A federal appeals court panel on Thursday heard oral arguments in a case that cuts to the heart of federal marijuana prohibition, with plaintiffs contending that the U.S. government in recent years has abandoned its attempts to rein in what it still considers a federally illegal substance.
The lawsuit was filed in the U.S. District Court for the District of Massachusetts, Western Division, by multi-state operator Verano Holdings Corp. and the Massachusetts-based cannabis businesses Canna Provisions and Wiseacre Farm, along with Treevit CEO Gyasi Sellers. The groups argue that the government’s ongoing prohibition on marijuana under the Controlled Substances Act (CSA) is unconstitutional.
This summer, a district judge dismissed the challenge and the companies subsequently appealed the case to the U.S. Court of Appeals for the First Circuit, arguing that Congress in recent decades has “dropped any assumption that federal control of state-regulated marijuana is necessary.”
“Congress has abandoned its goal of eradicating marijuana and has, in fact, expressly exempted it from federal enforcement in certain circumstances,” the companies’ opening appellate brief said, pointing to policies embodied in a congressional budget rider that prevents federal funds from being used to interfere with state-legal medical marijuana as well as federal lawmakers’ decision to allow marijuana legalization to proceed in the District of Columbia.
In light of those actions, the brief asserted, “the CSA’s ban as applied to state-regulated marijuana cannot be upheld today.”Lawyers for the Department of Justice (DOJ) say there’s no legal precedent backing those arguments, however. “Plaintiffs cite no authority for reasoning of this kind,” they wrote in an October filing, “which disregards the interstate nature of the marijuana market and the extent to which their proposed constitutional limitations would undermine the operation of the Controlled Substances Act.”
DOJ also warned that if the companies’ legal challenge succeeds, it “would frustrate” the effort to move marijuana to the less-restrictive Schedule III of the CSA.
The law firms Boies Schiller Flexner LLP and Lesser, Newman, Aleo & Nasser LLP are representing the plaintiffs. David Boies, chairman of the former firm, has a long list of prior clients that includes the Justice Department, former Vice President Al Gore (D) and the plaintiffs in a case that led to the invalidation of California’s ban on same-sex marriage, among others.
At Thursday’s oral argument, Boies told the three-judge appeals court panel that under the Constitution, Congress can only regulate commercial activity within a state—in this case, around marijuana—if the failure to regulate that in-state activity “would substantially interfere [with] or undermine legitimate congressional regulation of interstate commerce.”
The question presented, he said, is whether “it is permissible for Congress to prohibit intrastate marijuana commerce given the current regulatory scheme and given the current facts about marijuana.”
DOJ attorney Daniel Aguilar later pushed back on Boies’s characterization of the limits of the government’s authority to regulate in-state commerce.
“We don’t agree with that,” he told the panel. “If there is a reasonable basis to conclude that those activities in the aggregate can substantially affect interstate commerce, then Congress can regulate those wholly intrastate activities.”
Plaintiffs’ argument that the government has abandoned its overarching goal of controlling marijuana, and thus loses its authority to regulate it, is also unfounded, Aguilar contended.
Marijuana is allowed to be used for research in some circumstances, and lower-scheduled drugs such as testosterone or ketamine can be used in health care, he acknowledged. “But that doesn’t mean that if Congress places certain appropriations riders on enforcement capabilities, or states generally permit or choose not to control those substances…that somehow Congress loses its constitutional authority to regulate the markets for those substances.”
Judges’ questions focused largely on what legal precedent Boies had for asserting that the government’s selective hands-off approach around certain aspects of marijuana regulation—for example allowing state medical markets to proceed under the so-called Rohrabacher–Farr budget rider or permitting Washington, D.C. to engage in medical cannabis sales—meant it forfeited all authority to prohibit the drug more broadly.
“You cite things that are different today than were different at the time of Gonzales,” one judge said, referring to the 2005 Supreme Court decision in Gonzales v. Raich, which upheld the government’s ability to prohibit the production and use of homegrown medical marijuana. “But given the overarching goal of regulating both lawful and unlawful markets in controlled substances, why did those facts eliminate congressional authority?”
“Because, as the court held in Gonzales,” Boies replied, “regulating intra- and interstate commerce was only a means to the end of eradicating it. That is a goal that has been abandoned.”
Judge David J. Barron was skeptical.
“Other than the two things you’ve identified, Rohrabacher–Farr itself—which is itself questionable that it means they’ve abandoned the goal—and I guess the D.C. legislation,” Barron asked, “why do those carveouts suggest that then the entire project is over, even though the federal statute remains in place?”
Boies later emphasized that “regardless of the product, and this includes marijuana, if you have purely intrastate commerce, Congress has no power to regulate that.”
Barron asked how that position would impact congressional efforts to regulate gun sales: “Can Congress regulate that under the interstate Commerce Clause?”
Boies replied that would depend on other issues, such as where a firearm was manufactured and whether it incorporated materials that crossed state lines.
“What you have here is a situation in which there is no interference with the current congressional objective,” he emphasized. “The reason Rohrabacher is important is not merely that it says Congress is accepting of medical marijuana. It is because what Congress is saying in Rohrabacher is that you can distinguish medical marijuana from interstate marijuana—and that was the crux of the Gonzales opinion.”
The immediate matter before the appeals court is the government’s motion to dismiss the case, meaning an opinion for the plaintiffs would merely allow the lawsuit to continue.
Judges did not indicate at Thursday’s oral arguments how or when they planned to issue a ruling.
The companies’ loss at the district court level didn’t come as a surprise to their attorneys, who had indicated that they expected the case to move up to higher courts, including, potentially, the Supreme Court. Some legal observers have noted that plaintiffs’ attorney Boies is known as a lawyer who takes cases that “have legs,” meaning they could be appealed to higher courts and help set regional or nationwide precedent.
Central to the case is the degree to which in-state cannabis activity affects interstate commerce. Lawyers for the government have previously argued, for example, that cannabis legalization attracts out-of-state tourists.
DOJ argued in an April filing 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, have asserted 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 district court ruled that plaintiffs indeed had standing to bring the lawsuit.
“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,” the decision says. “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 district 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.
It will now be up to the First Circuit to decide whether to uphold the lower court’s ruling or confront more directly whether broad federal cannabis prohibition is constitutional.
Photo courtesy of Mike Latimer.
A federal appeals court panel on Thursday heard oral arguments in a case that cuts to the heart of federal marijuana prohibition, with plaintiffs contending that the U.S. government in recent years has abandoned its attempts to rein in what it still considers a federally illegal substance. The lawsuit was filed in the U.S. District Read More
