Federal Lawsuit Alleges Discrimination in Missouri's Medical Marijuana Licensing Restrictions

This past Friday, a federal lawsuit was filed in the Western District of Missouri seeking to overturn the restriction on non-Missouri residents owning a majority stake in medical marijuana businesses licensed through the state. This residency restriction was created by the Constitutional Amendment written by the special interest group New Approach Missouri as part of its broader program to create artificial barriers to entry and cap licenses -- ultimately this proposal was approved by Missouri voters and enacted by the Missouri Department of Health & Senior Services.

Mark Toigo, a Pennsylvania-based investor and minority partner in Missouri marijuana licensee, Organic Remedies MO, claims that he is unable to "apply for or receive a medical marijuana license in Missouri" on his own, that the residency restriction "by significantly limiting the universe of possible shareholders and investors in the company and/or prevents Mr. Toigo from assuming a majority interest in the company" harms his interests, and restricts interstate commerce, a usurpation of Congress's Constitutional authority under the Commerce Clause.

This lawsuit follows on the heels of an order by US District Judge Nancy Torresen of the District of Maine in August in Wellness Connection et al v. City of Portland, Maine, which held:

Although the Plaintiffs have not been denied a license, their alleged injury is not the denial itself but the disadvantage they face in obtaining a license due to the City’s points matrix. This injury is not conjectural or speculative because, viewing the facts in the Plaintiffs’ favor, there is every indication that there will be more than twenty applicants and that the City will apply the points matrix... There is thus a “sufficient threat” that the Plaintiffs will be forced to compete at a disadvantage.

While Judge Torresen's order in the Wellness Connection was specific to the dormant commerce clause issues also raised in Mark Toigo's lawsuit, it also made another very important holding:

The City portrays the Controlled Substances Act as a form of congressional consent... But the Act nowhere says that states may enact laws that give preference to in-state economic interests. In other words, although the Controlled Substances Act criminalizes marijuana, it does not affirmatively grant states the power to “burden interstate commerce ‘in a manner which would otherwise not be permissible.’ ” New England Power Co., 455 U.S. at 341 (quoting Southern Pacific Co. v. Arizona, 325 U.S. 761, 769 (1945)). And I have no authority to invent such an affirmative grant where Congress has not provided it.

This is significant because most, if not all, state medical and recreational marijuana laws have not been written with consideration of US Constitutional principles, largely because the Controlled Substances Act prohibits marijuana commerce. We are glad Judge Torresen recognizes that the US Constitution still applies in this case -- far too many state marijuana laws violate not just the US Constitution's Commerce Clause but also -- we would argue -- the US Constitution's Equal Protection and Privileges & Immunities clauses.

While both the claims in Mark Toigo's lawsuit and the Wellness Connection lawsuit are apparently on the right side of federal Commerce Clause jurisprudence, we hope there are ways to extend this logic, and other related Constitutional principles, to overturn the actual caps on marijuana licensing.

For further coverage, here is Jack Suntrup at the St. Louis Post-Dispatch: Federal lawsuit seeks to snuff residency rules for Missouri marijuana business owners

If you are interested in connecting with individuals and groups working to eliminate Missouri's license caps, and pass recreational marijuana reforms that do not create license caps or artificial barriers to entry, reach out to us at info@crossingpathspac.com.