Court rejects Missouri’s residency requirement for cannabis companies

Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.

A federal judge in Missouri ruled in favor of a Pennsylvania investor who sued the state’s medical cannabis regulators over a residency requirement for MMJ business owners.

The Missouri rule required that medical marijuana businesses be at least 51% owned by state residents, defined as those who had lived in Missouri for at least one year.

Mark Toigo’s lawsuit against the Missouri Department of Health and Senior Services argued that the residency rule violated the commerce clause of the U.S. Constitution, among other things.

According to legal-news outlet Law360, U.S. District Judge Nanette K. Laughrey granted a preliminary injunction against the rule, saying “it was unclear how Missouri’s policies accomplished their purported goal of keeping medical cannabis from being trafficked out of state.”

The judge acknowledged that the Missouri regulator had a legitimate interest in preventing medical marijuana from being diverted to the illicit market, but she wrote that the goal could be accomplished without discriminating against out-of-state business owners, Law360 reported.

Residency requirements for cannabis business ownership have faced pushback across the United States.

Oregon nixed its residency requirement in 2016, as did Colorado in 2019 and Maine in 2020.

On the other hand, a federal judge recently threw out a lawsuit against a residency requirement in Oklahoma.

Legal medical marijuana sales launched in Missouri in October 2020 and approached $25 million as of March.