Adam JacksonA crew of cannabis operators seeking to limit federal oversight of state-licensed marijuana businesses encountered sharp questioning from federal appeals court judges, who expressed doubt about arguments that commercial cannabis sales should be exempt from Congress’s commerce powers.
During First Circuit oral arguments, attorney David Boies — on behalf of Chicago-based Verano Holdings (OTC: VRNOF) and a string of Massachusetts operators — argued that recent policy developments have undermined the federal government’s authority to regulate state-compliant cannabis operations.
“I think we are on common ground that Congress can regulate purely intrastate commerce only if the failure to regulate that intrastate commerce would, you could reasonably conclude, substantially interfere or undermine with legitimate congressional regulation of interstate commerce,” Boies told the court.
But the panel repeatedly pressed Boies on why commercial marijuana sales wouldn’t clearly fall under federal authority, particularly given previous Supreme Court rulings on personal cultivation.
“Commercial sales of a product is pretty far from Wickard,” Chief Judge David Barron noted, referencing the 1942 case that established broad Commerce Clause powers. “I mean, Wickard was a hard case and still found commerce when it was personal cultivation.”
Department of Justice attorney Daniel Aguilar strongly contested the premise of Boies’ arguments.
“I think opposing counsel started the presentation today with saying it was common ground that we all agree… that it was necessary for the entire program to control all of marijuana… We don’t agree with that,” Aguilar told the court.
Aguilar defended federal authority, arguing that the Controlled Substances Act creates “a closed system” for regulated substances. He pushed back against claims that state legalization or congressional spending limits had altered the constitutional analysis.
Boies countered that congressional actions like the Rohrbacher-Farr amendment, which limits federal enforcement against state medical marijuana programs, demonstrated a shift in federal policy.
“The reason Rohrbacher-Farr is important is not merely that it says that Congress is accepting of medical marijuana… Congress is saying in Rohrbacher-Farr is that you can distinguish medical marijuana from interstate marijuana,” he argued.
The case is the latest in the industry’s efforts to reform federal marijuana policy through the courts. The First Circuit previously weighed in on similar constitutional questions in 2022, overturning Maine’s cannabis business residency requirements on Dormant Commerce Clause grounds. However, a federal court in Washington state in January reached the opposite conclusion, finding that marijuana’s federal illegality precludes the application of the commerce clause.
Jason Horst, president of the International Cannabis Bar Association, told Green Market Report earlier this year that such conflicting rulings could force the Supreme Court to ultimately decide the issue.
“There are absolutely stakeholders… who are not going to be willing to wait for politicians to wring their hands indefinitely on this,” Horst said in January.
The plaintiffs filed their initial complaint in October 2023. The appeals court is expected to issue its decision in the coming months, with Boies’ team already planning to petition the Supreme Court if unsuccessful.
The timing is particularly relevant as the Drug Enforcement Administration kicks off hearings to potentially reclassify marijuana from Schedule I to Schedule III.
Meanwhile, hemp operators and cannabis companies offering hemp-based products are now regularly shipping goods direct-to-consumer across state lines, though governments are beginning to crack down on the issue with mixed results.
