Cannabis Companies Take On US Attorney General In Battle Against Federal Prohibition

A coalition of U.S. cannabis operators and investors filed a lawsuit on Wednesday against U.S. Attorney General Merrick Garland to block the federal government from enforcing cannabis prohibition for state-legal activity.

Plaintiffs In The Lawsuit

Filed in the U.S. District Court in Massachusetts, the lawsuit represents all local independent operators in Massachusetts who have suffered harm and business challenges due to federal prohibition. Gyasi Sellers, CEO and founder of Treevit, Canna Provisions and Wiseacre Farm as well as Verano Holdings VRNOF, Ascend Wellness AAWH, TerrAscend TSNDF and Green Thumb Industries GTBIF, Eminence Capital and Poseidon Investment Management are named as plaintiffs. 

The lawsuit seeks to confirm the rights of Massachusetts and other states to regulate cannabis within their borders and confirm the corresponding limits on the federal government's power to regulate commerce. 

They are represented by Boies Schiller Flexner law firm.

The Legal Aspect

The federal government's power to regulate commerce is based on the Interstate Commerce Clause of the Constitution. The law at issue in this suit, the Controlled Substances Act, exceeds that limited authority as it bars the production, distribution and possession of marijuana, regardless of whether those activities cross state lines or, as in the case of the plaintiffs' cannabis businesses, are operating in multiple states. This, say the plaintiffs, harms and hinders the efforts of states to provide patients and adults with access to strictly regulated and tested cannabis.

Today, the 38 states - and Washington D.C.- that have medical or adult-use cannabis programs require compliance with a multitude of stringent regulations aimed to protect patients, customers and the public at large, including video surveillance and seed-to-sale tracking. 

State-regulated cannabis businesses deemed illegal under the CSA are considered to be committing federal crimes. As a result, they are cut off from numerous federal programs and protections, including small business loans. These businesses are also subject to discriminatory tax penalties, and many organizations—including banks and credit card processors— refuse to do business with them, rather than risk being deemed conspirators, aiders and abettors, or money launderers.

The result is that many cannabis businesses are suffering, people are losing their jobs and individual wealth is being destroyed, said Darren Weiss, president of Verano. In addition, social equity licensees harmed by the War on Drugs and who were supposed to have equal access to the industry, do not have the same benefits as other business owners to start a company and build their wealth.

"While reforms such as the SAFER Banking Act and rescheduling cannabis under the Controlled Substances Act would improve certain aspects of this broken and antiquated system, they will not solve the fundamental issue," said Weiss. 

To The Supreme Court If Necessary

"We are prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years. We believe that the Supreme Court will adhere to the core value on which our country was founded and which is central to guaranteeing freedom: that the federal government's powers are limited," Weiss said.

David Boies, chairman of Boies Schiller Flexner LLP added, "The federal criminalization of safe, regulated marijuana commerce in states where it is legal unfairly burdens legal operations and expands the production and sale of illegal marijuana that is unregulated, can be unsafe, and is likely to find its way to other states."