Cannabis Industry Awaits Ruling in Long-Running Lawsuit Over Federal Preemption

By Omar Sacirbey

Arizona attorney Steven White is leaving the legal profession to concentrate on his marijuana business, but he’s fighting perhaps the biggest battle of his career before moving on.

White argued his last case on March 3 in a lawsuit pitting his client – plaintiff White Mountain Health Center of Sun City, Arizona – against Maricopa County, which is trying to prevent the dispensary from opening.

The outcome of the case has national implications that could reverberate across not only Arizona, but also every state with legalized medical or recreational marijuana.

If White Mountain loses, the ruling could set a legal precedent for marijuana foes to wreak havoc on the cannabis industry, threatening dispensaries, cultivation sites and other businesses.

The case goes all the way back to 2012 and is now being heard in the Arizona Appellate Court.

Lawyers for Maricopa County, including noted prohibitionist Bill Montgomery, argue that the municipality is entitled to deny the dispensary a permit to open because the business violates the federal Controlled Substances Act given that it sells marijuana. They also argue that federal law preempts Arizona’s MMJ program.

A ruling is expected in two or three months, said White, who believes the panel of judges will rule against federal “preemption.”

Nonetheless, he said, industry supporters need to be wary of the threat.

“The issue that is most important for the industry at large is the preemption issue,” said White, CEO of Harvest of Tempe, a cultivation, processing and dispensary business that now has operations in its home state plus Nevada and Illinois. “Not everybody knows that this case is still going on. People presume that when this case was won at the trial court level, that was going to be the end.”

He added that many people don’t realize that the case is still alive and “is subject to being overturned.”

“We as an industry have to be pretty vigilante to ensure that that doesn’t happen,” White said.

Indeed, given the rapid pace of legalization over the last few years and the potential that several more states could allow recreational or medical marijuana this year, it’s easy to take legalization for granted.

But the preemption threat is not to be taken lightly.

One of the Arizona Appellate Court judges, Donn Kessler, told White Mountain’s lawyers, “Whatever you’re doing, you can’t violate federal law,” according to ArizonaCentral.com.

Similar arguments are being made elsewhere.

Last March, Nebraska and Kansas sued Colorado over its recreational marijuana program, asserting that federal law has supremacy over state law.

Federal preemption is an argument used often by local municipalities or private individuals who want to prevent marijuana businesses from opening within their borders, although so far it hasn’t been successful, attorneys said.

“The federal government can regulate marijuana and does, but states don’t have to enforce federal law,” said Ilya Shapiro, an attorney and states’ rights expert at the Cato Institute in Washington DC. “If the state wants to enforce federal law, it can do that, but if it doesn’t want to, then a private party can’t force it to.”

Professor Robert Mikos of Vanderbilt University Law School, who studies the issue, agreed.

He wrote an amicus brief in a 2013 Michigan case where John Ter Beek, a medical marijuana cardholder who grew his own medicine, sued the town in Wyoming where he lived for imposing an ordinance against cannabis cultivation.

Ter Beek lost at the district court level but appealed and won, including at the Michigan Supreme Court, where justices ruled that the federal Controlled Substances Act did not preempt Michigan’s medical marijuana law.

One of the attorneys who argued that case was Emma Anderson of the American Civil Liberties Union, who also argued the White Mountain case with attorney Steven White.

Mikos believes the Arizona case will play out like the Ter Beek case.

“If all Arizona is saying is ‘we are not going to punish people who buy and sell marijuana for medical or other purposes,’ they’re constitutionally entitled to do that,” Mikos said. “The key point is that state law is not preempted to the extent that it merely allows people to do something that’s forbidden under federal law.”

However, while states don’t have to enforce federal law, they can’t stop federal law enforcement officials from enforcing federal laws, which is why marijuana businesses in California and other states were defenseless against federal raids in years past.

“They can’t stop the federal government from coming in cracking down on these people,” Mikos said.

Those raids have subsided since the 2013 Department of Justice Cole Memo, which essentially said the federal government will not make enforcing federal marijuana laws a priority in states with legalized marijuana.

While the Cole Memo has taken some of the federal heat off state-licensed marijuana businesses, it still can’t stop a party from launching a federal preemption claim against a state, even though it might fail like past preemption cases.

“If you’ve got a governor or some other senior state official who says ‘I can’t implement this medical marijuana licensing regime because it’s preempted by federal law, maybe that official is wrong but at least for the time being, those businesses that wanted to take advantage of these laws are going to be out of luck, they’re going to have to file their own legal challenges,” Mikos said.

The best defense against preemption, attorneys said, is the 10th Amendment of the Constitution, which says that powers not given to the federal government by the Constitution, and not prohibited by it to the states, will belong to the states.

‘The federal government can’t force the states to criminalize private behavior. They can’t force a state like Arizona or Michigan to ban the possession or distribution of marijuana,” Mikos said.

Omar Sacirbey can be reached at [email protected]

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 6 Comments

  1. Desert Woman March 16, 2016
  2. joe davison March 16, 2016
    • Ingrid March 23, 2016
  3. Ronald Coquis March 22, 2016

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