Business

SCOOP: Oregon distributor sues state on interstate trade

By Alex Halperin
Nov 15, 2022
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A south Oregon distributor sued the state to allow interstate cannabis commerce. The complaint, filed Monday in Oregon federal court, argues the state’s export ban is unconstitutional and hurts the state’s export-ready industry.    

“There is no constitutionally adequate reason for Oregon, or any other state, to bar the import or export of marijuana,” Jefferson Packing House argues. 

“Attempting to appease the perceived enforcement priorities of the federal government to induce the [U.S. Department of Justice] to continue its policy of nonenforcement…implicates fatal separation of powers concerns,” the suit continues. “Only Congress can authorize the States to regulate interstate commerce, not the DOJ,” 

  • The plaintiff is represented by Andrew DeWeese and Kevin Jacoby of Portland-based Greenlight Law Group

In an accompanying letter to Oregon Gov. Kate Brown and other state officials, the plaintiff’s lawyers cite a recent Maine case where a federal appeals court ruled the U.S. Constitution’s dormant Commerce Clause (DCC) blocked the state from imposing residency requirements on MED license holders.  “This decision indicates a growing consensus within the courts to view marijuana commerce the same as any other commerce,” the letter states.

“Under the DCC, for example, an Oregon law prohibiting the export of hazelnuts (or grapes, semiconductors, Bigfoot decals, etc.) would be invalidated,” the letter says.  “We believe it is likely that a federal court will…invalidate state laws” prohibiting cannabis exports, despite federal illegality.

The complaint asks that Brown and other state officials not defend Oregon’s law prohibiting cannabis exports and instead join its plea to the judge.

  • The suit comes days after Oregon speaker of the house Tina Kotek (D) won a close race to replace Brown. Her defeated opponent Christine Drazan (R) was chillier to cannabis reform.   

In a Forbes article this month, Vanderbilt Law professor Robert Mikos argued companies could pry open interstate markets by suing states, and predicted the lawsuits could begin in 12-18 months.

“State bans, I think, are plainly unconstitutional,” Mikos said. However cannabis lawyers disagree on whether this approach could lead to interstate trade before federal legalization. 

As talk of federal reform heats up in Washington D.C., the prospect of interstate commerce has never loomed larger for the cannabis industry. In September, California Gov. Gavin Newsom signed a law enabling the state to make interstate trade agreements with other states. 

  • Similar to the Oregon lawsuit, California’s top regulator Nicole Elliott, and many in the California industry, believe California will become a major cannabis exporter once it can legally do so. 
  • Others argue it will introduce new complications to an already struggling market.