According to the CEO of one of the companies, several major marijuana companies and stakeholders have banded together to sue the federal government over what they believe are unconstitutional policies impeding their operations. And, he says, they retained the services of a top law firm led by an attorney who has been involved in many high-profile federal cases.

There have been various attempts to overturn the federal ban through the court system, but what makes this emerging effort particularly noteworthy is that the cannabis industry’s Multistate Operator Coalition (MSO) will apparently be represented by Boies Schiller Flexner LLP.

David Boies, the firm’s chairman, has a long list of past clients that includes the Justice Department, former Vice President Al Gore and plaintiffs in a case that led to the marriage ban being struck down homosexual in California, among others. The prominent company’s willingness to take on the marijuana industry case would be a strong indicator that it considers the merit of the matter under consideration.

Abner Kurtin, founder and CEO of Ascend Wellness Holdings, told Marijuana Moment in a phone interview on Friday that it’s an “industry-wide effort,” with at least six major cannabis operators “favorably disposed” to join the lawsuits, one of which reportedly focuses on the federal government’s stoppage of obstructing intrastate cannabis trade and another challenge to a tax provision known as the 280E which prevents industry from taking advantage of tax deductions that are available to any other business.

Potential supporters include Curaleaf and TerrAscend, who “work very closely with me,” Kurtin said. The American Cannabis and Hemp Trade Association (ATACH) is also apparently involved in these conversations.

Curaleaf and TerrAscend did not immediately respond to Marijuana Moment’s requests for comment. (Disclosure: TerrAscend supports the work of Marijuana Moment through a monthly pledge on Patreon.)

Michael Bronstein, president of ATACH, told Marijuana Moment that the organization “strongly believes that the Controlled Substances Act and Internal Revenue Code provision 280E are misapplied to legal businesses and deserve constitutional protections.”

“ATACH continues to evaluate and explore potential legal options,” he said, without commenting directly on the organization’s potential involvement in the current litigation effort Kurtin describes.

The plan is to file both lawsuits in federal district court “within the next two months.” There are still legal documents that need to be signed to formally implicate the other companies, but he said it is effectively a formality at this point.

A lawsuit will target the federal ban on intrastate marijuana trade and challenge the constitutionality of the Controlled Substances Act (CSA) under a unique interpretation of the Commerce Clause of the Constitution. In part, plaintiffs will argue that prior court rulings on the federal government’s authority over intrastate commerce, particularly regarding fungibility, should not apply to marijuana businesses in highly regulated state legal markets.

The federal government’s position on its influence on intrastate trade has been largely based on market fungibility, or the fact that the mere fact that a given item is grown in one state can still affect prices in other states. states, and therefore the federal government still has jurisdiction over intrastate commerce. industries under the trade clause.

This is effectively what the Supreme Court determined in a 2005 case in which Californian medical cannabis patients argued that the 10th Amendment protected their right to access marijuana that was licensed to be grown and used in the home. ‘State. The court at the time ruled against the patients, saying that even if the cannabis plants in question had remained in California, it could have impacted the nation’s illicit marijuana market.

But that’s no longer the case for state-legal marijuana, Kurtin said, especially since markets have matured in isolation and highly regulated within state lines, undermining the idea that cannabis grown in one state could impact prices elsewhere.

They will also point to the federal inconsistency in cannabis enforcement, which was criticized last year by conservative U.S. Supreme Court Justice Clarence Thomas, as a clear example of why the courts should provide the marijuana industry with the relief it seeks. Thomas, for what it’s worth, ruled on the side of cannabis patients in the 2005 case.

If challenging marijuana’s status under the CSA is successful, Kurtin said it would ultimately give cannabis companies access to both the banking system and major stock exchanges.

The current second lawsuit will present similar arguments, but will focus on an Internal Revenue Service (IRS) code known as 280E, which prevents cannabis businesses from claiming federal tax deductions because, under the CSA, they’re dealing in a controlled substance.

The implications of the IRS fixing this issue could also be retroactive, Kurtin said, meaning cannabis companies that were denied federal tax breaks could theoretically change their previous tax returns and receive deductions. going back years, which could be funding. expensive lawsuit with a high-powered law firm a good long-term investment.

States’ rights will be at the center of both of these challenges. There are many precedents to draw on from this view, and Kurtin said the legal discussions that have emerged around issues such as President Obama’s health care law that impacted markets states are “very much like what’s happening with cannabis.”

The CEO also observed that this lawsuit will emerge “at a time when you have a very pro-states rights Supreme Court” that is actively considering overturning a previous abortion rights ruling that would leave the issue to the states.

He also pointed out that by the time the issue of same-sex marriage reached the Supreme Court, public sentiment towards the issue had shifted in favor of policy change. “We would make the same argument,” he said.

Taking an appropriate state approach to these cannabis cases could inspire supporters from all political walks of life to join them in the future legal challenge, which is part of the plan. Conversations are already underway with state attorneys general, Kurtin said, and an ideal scenario would be to have a bipartisan push from top state attorneys to push the issue forward.

For now, well-funded MSOs are said to be initiating the process to provide the financial resources to take this case to court, in hopes that it will eventually reach the Supreme Court if Congress does not act on it. first to end the ban. . But once the ball rolling, the hope is to have a list of plaintiffs that also includes other stakeholders who have been impacted by current federal policies, such as social equity candidates who have had difficulty in accessing traditional financial services.

It remains to be determined in which federal district court the lawsuits will be brought, but the intention is to sue a jurisdiction where marijuana is not only legal, but has a strong record of compliance and effective regulation, Kurtin said. This could be in a state like Illinois, or potentially an East Coast state that has had time to learn from early adopter experiences and implement comprehensive rules.

Kurtin said they would seek to expedite court proceedings on the grounds that the status quo is an urgent public safety issue. Marijuana businesses that currently largely operate in cash are unique targets of violent crime, as state officials, congressional lawmakers and advocates have pointed out, especially amid the amplified push to pass a bipartisan bill, the Secure and Fair Enforcement (SAFE) Banking Act.

The case could help galvanize congressional efforts to enact the policy, highlighting not only the dangers it has posed in a growing number of states that have legalized, but also the allegedly weak legal foundations that have prevented the market to engage in intrastate transactions. trade without hindrance or claiming tax deductions under 280E

As noted, there have been various attempts to challenge the constitutionality of the federal ban which have so far been unsuccessful. And the Justice Department recently asked the Supreme Court to dismiss a case involving workers’ compensation for medical cannabis that could have implications for federal supremacy (though the DOJ said part of its reasoning for the request was that he felt that the executive or legislative branch was better suited to deal with the overall problem).

But while new industry lawsuits have yet to be filed, the company that is apparently implicated in the case is giving reason to believe it could achieve a different outcome.

“I think the fact that one of the leading constitutional law firms in the United States is willing and eager to take on this case speaks volumes about the seriousness of the action and the potential likelihood of success,” Kurtin said. .

For his part, Boies Schiller Flexner co-founder and managing partner Jonathan Schiller told Marijuana Moment in a statement that the company had “no comment” on the matter.

Kurtin, for his part, said the timing of this legal challenge is no coincidence. As Senate leaders resist the SAFE Banking Act passed by the House while members demand a more comprehensive approach, some advocates and stakeholders are losing patience.

“I hope it will be another factor [so] that the Senate is saying, ‘you know, we have to get out of this or we’re going to lose this case in court.'”

State marijuana regulators say banking fix will make their jobs easier on top of helping businesses

Photo elements courtesy of rawpixel and Philip Steffan.

Marijuana Moment is made possible by the support of readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon Pledge.