Summary
The Ninth Circuit affirmed the dismissal of two actions challenging Washington State and City of Sacramento cannabis dispensary licensing schemes that favor residents. The court held that the dormant Commerce Clause does not apply to interstate commerce in marijuana because Congress has declared that market illegal under federal law. The appeals were consolidated and decided in a per curiam publication-designated opinion authored by Judge Bress.
Topics
Practice areas
Questions Presented
- Whether the dormant Commerce Clause applies to state or local protectionist restrictions on an interstate marijuana market that Congress has made illegal under federal law.
- Whether Washington's and Sacramento's cannabis dispensary licensing residency requirements violate the dormant Commerce Clause.
Holdings
- The dormant Commerce Clause does not apply to state or local restrictions on an interstate marijuana market that Congress has declared illegal under federal law.
- The challenged Washington and Sacramento cannabis dispensary licensing regimes do not violate the dormant Commerce Clause because that doctrine does not apply to the federally illegal marijuana market.
Key quotations
“We hold that the dormant Commerce Clause does not apply here.” (5)
“we decline to extend the dormant Commerce Clause to interstate commerce in a drug market that Congress has declared illegal.” (5)
“The dormant Commerce Clause reflects an anti-discrimination rule, to be sure, but the Supreme Court has not said that the rule must blindly apply in all contexts.” (20)
“We are not persuaded that the dormant Commerce Clause requires us to contradict Congress’s judgment and protect an illegal national marketplace from state restrictions.” (23)
Factual background
Washington requires cannabis dispensary license applicants to satisfy a six-month state residency requirement and reserves certain licenses for social-equity applicants with specified residency-related qualifications. Sacramento's CORE Program similarly reserved dispensary permits for current or former Sacramento residents meeting additional equity criteria. Peridot, whose majority owner was a Michigan resident, alleged that it satisfied the licensing requirements except for the residency preferences and that its applications were rejected for that reason.
Procedural history
Peridot entities challenged residency-based cannabis dispensary licensing schemes in Washington and Sacramento, alleging discrimination against interstate commerce. Both district courts dismissed the complaints under Federal Rule of Civil Procedure 12(b)(6) and denied preliminary-injunction requests, concluding that the dormant Commerce Clause does not apply to the federally illegal marijuana market. The Ninth Circuit consolidated the appeals and affirmed both judgments.