Tired of waiting on Congress to act, in October 2023, several Massachusetts cannabis business owners, Canna Provisions, Inc., Gyasi Sellers, Wiseacre Farm, Inc., and Verano Holdings Corp, filed suit in a Massachusetts federal court challenging the constitutionality of the Controlled Substances Act to the extent it restricts intrastate (as opposed to interstate) commerce. In Canna Provisions et. al. v. Garland, the Plaintiffs assert: “While Congress has authority to ban marijuana from interstate commerce, it has no general police power over marijuana grown, transported, and distributed in intrastate commerce.”
The lawsuit argues that considering new information and attitudes about cannabis, the Supreme Court’s 2005 ruling in Gonzales v. Raich, which held that Congress, intending to eradicate cannabis from interstate commerce, possesses a rational and lawful purpose in intervening in state-level cannabis regulation, is grossly outdated and impedes their ability to safely “manufacture, distribute, or dispense” marijuana, even in intrastate commerce.”
Interestingly, the last time the Supreme Court heard a case involving the Controlled Substances Act, there weren't any state-regulated cannabis businesses. Today 38 states have legalized cannabis in some form, either medicinally or for recreational use. Also, since then, Congress and the Executive Branch have abandoned any intention to "eradicate" marijuana.
On January 23, 2024, U.S. Attorney General Merrick Garland filed a motion to dismiss. In his motion, the Attorney General claims the Plaintiffs lack standing on which to sue and have presented no evidence that prohibition has caused them injury (such as being arrested or prosecuted). The motion states: “Even if the court were free to disregard Raich’s holdings (it is not), Plaintiff’s attacks on that holding are unpersuasive,” that the “Plaintiffs lack standing to challenge the CSA [Controlled Substances Act],” and “Courts have consistently, and correctly, held that no fundamental right exists to distribute, possess, or use marijuana.”
The motion to dismiss filed by Garland, however, ignores some key facts in alleging the CSA does not cause the Plaintiffs injury. Specifically, because of federal prohibitions, credit card companies will not work with cannabis businesses, requiring them to either operate in cash or pay exorbitant amounts in fees to access business checking and savings accounts. According to the lawsuit, “The fees paid to avoid the most dangerous part of the business, cash, are incredibly high.” Additionally, payroll, security, insurance, and banking companies refuse to work with cannabis-related businesses causing these companies to operate with a “duct tape” approach.
The plaintiffs also claim they are excluded from various federal initiatives, such as small business loans and ordinary tax deductions because of their illegal status at the federal level. Cannabis companies are often subjected to “green tax,” which increases costs because of their association with cannabis. In other words, because of the CSA, while legal in their respective states, cannabis companies must continue to operate almost as if they are still illegal.
How this case is resolved could have a significant impact on the cannabis industry. While it is unlikely that this case will be resolved in District Court, and the Supreme Court will likely have to rule on this issue (which could take two years), the fight is worth the wait. All eyes will be watching this case as it proceeds through the court system, hoping it will unlock the handcuffs that currently restrain the cannabis industry.
