Yesterday late afternoon, Oregon hashish wholesaler Jefferson Packing House (JPH) filed one other dormant commerce clause (DCC) problem to protectionist state hashish legal guidelines. You’ll be able to view the criticism here. I say “one other” DCC problem as a result of JPH prosecuted DCC litigation in late 2022; and in addition as a result of a number of DCC hashish lawsuits have been filed in recent times, with some succeeding as of late.
What’s the dormant commerce clause, and the way does it relate to state hashish packages?
The DCC is an implied constitutional precept, derived from the commerce clause. It prohibits states from enacting legal guidelines that discriminate in opposition to, or unduly burden, interstate commerce. The DCC applies even the place Congress hasn’t handed a legislation regulating a zone of commerce.
The coverage right here is to bar state protectionism, and to keep up aggressive, open markets. If a statute is discriminatory, the state has the authorized burden to justify the native advantages flowing from the legislation, and to indicate that the state has no different technique of advancing the legit native goal. If the state can’t make that displaying when held to account (sued by injured events), its legislation will likely be struck down.
State marijuana packages uniformly prohibit trafficking of hashish in- and out-of-state. In addition they include different exclusionary guidelines in lots of circumstances. Chief amongst these are guidelines that prohibit nonresidents from proudly owning native hashish companies. However actually, the massive kahuna is interstate marijuana gross sales.
In the end, the elemental query is that this: does the DCC defend interstate commerce of a managed substance, even the place Congress has legislated in opposition to the exercise?
What have courts finished with DCC hashish lawsuits so far?
It’s been a blended bag. Trying by means of the circumstances, although, I’d argue for an rising view that the DCC applies to state marijuana packages, and that states can not enact protectionist legal guidelines. The Second Circuit Court docket of Appeals just said that in a New York case, as did the First Circuit a few years back, as to Maine. Federal district courts in Maryland and Michigan and Missouri have likewise discovered that the DCC applies to state and native marijuana packages.
Different courts, such because the Western District of Washington have held on the contrary, writing in one case that “residents do not need a authorized curiosity in taking part in a federally unlawful market”; and explaining in another that declaratory aid wasn’t obtainable for that very same cause.
A remaining class of case continues to be pending: essentially the most compelling right here is Peridot Tree Inc. v. City of Sacramento. Briefly, the plaintiffs misplaced at district court docket, however filed an enchantment with the Ninth Circuit in November 2024. A ruling there might have critical implications for the JPH case filed yesterday night.
What’s completely different in regards to the JPH case in Oregon?
The entire circumstances talked about above are challenges to state or native legal guidelines that require hashish enterprise house owners to be residents. None have taken a bead on state guidelines that prohibit promoting marijuana throughout state strains. The JPH case does precisely that, for each marijuana and hemp merchandise that fall throughout the definition of “marijuana gadgets” underneath Oregon state legislation.
JPH’s rationale for overturning the ban on interstate gross sales is much like DCC arguments made within the circumstances mentioned above. That mentioned, JPH is de facto going for it right here. A ruling that interstate gross sales of state-legal marijuana should be allowed per the DCC, could be extraordinary.
What occurred to the primary JPH case, from 2022?
The primary JPH case was filed in late 2022 and dismissed in early 2024. It was dismissed by JPH voluntarily, and primarily for political causes. I’ve a bit extra data than that, however ought to most likely say much less. For now, suffice it to say that JPH is free to file once more, and I don’t anticipate points on procedural or standing grounds.
What would occur if JPH wins?
This query is supremely attention-grabbing and I haven’t thought-about it absolutely. Oregon would have the correct to enchantment, in fact, and certain would; and it’s attainable the Ninth Circuit would take up the case. The ultimate cease could be the U.S. Supreme Court docket, although a really small proportion of federal circumstances get that far.
If Oregon legal guidelines banning interstate hashish gross sales are overturned, some necessary questions embrace:
- Which state or states may even change their legal guidelines, voluntarily or in any other case, and settle for hashish from Oregon operators?
- What results would interstate gross sales have on the Oregon market? (Presumably, Oregon must settle for marijuana from different states as properly.)
- What upward strain, if any, would the ruling place on Congress to lastly act?
Who’s behind the JPH case?
As talked about above, JPH is a licensed hashish wholesaler in Oregon. The corporate’s legal professional is a proficient litigator, Andrew DeWeese. Andrew is a buddy of the legislation agency and my former, across-the-street neighbor. A giant due to Andrew for sharing an advance copy of this well-drafted criticism with me final week. And better of luck.
Extra on the dormant commerce clause and hashish
We’ll proceed to trace this case and different DCC litigation, and observe up right here with any necessary updates. Within the meantime, try the next posts:
