Yesterday late afternoon, Oregon hashish wholesaler Jefferson Packing Home (JPH) filed one other dormant commerce clause (DCC) problem to protectionist state hashish legal guidelines. You possibly can view the criticism right here. I say “one other” DCC problem as a result of JPH prosecuted DCC litigation in late 2022; and in addition as a result of a number of DCC hashish lawsuits have been filed lately, with some succeeding as of late.
What’s the dormant commerce clause, and the way does it relate to state hashish applications?
The DCC is an implied constitutional precept, derived from the commerce clause. It prohibits states from enacting legal guidelines that discriminate towards, or unduly burden, interstate commerce. The DCC applies even the place Congress hasn’t handed a regulation regulating a zone of commerce.
The coverage right here is to bar state protectionism, and to keep up aggressive, open markets. If a statute is discriminatory, the state has the authorized burden to justify the native advantages flowing from the regulation, and to point out that the state has no different technique of advancing the authentic native function. If the state can’t make that displaying when held to account (sued by injured events), its regulation can be struck down.
State marijuana applications uniformly prohibit trafficking of hashish in- and out-of-state. Additionally they include different exclusionary guidelines in lots of instances. Chief amongst these are guidelines that prohibit nonresidents from proudly owning native hashish companies. However actually, the massive kahuna is interstate marijuana gross sales.
In the end, the elemental query is that this: does the DCC defend interstate commerce of a managed substance, even the place Congress has legislated towards the exercise?
What have courts finished with DCC hashish lawsuits so far?
It’s been a blended bag. Wanting by the instances, although, I’d argue for an rising view that the DCC applies to state marijuana applications, and that states can not enact protectionist legal guidelines. The Second Circuit Courtroom of Appeals simply stated that in a New York case, as did the First Circuit a couple of years again, as to Maine. Federal district courts in Maryland and Michigan and Missouri have likewise discovered that the DCC applies to state and native marijuana applications.
Different courts, such because the Western District of Washington have held on the contrary, writing in a single case that “residents wouldn’t have a authorized curiosity in collaborating in a federally unlawful market”; and explaining in one other that declaratory aid wasn’t obtainable for that very same cause.
A remaining class of case continues to be pending: essentially the most compelling right here is Peridot Tree Inc. v. Metropolis of Sacramento. Briefly, the plaintiffs misplaced at district courtroom, however filed an attraction with the Ninth Circuit in November 2024. A ruling there may have severe implications for the JPH case filed yesterday night.
What’s totally different concerning the JPH case in Oregon?
The entire instances talked about above are challenges to state or native legal guidelines that require hashish enterprise homeowners to be residents. None have taken a bead on state guidelines that prohibit promoting marijuana throughout state traces. The JPH case does precisely that, for each marijuana and hemp merchandise that fall inside the definition of “marijuana gadgets” below Oregon state regulation.
JPH’s rationale for overturning the ban on interstate gross sales is much like DCC arguments made within the instances mentioned above. That stated, JPH is actually going for it right here. A ruling that interstate gross sales of state-legal marijuana have to be allowed per the DCC, could be extraordinary.
What occurred to the primary JPH case, from 2022?
The primary JPH case was filed in late 2022 and dismissed in early 2024. It was dismissed by JPH voluntarily, and primarily for political causes. I’ve a bit extra info than that, however ought to most likely say much less. For now, suffice it to say that JPH is free to file once more, and I don’t anticipate points on procedural or standing grounds.
What would occur if JPH wins?
This query is supremely fascinating and I haven’t thought-about it totally. Oregon would have the appropriate to attraction, in fact, and certain would; and it’s potential the Ninth Circuit would take up the case. The ultimate cease could be the U.S. Supreme Courtroom, although a really small proportion of federal instances get that far.
If Oregon legal guidelines banning interstate hashish gross sales are overturned, some vital questions embrace:
Which state or states may even change their legal guidelines, voluntarily or in any other case, and settle for hashish from Oregon operators?
What results would interstate gross sales have on the Oregon market? (Presumably, Oregon must settle for marijuana from different states as properly.)
What upward stress, if any, would the ruling place on Congress to lastly act?
Who’s behind the JPH case?
As talked about above, JPH is a licensed hashish wholesaler in Oregon. The corporate’s legal professional is a proficient litigator, Andrew DeWeese. Andrew is a pal of the regulation agency and my former, across-the-street neighbor. A giant because of Andrew for sharing an advance copy of this well-drafted criticism with me final week. And better of luck.
Extra on the dormant commerce clause and hashish
We’ll proceed to trace this case and different DCC litigation, and observe up right here with any vital updates. Within the meantime, try the next posts:
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