I wanted to highlight two federal court decisions from this week relevant to the cannabis industry.
First, a federal court has rejected a Missouri requirement that a medical cannabis business be majority owned by a state resident. (link) I’ve written in these Cannabis Musings before about how state residency requirements for licensing are highly suspect under our old friend, the dormant commerce clause. (link) This ruling comes as no surprise, continuing a trend of federal courts finding these requirements unconstitutional. I’ll repeat what I said back in August, when I wrote about this last: what’s really notable to me about this kind of decision is that a federal court is enforcing federal constitutional law about something that’s completely illegal under federal law. It’s a paradox.
Second, where some federal courts giveth, others taketh away. It was reported that the U.S. Supreme Court declined to review a federal appellate court decision challenging the Internal Revenue Service’s investigatory authority under 280E. (link) The Supreme Court has the ability to choose its cases – there is no right of appeal. Given that the Supreme Court receives approximately 10,000 petitions to hear an appeal per year, and agrees to hear only about 100 of them (link), this denial unfortunately comes as little surprise based on percentages alone. The industry will instead have to wait for Congress to act on 280E, but I wouldn’t hold my breath.
Read some of my prior Cannabis Musings here: archive