On January 2, the Ninth Circuit Court of Appeals issued a key decision holding that federal constitutional protections for interstate commerce (the so-called “dormant commerce clause”) do not apply to commercial cannabis activities, which are illegal under federal law. Therefore, state and local governments may regulate those activities in ways that would be impermissible for most businesses, including such common measures as local residency preferences for commercial cannabis licenses, and prohibiting the transportation of cannabis over state lines.
Rural County Representatives of California, writing on behalf of the California State Association of Counties and League of California Cities, filed a friend-of-the-court brief supporting the City of Sacramento, whose residency preference had been challenged, arguing that the dormant Commerce Clause does not apply to federally illegal markets like cannabis, and that local government should be permitted to establish licensing schemes for such markets in a manner that addresses local needs. RCRC’s brief encouraged the Court to directly address decisions in other Circuits that had found otherwise. The Court’s decision largely followed the logic and arguments advanced in RCRC’s brief, including acknowledging the Circuit split that could set this case up for consideration by the Supreme Court.
This decision is important to all local government entities, whether or not they currently permit commercial cannabis activities, because it sets a clear path for allowing for discrimination in favor of local residents and local interests in markets that are federally illegal. This decision applies to all jurisdictions within the Ninth Circuit, which constitutes a significant portion of the Western United States.
The Court’s opinion can be found HERE, and RCRC’s friend-of-the-court brief can be accessed HERE.