August 19, 2022 Article

First Circuit Court of Appeals Rules Against Maine Residency Requirements for the Medical Cannabis Industry

The First Circuit Court of Appeals on Wednesday struck down the Maine law that requires owners of medical cannabis dispensaries to be Maine residents. The Court affirmed a decision from the federal court in Maine last year, finding the state law to be unconstitutional.  Preti Flaherty led the way to achieve this landmark ruling and now, as long as the state does not further appeal, Maine’s medical cannabis market will be fully open to residents of other states as early as September.

The court of appeals determined that Maine’s residency requirement for dispensaries violated the Commerce Clause of the Constitution. The State of Maine had argued for the past several years that the Commerce Clause does not apply to cannabis markets because Congress has yet to legalize cannabis, and so related interstate commerce is illegal. But, on behalf of its clients, Preti Flaherty had argued that despite the unusual status of cannabis, the usual constitutional rules apply. In a split decision, the First Circuit sided with Preti Flaherty’s clients, finding the residency requirement for dispensaries to be unconstitutional. The court noted that “nothing on the face of the Controlled Substances Act purports to bless interstate discrimination in the market for medical marijuana.”

This appeal is the first of its kind to reach the federal circuit courts and could have wide-reaching impacts for the cannabis industry in the United States. Preti Flaherty has led the way in challenging similar residency requirements across the country, including filing the first constitutional challenge to such a law, challenging Maine's adult use residency requirement in March of 2020.

Learn more about the decision here.

UPDATE: On September 21, 2022, the full First Circuit Court declined to review the 2-1 decision from August 19, 2022, leaving the previous decision to strike down the Maine law intact. Learn more about this latest development here.

If you have questions about how this ruling may impact your business or your ability to leverage out of state investments, please contact a member of Preti Flaherty's Cannabis Practice Group.

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