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A coalition of cannabis operators and investors working in state-legal medical and adult-use cannabis markets have filed a lawsuit seeking equal treatment for cannabis businesses, asserting that the federal government has “no basis for enforcing the Controlled Substances Act against intrastate, state-regulated cannabis operations”.
The lawsuit has been filed against U.S. Attorney General Merrick Garland by Boies Schiller Flexner and Lesser, Newman, Aleo & Nasser LLP in the United States District Court for the District of Massachusetts, Western Division.
The coalition is seeking to enjoin the federal government from enforcing the Controlled Substances Act in a manner that interferes with the intrastate cultivation, manufacture, possession, and distribution of cannabis, pursuant to state law.
Plaintiffs Gyasi Sellers, CEO and Founder of Treevit, Canna Provisions, and Wiseacre Farm will be represented, all of which are independent Massachusetts operators who say they have suffered significant harm and business challenges due to federal prohibition.
Verano Holdings is also named as a plaintiff, while foundational supporters of the suit include Ascend Wellness Holdings, TerrAscend and Green Thumb Industries, as well as Eminence Capital and Poseidon Investment Management.
The lawsuit seeks to confirm the rights of Massachusetts and other states to regulate cannabis within their borders, and to confirm the corresponding limits on the federal government’s power to regulate commerce.
David Boies, Chairman, Boies Schiller Flexner LLP, stated: “The federal criminalisation of safe, regulated marijuana commerce in states where it is legal unfairly burdens legal operations and expands the production and sale of illegal marijuana that is unregulated, can be unsafe, and is likely to find its way to other states.”
Interstate commerce
The Interstate Commerce Clause of the Constitution gives the federal government power to regulate interstate commerce.
Boies Schiller Flexner LLP highlights that the law at issue in this suit, the Controlled Substances Act, exceeds that limited authority, barring the production, distribution, and possession of cannabis, regardless of whether those activities cross state lines or, as in the case of Plaintiffs’ cannabis businesses, are intrastate.
The suit claims this is “unjustified and unconstitutional prohibition on intrastate cannabis harms Plaintiffs and hinders the efforts of states to provide patients and adults with access to strictly-regulated and tested cannabis.”
The current situation in the US, where state cannabis businesses are considered illegal means they are unable to receive financial support, have tax penalties and many ancillary businesses refuse to work with them.
“The result is that many cannabis businesses are suffering, people are losing their jobs and individual wealth is being destroyed. In addition, social equity licensees harmed by the War on Drugs and who were supposed to have equal access to the industry do not have the same benefits as otherwise situated business owners to start a business and build their wealth,” explains Boies Schiller Flexner LLP.
“Federal criminalisation also denies small, legal marijuana businesses of access to SBA loans, investors, benefits for their employees, and normal banking regulations (which among other things, forces them to rely on cash transactions with all of the dangers to them, and to the community, that result) – as well as burdening them with discriminatory taxes,” said Boies.
“Americans believe that cannabis should be legal and available subject to reasonable regulation by the states. 38 states have legalized some form of cannabis. The federal government lacks authority to prohibit intrastate cannabis commerce. Outdated precedents from decades ago no longer apply – the Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce; moreover, the facts on which those precedents are based are no longer true.”
Darren Weiss, President of Verano, added: “While reforms such as the SAFER Banking Act and rescheduling cannabis under the Controlled Substances Act would improve certain aspects of this broken and antiquated system, they will not solve the fundamental issue.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.
“We are prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years. We believe that the Supreme Court will adhere to the core value on which our country was founded and which is central to guaranteeing freedom: that the federal government’s powers are limited.”
“We want to be treated equally, on an even playing field with any other small business in Massachusetts,” said Meg Sanders, CEO and co-founder of Canna Provisions, an award-winning independent craft cultivation, with two retail dispensaries in Western Massachusetts.
