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DOJ Says State Marijuana Legalization Boosts Tourism In Court Filing Seeking Dismissal Of Industry Lawsuit

The Justice Department is again asking a federal court to dismiss a lawsuit from major marijuana companies seeking to block enforcement of prohibition against state-legal activities—in part because the government says cannabis legalization attracts out-of-state tourism, empowering it to intervene under the Constitution.

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In a filing with the U.S. District Court for the District of Massachusetts, Western Division on Friday, DOJ contested claims from the cannabis corporations that federal policy is at odds with the government’s enforcement practices, and it also argued that the plaintiffs lack standing to raise the lawsuit in the first place.

“Plaintiffs argue that federal marijuana policy no longer serves a goal of eradicating the marijuana trade, yet even if that is true, curtailing the marijuana trade is a legitimate objective regardless of whether the government pursues that objective to the point of eradication,” the Justice Department said.


“Plaintiffs also cannot show that any way in which federal marijuana policy is irrational, when they allege that federal policy focuses law enforcement resources on marijuana activities that most implicate vital federal interests such as preventing violence and protecting public safety,” it added.

The underlying suit against the federal government is being led by multi-state operator Verano Holdings Corp. and the Massachusetts-based cannabis businesses Canna Provisions and Wiseacre Farm, along with Treevit CEO Gyasi Sellers. They’re represented by the law firms Boies Schiller and Flexner LLP and Lesser, Newman, Aleo and Nasser LLP.

Litigator David Boies—whose list of prior clients includes the Justice Department, former Vice President Al Gore and plaintiffs in the case that led to the invalidation of California’s ban on same-sex marriage—is leading the suit.

DOJ said in the latest filing that the plaintiffs lack jurisdiction in the suit partly because they “cannot establish a credible threat of future enforcement” of the Controlled Substances Act (CSA), “when they allege that the Department of Justice has a policy not to prosecute their alleged conduct.”

“Because they allege that the Department of Justice adheres to a policy of not prosecuting those who engage in Plaintiffs’ conduct, they cannot establish a credible threat of future enforcement,” the filing says.

DOJ makes several notable admissions in this latest document, however. For example, it contests the idea that plaintiffs are harmed under prohibition because it has resulted in the reluctance of banks to work with their intrastate businesses, pointing out that the department has not “taken to coerce any of the third parties who have declined to transact with Plaintiffs.”

“And they do not and cannot dispute that the Complaint alleges that some third parties have decided to transact with Plaintiffs, while others have declined to do,” it says.

The department also asserts that the lower court does not have juridiction to undermine a 2005 Supreme Court decision, Gonzales v. Raich, in which justices held that state-level cannabis laws do not protect people from federal prosecution because of Congress’s interest in preventing illegal marijuana from entering interstate commerce.

Raich’s constitutional holding is controlling here because the Supreme Court is the only court with the power to overrule its holding in Raich, which would be necessary to sustain Plaintiffs’ Commerce Clause and Necessary and Proper Clause claim,” the filing says.

“Even if Raich’s ultimate holding were not directly controlling here, the CSA’s application to Plaintiffs falls well within Congress’s authority under the Commerce Clause and Necessary and Proper Clause. Plaintiffs do not and cannot dispute that the Supreme Court’s ‘case law’ under these clauses ‘firmly establishes Congress’ power to regulate purely local activities that are part of an economic ‘class of activities’ that have a substantial effect on interstate commerce.”

Part of DOJ’s reasoning here is that it claims “it is rational to conclude that the regulated marijuana industry in Massachusetts fuels a different kind of marijuana-related interstate commerce: marijuana tourism.”

“That is especially so because Massachusetts marijuana businesses gross hundreds of millions of dollars in sales each year, and dispensaries such as Canna Provisions cater to out-of-state customers,” it states.

In other words, while the plaintiffs’ claim is that the Constitution’s Commerce Clause should preclude DOJ from interfering in state-legal activity because it is centrally regulated within a state’s borders, legalization attracts cannabis tourism from people from states without legal programs who would prefer to buy from regulated storefronts.

“As the Supreme Court held decades ago, Congress has the authority to regulate businesses that cater to tourists from out of state, even if the businesses’ transactions occur wholly in-state,” DOJ said in the new filing.

It also argued that this “rational basis also exists to conclude that, despite what Plaintiffs describe as ‘strict controls’ in Massachusetts’ system, some portion of the marijuana produced in Massachusetts will be diverted into the illicit market. Experience has shown that even where states impose controls on regulated marijuana, some diversion occurs.”

The department further disputed the plaintiffs’ position that a congressional rider preventing the use of DOJ funds to interfere in state medical cannabis programs call into question the propriety of ongoing federal prohibition.

“These laws rationally serve the purposes of avoiding friction between the federal government and state governments and allowing the states to develop a body of experience in dealing with medical marijuana that can inform future decisions by federal policymakers and policymakers in other states about whether to enact further changes in marijuana policy,” it said.

Similarly, cited an Obama-era memo generally directing federal prosecutors not to interfere with state marijuana laws, which was later rescinded during the Trump administration, saying the “alleged policy to focus law enforcement resources on important federal interests is manifestly rational on its face.”

This all comes in the background of a Drug Enforcement Administration (DEA) review into marijuana scheduling under the CSA. The U.S. Department of Health and Human Services (HHS) has recommended moving cannabis from Schedule I to Schedule III.

And while the Biden administration has maintained that people should not be criminalized over possession or use of marijuana, DOJ has continued to fight reform efforts in courts, including this current case on broad prohibition, as well as litigation challenging the ban on cannabis consumers’ gun rights.


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