By J. Peterman
An intelligent attorney might look over and run their eyes lightly down your bench notes. “This is nice. What is it?” In which case you might have to confess, “dormant Commerce Clause, actually.” Otherwise, the fact the instant matter involves the judge-made hypothetical might just as well be kept to yourself. Because even in this enormously enlightened age, there are still people who would think such nonsense a bit indulgent. And they would be right.
In 2012, your friends and neighbors (and their live-in adult children) legalized the possession and sale of cannabis through an initiative process. Ever since, the state liquor control board regulates and taxes cannabis sales. Applicants for licenses to grow, sell, or possess must meet certain eligibility criteria, including a residency requirement. Among other things, the board may not issue a license to someone under the age of 21, who does business as a sole proprietor but has not lawfully resided in state for at least six months, or who does business as a partnership or corporation unless formed under the laws of this state.1 The board is even required to confirm residency eligibility.2
You might ask yourself, isn’t dope illegal? And you would be right — to an extent. Although manufacturing, distributing, or dispensing, or possessing cannabis with the intent of doing any of the foregoing, remain illegal under federal law,3 the federal government rarely prosecutes the sale of cannabis which otherwise complies with state law.4 Such state laws even include restorative justice measures.
In 2020, Washington began the Social Equity Program, designed to reduce barriers to entry to the cannabis industry. The specific group identified in the legislation are those “most adversely impacted by the enforcement of cannabis-related laws.”5 Given that federal law presents one obvious barrier to entry, you might think this sounds a bit absurd. But look, Elaine, we live in an enormously enlightened age. The legislature wants to ensure the state’s illicit cannabis industry is equitable and accessible to those adversely affected by the drug war. I’m telling you, an enormously enlightened age.
Successful applicants to the Program must meet certain additional criteria, including having “lived in a disproportionately impacted area in Washington state for a minimum of five years between 1980 and 2010,” “been or having a family member who was arrested or convicted of a cannabis offense,” or annual income below “the median household income within the state of Washington.”6 It is not necessary to be admitted to the Program in order to be licensed to possess or sell.
Still, the Program is competitive and expected to be impactful. An entity whose application to the Program was rejected sued the board arguing, among other things, that the residency requirement violates the dormant Commerce Clause.7 Plaintiff moved to enjoin the board from issuing final licenses to the applicants accepted to the Program. Because Plaintiff failed to show a likelihood of success on the merits, the court denied its motion for injunctive relief.
Following Plaintiff’s application submission, the board notified Plaintiff that its application was withdrawn for failing to meet residency requirements. Plaintiff’s majority owner met the Program’s criteria but for the fact that he is from Michigan. Minor detail, eh? Nevertheless, Plaintiff filed suit claiming the residency requirement discriminates against interstate commerce. How that could be so when the possession and sale of cannabis remains illegal at the federal level says more about the profitability of Washington’s cannabis market (and Plaintiff’s desire to tap into it) than legal merit.
Whether to grant injunctive relief “is a matter of equitable discretion and is an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.”8 “To obtain a preliminary injunction, a plaintiff must establish: (1) a likelihood of success on the merits, (2) a likelihood of irreparable harm in the absence of preliminary relief, (3) that the balance of equities favors the plaintiff, and (4) that an injunction is in the public interest.”9 If the nonmovant is the government, the last two factors merge.10 Here, Plaintiff could not establish likelihood of success on the merits because its dormant Commerce Clause challenge fails on its face.
Under the Constitution’s Commerce Clause, the legislature is authorized “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”11 Under Supreme Court precedent, the Commerce Clause “also prohibits state laws that unduly restrict interstate commerce.”12 You might know this as the “dormant Commerce Clause.”13
The dormant Commerce Clause, however, was invented by judges to help solve a riddle and does not come from express language in the Constitution; accordingly, the Supreme Court refers to its DCC touchstone, the “fundamental objective”: to “preserv[e] a national market for competition undisturbed by preferential advantages conferred by a State upon its residents or resident competitors.”14 By “prevent[ing] the States from adopting protectionist measures,” the dormant Commerce Clause “preserves a national market for goods and services.”15
You might say “hold on, Jacopo,” there is no national market for recreational-use Washington cannabis. And you would be right. Illegal markets should not enjoy the protections of federal common law. Case closed.
Made in Washington.
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Price: $198.
1 RCW § 69.50.331(1)(b).
2 WAC 314-55-020(1)(d).
3 21 U.S.C. §§ 812(c), 841(a)(1).
4 See Cole, James, “Guidance Regarding Marijuana Enforcement.”
5 2020 Wash. Sess. Laws Ch. 236 § 1(1).
6 WAC 314-55-570(2).
7 Peridot Tree v. Liquor and Cannabis Ctrl. Bd., No. 23-cv-0611 (W.D. Wash. Jan. 5, 2024) (Cartwright, J.).
8 Earth Island Inst. v. Carlton, 626 F.3d 462, 469 (9th Cir. 2010).
9 Geo Group, Inc. v. Newsom, 50 F.4th 745, 753 (9th Cir. 2022) (en banc) (citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).
10 Baird v. Bonta, 81 F.4th 1036, 1040 (9th Cir. 2023) (quoting Nken v. Holder, 556 U.S. 418, 435 (2009)).
11 U.S. Const. art. I, § 8, cl. 3.
12 Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2459 (2019); see also Rosenblatt v. City of Santa Monica, 940 F.3d 439, 444 (9th Cir. 2019).
13 Id. (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273 (1988).
14 Gen. Motors Corp. v. Tracy, 519 U.S. 278, 287 (1997).
15 Tenn. Wine & Spirits Retailers, 139 S.Ct. at 2459.
