Could rescheduling provide leverage for cannabis interstate commerce?

Cannabis industry pundits have waxed poetic for weeks now about the ripple effects and unanswered questions that still shroud the marijuana rescheduling process, but one tangential legal theory that’s cropped up recently takes direct aim at residency requirement for state cannabis business licenses.

And some experts are saying the move could provide fuel for more lawsuits around that restriction.

Such challenges have typically relied on federal legal arguments that such residency requirements violate the U.S. Constitution’s Dormant Commerce Clause. But federal judges hearing those cases have issued different opinions, with the First Circuit Court in Maine overturning that state’s residency requirement in 2022, while a federal judge in Washington state ruled that the Dormant Commerce Clause doesn’t apply to marijuana because it’s still a Schedule I narcotic.

Similar cases are still pending before the Ninth Circuit Court of Appeals in California.

Once the rescheduling process is completed, that could provide new fuel for such legal challenges, which could have a wide array of impacts, Charles Gormally, a New Jersey cannabis attorney, told Green Market Report.

“Rescheduling will reactivate a lot of litigation or potential challenges under the Dormant Commerce Clause. That’s a big industry issue,” Gormally said. “If you’re a mom-and-pop store, you might not really care about opening up across the country, but Big Pharma and Big Tobacco certainly need full interstate commerce in order to have a scalable, profitable business.”

Although the policy change may give rise to a new batch of lawsuits by marijuana companies eager to tear down barriers to interstate commerce, Gormally said that approach likely won’t be quick and there’s still no guarantee of success either.

Rather, attempts to legalize interstate cannabis commerce – which, for example, would allow farmers in California and Oregon to ship their goods anywhere in the country, as hemp farmers are able to – would still take years to wind their way through first the district court and then the appellate level, Gormally said. Even then, the question may have to be decided by the U.S. Supreme Court, which could extend the timeline even further.

“Something’s got to change in terms of the federal illegality for us to be able to have interstate commerce,” Gormally said. “Not the way to make national policy, through litigation.”