Maine regulators fired back at Northeast Patients Group, in a briefing filed Feb. 28, in the federal First Circuit Court of Appeals a month ahead of the scheduled oral arguments over the state’s residency requirement which bars multi state operators from owning medical cannabis dispensaries.
Arguments in the case focus on the dormant commerce clause of the U.S. Constitution, which bars states from interfering with interstate commerce, and whether or not it applies to cannabis while it is still illegal on the federal level.
A court precedent on state residency requirements in cannabis, which eluded the original attack on Maine’s requirement, would have implications across the country. The federal court decision in at stake has already been cited in other cases, such as when a federal judge in Missouri struck down that state’s residency requirement for cannabis licenses on Oct. 7, while a case in Detroit, Michigan awaits a 2022 trial. Missouri officials have indicated they will not appeal the ruling and will abide by the Circuit Court’s ruling.
“Even assuming true the unsupported fact that a ‘national market’ for medical marijuana exists, such a national market is completely illegal per federal statute. In the eyes of Congress, the national market for medical marijuana is no more legally permissible than a national market for heroin, psilocybin, or LSD,” wrote state Attorney General Aaron Frey, on behalf of Kirsten Figueroa, Commissioner of Maine Department of Administrative and Financial Services.
Acreage Holdings, a multi-state operator based in New York City, would like to purchase NPG, but current state restrictions bar ownership of medical cannabis facilities by non-residents. NPG operates as Wellness Connection in Maine and owns three of the state’s seven medical dispensaries.
Acreage and NPG were successful in federal court, when the judge ruled in their favor,, despite advocacy group United Cannabis Patients and Caregivers of Maine inserting themselves into the legal fight. United Cannabis argued in favor of the residency requirement on behalf of the state’s vibrant medical cannabis caregiver market. United Cannabis and the state filed dual appeals to the ruling in the First Circuit in Oct. 2021.
NPG previously argued that despite the ongoing federal prohibition against cannabis, that the government’s leniency towards states that have legalized the plant and the fact that cannabis businesses are still expected to pay federal taxes implies that there is a tacit approval from the federal government to allow an interstate market for cannabis to emerge.
“NPG’s argument would be akin to arguing that a prosecutor’s declaration that she will not charge individuals for the crime of shoplifting is some sort of blessing of a market for shoplifted goods,” wrote Frey.
“Al Capone was infamously convicted of failing to pay federal income tax, but no one could legitimately argue that Capone’s requirement to pay federal income tax under a generally applicable statute somehow translated into Congressional approval of his racketeering activities,” Frey added.
Frey’s 28-page rebuttal pushes back against the notion that the Department of Justice’s decision to deprioritize enforcing cannabis laws in states where the plant is legal for medical or adult use, created a tacit approval of a nation-wide market for cannabis.
“Asking the Court to pretend that medical marijuana commerce is not illegal under federal law simply because significant illegal activity is taking place would be like insisting to a police officer that speeding is legal because so many motorists do so without facing a penalty,” wrote Frey.
NPG and Acreage previously sued the state over the residency requirement for its adult use market in March, 2020, which NPG also participates in. There was never a ruling in that case, because the parties settled with the state agreeing to no longer enforce the residency requirement for adult use establishments. Nine months later in Dec. 2020, the companies filed their suit challenging the same requirement in the medical cannabis industry.
“NPG suggests that there is something unfair about Maine creating an intrastate medical marijuana regime while prohibiting non-residents from participating in certain aspects of that regime. The issue here, though, is not fairness, but whether the regime violates the dormant commerce clause. Any perceived unfairness is, again, a policy question for NPG to take up with the Maine Legislature.”
All parties will present their oral arguments on April 7.