Leading Cannabis Companies Challenge Controlled Substances Act
A group of cannabis companies and their investors have filed a lawsuit against the federal government in United States District Court for the District of Massachusetts, Western Division, challenging the government’s formal ban on cannabis commerce within states that have legalized. The lawsuit—filed by Boies Schiller Flexner and Lesser, Newman, Aleo & Nasser LLP—argues that the government’s enforcement of the Controlled Substances Act is unconstitutional and places undue burdens on cannabis businesses.
“The federal criminalization of safe, regulated marijuana commerce in states where it is legal unfairly burdens legal operations,” said David Boies, chairman, Boies Schiller Flexner LLP. “Federal criminalization also denies small, legal marijuana businesses access to SBA loans, investors, benefits for their employees, and normal banking regulations (which among other things, forces them to rely on cash transactions with all of the dangers to them, and to the community, that result)—as well as burdening them with discriminatory taxes.”
The plaintiffs include prominent cannabis companies like Green Thumb Industries, TerrAscend, Verano, and Ascend Wellness, along with Massachusetts-based cannabis operators Gyasi Sellers (CEO and founder of Treevit), Canna Provisions, and Wiseacre Farm, as well as Eminence Capital and Poseidon Investment Management.
The lawsuit asserts that the Controlled Substances Act as it stands exceeds the federal government’s authority to regulate commerce within a state, as constrained by the Interstate Commerce Clause of the Constitution. According to the attorneys, because the Controlled Substances Act “bars the production, distribution, and possession of marijuana, regardless of whether those activities cross state lines or, as in the case of Plaintiffs’ cannabis businesses, are intrastate,” it exceeds the federal government’s authority.
The constitutionality of the Controlled Substances Act was unsuccessfully challenged in 2005, but the plaintiffs and their attorneys argue that changes in the legal cannabis landscape over the last 18 years will compel a significantly different result. The Supreme Court rejected the 2005 challenge because, at the time, the federal government was actively working to destroy the market for cannabis across the U.S. The court concluded that the government’s overall goal allowed the Controlled Substances Act to stand.
Today, the lawsuit argues, the landscape is much different. The federal government, say the plaintiffs, is no longer working to “eradicate” cannabis in the U.S. The suit also argues that in the nearly two decades since the 2005 challenge, numerous states have established regulated cannabis markets that are distinguishable from the black market.
“The federal government lacks authority to prohibit intrastate cannabis commerce,” said Boies. “Outdated precedents from decades ago no longer apply—the Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce.”
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