We have been waiting for this.
On September 10th, a Michigan man asked the U.S. Supreme Court to resolve a circuit split on whether states can discriminate against non-residents in their cannabis licensing programs. This is a fascinating legal question we’ve been mulling on the blog since at least 2015. It’s pure law, and it warrants final resolution.
Background on the case, and the circuit split
The petitioning Michigander, Kenneth Gay, and his company, Peridot Tree, were denied access to Washington State’s cannabis program, second oldest in the country. Peridot was also denied access to licensure in Sacramento, California. Both denials were based upon Gay’s non-resident status. So he sued.
Peridot’s argument is that these denials were unconstitutional under the U.S. Constitution’s dormant commerce clause. The California litigation was filed in 2022, and the Washington litigation in 2023. In the interim, other cases were filed by other plaintiffs in other jurisdictions, also challenging residency requirements for cannabis licensure.
Peridot lost both of his cases. Federal district courts in Washington and California each held that the dormant commerce clause does not apply to marijuana-related commerce, due to the plant’s Schedule I status under the Controlled Substances Act. In January of this year, the Ninth Circuit Court of Appeals affirmed those decisions. My colleague Elijah Hartman covered that ruling here. He explained:
The Ninth Circuit parted ways with a First Circuit decision and a Second Circuit decision, both of which held that state cannabis residency requirements violate the dormant commerce clause, despite the federal illegality of marijuana. The Ninth Circuit instead aligned itself with a growing body of district court decisions (and with dissents from other circuits) emphasizing that illegal markets are constitutionally different in kind.
Put differently: there is no implied constitutional right to engage in illegal interstate commerce according to the Ninth Circuit.
What is the dormant commerce clause?
The dormant commerce clause prohibits states from enacting protectionist policies to favor in-state businesses, or which “unduly burden” interstate commerce. Although the dormant commerce clause is a Constitutional doctrine, you won’t find it printed anywhere on the actual parchment. As Elijah explained:
The Constitution gives Congress the power to regulate interstate commerce. From that affirmative grant, the Supreme Court has long inferred a negative corollary: states generally may not enact laws that discriminate against or unduly burden interstate commerce, even when Congress is silent [….]
At its core, the doctrine is anti‑protectionist. States may not tilt the economic playing field to favor in‑state actors over out‑of‑state competitors. Laws that explicitly discriminate against interstate commerce are frequently per se invalid.
But the Dormant Commerce Clause is also controversial. It is judge‑made, not textually explicit, and the Supreme Court has repeatedly warned that courts must exercise “extreme caution” before using it to invalidate democratically enacted state laws.
Will the Court take the case?
It might. The Supreme Court only grants about 1% of all petitions for certiorari in a given term… but it might.
The current Court is actively engaged with the dormant commerce clause. The most recent case, National Pork Producers Council v. Ross (2023) addressed the dormant commerce clause in the context of another California law, requiring out-of-state sellers to comply with California standards to sell pork within the state. The Court declined to invalidate California’s law. This is arguably not a great precedent, but these are also very different facts, with no federal illegality overlay, and the Court issued a splintered, 5-4 ruling.
One thing that bodes well for Peridot is the fact that Erwin Chemerinsky submitted the petition. Chemerinsky is widely regarded as one of the most prominent Constitutional law scholars in the U.S. Among his prolific output is, in my opinion, the most important law review article ever on state-legal marijuana programs. That piece was written in 2015 but is relevant today.
(Note: Chemerinsky is joined by two other attorneys on the Peridot Tree petition. I don’t mean to shortchange them and I’m sure they are also brilliant; I just don’t recognize those names.)
What happens if residency requirements are invalidated for state-legal cannabis?
A lot. Marijuana-related residency requirements remain the law in many states, including Oklahoma, New Jersey, Washington, Montana, Massachusetts, and probably more. They also apply in various cities and counties—sometimes in specialized contexts such as social equity programs. If Peridot wins, all of these jurisdictions would be forced to tear down the walls.
It’s not just cannabis programs at issue, either. Many states have rules regarding who is allowed to purchase medical marijuana, or grow plants at home. A Peridot victory would presumably upend those restrictions as well. (Schedule III for state-legal medical marijuana does nothing to change this analysis, regardless of the Peridot outcome.)
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Watch this space. In the meantime, for more on cannabis and the dormant commerce clause, check out the following:
