Government moves to dismiss Boies case

The DOJ says Massachusetts has sold billions of dollars of cannabis and to out-of-state residents.

The Department of Justice moved to dismiss the case brought against Attorney General Merrick Garland by several cannabis companies based in Massachusetts. The group had hired famed attorney David Boies in October of 2023 alleging that the federal government has no basis for enforcing the Controlled Substances Act against intrastate, state-regulated cannabis operations.

Green Market Report wrote at the time the coalition wanted to urge the federal government to not enforce the CSA in a manner that interferes with the intrastate cultivation, manufacture, possession, and distribution of cannabis, under state law.

“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,” said David Boies, chairman of Boies Schiller Flexner LLP.

Government Response

The DOJ seemed to take the case seriously as its motion to dismiss ran 25 pages long. It kicked off by saying “Courts have consistently, and correctly, held that no fundamental right exists to distribute, possess, or use marijuana.”

Injury or Harm

One of the main arguments that could have worked in this case was to argue that the cannabis companies had been harmed or injured, but the government responded that the parties hadn’t been harmed. The DOJ said that the government hasn’t kept them from growing or selling cannabis. The government said that fearing the “risk of prosecution” for working with a federally illegal substance isn’t enough of a harm. Indeed, the DOJ said it doesn’t go after people or businesses that follow the established cannabis rules within their state.

The government went on to argue that billions of dollars of cannabis are sold in Massachusetts so the companies are certainly able to grow and sell. The DOJ also said it wasn’t keeping people from other states to purchase these cannabis products either. The state promotes the sale of products to out-of-state residents by urging them to enjoy their purchases.

Constitutionality

The plaintiffs also argued that because they worked in cannabis they were denied government loans, the ability to own guns, the inability to take tax deductions and that there was a federal ban on public housing. The DOJ request to dismiss noted that the case didn’t actually say these things were unconstitutional.

“A claim that a plaintiff is harmed by one provision does not give that plaintiff license to challenge the constitutionality of another provision, even where the provisions are interconnected,” the government wrote.

Banking?

Finally, the plaintiffs argued that third parties like banks and insurance companies wouldn’t work with them. They claim that credit card companies won’t process transactions and some companies won’t allow job postings. The motion stated,

Plaintiffs do not allege that Defendant has coerced third parties not to transact with Plaintiffs. To the contrary, Plaintiffs allege that some third parties, such as banks and insurers, do transact with Plaintiffs.

The plaintiffs argued that they did have banks willing to work with them, but that they charged more money, which undercut the argument of harm. They also couldn’t point to the government has having ordered the companies to not work with cannabis. The DOJ argued that these companies chose on their own to not work with cannabis.

Plaintiffs

The group of cannabis companies that came together for the case includes multistate giant Verano Holdings Corp.(OTC: VRNOF), dispensary owner Canna Provisions Inc., cultivator Wiseacre Farm Inc., and cannabis delivery owner Gyasi Sellers.

The Plaintiff’s response to the motion to dismiss was as follows:

“Plaintiffs look forward to demonstrating their standing before the Federal District Court in Springfield, Massachusetts. Plaintiffs have been injured by the federal government’s ban on cultivating, manufacturing, and distributing intrastate marijuana. Plaintiffs brought this suit to stop the enforcement of that unconstitutional ban and protect themselves and others similarly situated from further injury.   The facts in the Complaint distinguish this case from Gonzales v. Raich, the 2005 Supreme Court decision on which the government continues to rely.”

The On Drugs substack written by  Matt Zorn and Shane Pennington wrote, “Bottom line, if the objective of this lawsuit is to win, don’t count on it. (I know of many other legal theories more likely to succeed.) If, however, the objective is to raise the profile of the issue, be proactive, and get people talking, then let’s give it some credit. At least we’re having a conversation, right?”

MTD Canna v Garland

 

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


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