New Cannabis Lawsuit Filed Against Federal Government

Last year in October, a group of cannabis companies filed a federal lawsuit claiming that a federal ban on cannabis is unconstitutional, but the suit was dismissed in January. On Friday, March 15, a new federal lawsuit was filed in court as Canna Provisions, Inc. et al v. Garland.

The case is represented by Boies Schiller Flexner LLP, is pursuing the rights of Verano Holdings Corp, Canna Provisions Inc., Wiseacre Farm Inc., and Gyasi Sellers, who owns a delivery service—all of which operate cannabis businesses in Massachusetts. The plaintiffs claim that the Controlled Substances Act (CSA) has hindered their businesses and prevents them from accessing legal, reliable banking services, and requires that they operate under constant threat of federal prosecution.

The new lawsuit claims that the intention behind the CSA was to prevent illegal cannabis from being moved across state lines, but now that so many states have implemented cannabis laws, legislators are no longer trying to enforce that. “Dozens of states have implemented programs to legalize and regulate medical or adult use marijuana,” the lawsuit stated, and continued on to explain that this has led to “safe, regulated, and local access to marijuana” for consumers, while also having “reduced illicit interstate commerce, as customers switch to purchasing state-regulated marijuana over illicit interstate marijuana.”

“The ground-shaking shifts in marijuana regulation… together with the nation’s long history of marijuana cultivation and use prior to the CSA, demonstrate the widely-held understanding that Plaintiffs’ marijuana activities implicate a liberty interest that requires protection,” the lawsuit continued. “Today, almost every state permits some form of marijuana that is illegal under federal law, and the majority of the nation’s population lives in states where both medical and adult-use marijuana is legal.”

Both the dismissed lawsuit and the newly filed lawsuit hinges on the 2005 court case Gonzales v. Raich in order to demonstrate how the CSA is outdated. “The federal criminal prohibition on intrastate marijuana remains in place, an unjustified vestige of a long-abandoned policy,” the 2023 lawsuit stated. “This unjustified intrusion of federal power harms Plaintiffs, threatens the communities they serve, and lacks any rational purpose.”

In January, the U.S. Department of Justice (DOJ) called the original lawsuit a “transparent entreaty.” “Neither Plaintiffs’ contention that they are harmed by other federal laws and policies whose constitutionality is not challenged here, nor Plaintiffs’ allegations that some third parties have independently chosen not to transact with them, suffice to provide Plaintiffs with standing to challenge the CSA,” wrote the DOJ.

In response to this, the new lawsuit added text alleging that Congress was trying to prevent interstate cannabis. “Congress was intent on eradicating interstate marijuana, and the factual circumstances that existed in 2005 supported the Government’s position that banning intrastate marijuana was necessary for achieving that goal,” the lawsuit stated. “That legislative and factual landscape no longer exists. It has changed in the proceeding 18 years in ways that even the most ardent advocates of marijuana reform in 2005 would never have imagined possible.”

Law 360 spoke with Joshua Schiller of Boies Schiller Flexner LLP, who explained that the newest litigation more directly challenges the Gonzales v. Raich case. He explained that the government has made recent movements contradicting the policy since October 2023.

One of the plaintiffs, Verano Holdings Corp, is a multi-state operator. While its business spans multiple states, Schiller explained the importance of its inclusion. “We like having a multistate operator just to show a different business, to show a different story about a different business,” Schiller told Law 360. “And even though it’s a multistate operator, each of its markets are intrastate. They’re not even allowed to bring a seed [across state lines].”

The news outlet inquired about why there was no mention of tax code Section 280E, which is a tax policy that prevents deductions and credits from being utilized by “illegal” businesses. “It’s a different case,” Schiller said. “That’s not to say [280E] is not punitive and damaging and therefore unfair. But it’s not the harm we’re seeking to redress. It’s a separate harm that would have to be litigated in a separate case.”

The timing of this case aligns with the recent shifts in federal policy. Last August, the U.S. Department of Health and Human Services (HHS) called on the Drug Enforcement Administration (DEA) to reclassify cannabis as a Schedule III substance. NORML Deputy Director Paul Armentano responded to the announcement with hesitance. “It will be very interesting to see how DEA responds to this recommendation, given the agency’s historic opposition to any potential change in cannabis’ categorization under federal law,” said Armentano. “Further, for decades, the agency has utilized its own five-factor criteria for assessing cannabis’ placement in the CSA—criteria that as recently as 2016, the agency claimed that cannabis failed to meet. Since the agency has final say over any rescheduling decision, it is safe to say that this process still remains far from over.”

It’s been approximately seven months since that HHS recommendation. Although there hasn’t been any updates from the DEA regarding the recommendation, Vice President Kamala Harris recently held a roundtable conversation about cannabis reform, alongside rapper Fat Joe, Kentucky Gov. Andy Beshear, and more. “I cannot emphasize enough that they need to get to it as quickly as possible, and we need to have a resolution based on their findings and their assessment,” Harris said.