stakeholders are experiencing the current legal setback, the Biden campaign has stepped up its push to draw a contrast between the president’s marijuana policies at those of former President Donald Trump, stressing that cannabis is “not as dangerous as we once believed” on a new campaign page and buying ads promoting his clemency actions.

The Biden campaign has repeatedly pointed to that action as an example of the marijuana policy disconnect between the two administrations.

Read the latest court filing in the marijuana case against DOJ below: 

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