Friends, don’t forget to RSVP to watch me host a panel this coming Tuesday on the State of the Industry at the UNLV Cannabis Policy Institute. I’ll be modertating a group of smart people on topics like the unlicensed market and intoxicating hemp, including Can Legal Weed Win? author and economist Dr. Robin Goldstein from UC Davis; Director of the Maine Office of Cannabis Policy, Dr. John Hudak; and cultivation owner and Nevada attorney Judah Zakalik, Esq.. Did I mention that it’s free?
Sometimes, the universe bestows upon cannabis law and policy wonks like myself the gift of pure, uncut catnip. Like that time that MedMen argued in court that it didn’t have to pay rent on a lease because cannabis is illegal. Or the rebranding of SAFE Banking into SAFER Banking. Or when Canopy bought options from Acreage stockholders to not-quite-yet buy Acreage and forestall being deemed to own a US plant-touching company. And for sure the Tax Court case that led to Congress enacting 280E in 1982, when drug dealer Jeffrey Edmonson got the court to agree to allow him to deduct operating expenses like a scale, phone, and rent from his trafficking business. This stuff is funny.
So, imagine my utter delight when I read a report in Wednesday’s Law360 Cannabis about the residents of Highland Park, New Jersey suing to prevent licensed cannabis operations in that borough because cannabis is illegal (which is true!). The complaint is worth reading, which also claims health risks and that allowing companies to operate would “’Normalize’ Marijuana in Highland Park for Teens and Youth.” A one-two punch of law and policy.
The heart of the plaintiffs’ argument is that the New Jersey Cannabis Regulatory, Enforcement, Assistance, and Marketplace Modernization Act (or, the CREAMM Act - also funny), and the borough’s authorizing regulations, promote the violation of federal law by borough residents and employees, and contradict the borough’s own ordinance that prohibits illegal activities (very meta). Nor, the complaint argues, may a NJ municipality pass a law that violates federal law.
I have to applaud this novel and interesting use of the illegality argument. Putting aside the health and policy arguments in the complaint (which are highly rebuttable), the plaintiffs don’t seem to be wrong on the law, at least on its face. Cannabis is indeed illegal under federal law. Licensed operators indeed would be violating federal law in this New York City suburb. The borough indeed would be allowing that violation of law to occur within its borders.
None of this is new, of course. We’ve been operating in the tension between cannabis being federally illegal, yet state legal– what I like to refer to as the wave-particle duality of cannabis law – for some time now (the tension that the case filed by Boies Schiller back in October is getting at). States legalize cannabis for strong policy reasons that outweigh the possible risk of triggering the wrath of the Department of Justice. That risk may seem fairly small now, after years of operating under and post-Cole Memo without direct interference, but it was much more unknown when states first started to decriminalize, and then legalize, cannabis.
I won’t dare try to guess how this case will play out, knowing exactly zero about New Jersey caselaw and courts. What I do know is that it sure would be funny for a state court to do what the Department of Justice and federal agencies have chosen not to do – put a halt to the state legalization movement because of federal law. A falsheh matba’ieh farliert men nit (“A bad penny always turns up.”)
Be seeing you!
© 2024 Marc Hauser and Hauser Advisory. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form.