Judge Declines to Stop L.A. Social Equity Lottery

Decision turned on the issue of "irreparable harm."

Unlike what happened in New York, a U.S district judge in Los Angeles refused to halt a scheduled lottery for social equity cannabis licenses in the city.

Kenneth Gay, the owner of Variscite Inc., filed suit against the city of Los Angeles claiming that the city’s regulatory scheme violates the U.S. Constitution’s dormant commerce clause. The L.A. social equity program – and most of its marijuana business licensing to date – has focused on those with cannabis criminal convictions, but it also excludes anyone who doesn’t have such a record from within California and specific “disproportionately impacted areas” in the state.

In her opinion on Thursday, Judge Sherilyn Peace Garnett noted that Gay’s request for an injunction did not meet the standard of preventing “irreparable harm” if the lottery were to proceed.

“Plaintiffs’ argument that they will suffer irreparable harm are based on their speculation that they would be able to successfully enter the commercial retail cannabis market, establish a loyal customer base, and make a profit,” Garnett wrote. “Thus … the Plaintiffs’ monetary losses associated with the challenged provisions are purely speculative and insufficient.”

In addition, Garnett disagreed with the assertion that the clause limiting applicants to those who had a conviction in California put an undue burden on nonresidents of the state. “By its terms, this does not require the applicant to have been a California resident currently or at the time of arrest,” she wrote.

Other Cases

This differing opinions on the injunctions between L.A. and New York highlight how blurry the current lines can be for creating a state-legal cannabis program the embraces the idea of attempting to repair some of the harm caused by the War on Drugs.

The position taken by Garnett in Los Angeles this week mirrored a decision issued by a federal judge in Illinois over the summer. In that case, Judge Rebecca Pallmeyer declined to halt a licensing process that was already two years behind schedule, according to a report in Crain’s Chicago.

A key factor in Pallmeyer’s decision was that neither person who filed suit had actually applied for a license, and there was no way to know whether they would qualify to receive one.

On the other hand, similar cases, including one filed by one of the plaintiffs in the Illinois case, succeeded in Missouri and elsewhere.

The conflicting decisions just add another layer to the patchwork structure of the U.S. cannabis industry developing while the plant continues to be illegal under federal law.variscite-la

Jenel Stelton-Holtmeier

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