Legal challenges to state cannabis ballot measures: What businesses should know

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(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the cannabis industry. Andrew Livingston is director of economics and research at Denver-based law firm Vicente Sederberg, where he tracks, analyzes and reports on marijuana-related ballot measures. Mason Tvert is a partner at VS Strategies, a Denver-based consulting firm. He has worked on several cannabis initiative campaigns at the state and local levels.)

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Andrew Livingston

While 2020 was another banner election year for marijuana policy reform – four states approved adult-use laws and two states approved medical laws – opposition lawsuits took a significant toll.

In Nebraska, a widely supported medical cannabis initiative was kicked off the ballot just weeks before voting commenced.

In Mississippi, a voter-approved medical cannabis law was overturned in a court ruling that also upended the process for future initiatives.

And in South Dakota, an adult-use measure remains in legal limbo nine months after its passage.

Cannabis-related ballot measures have faced legal challenges for decades, but up until 2020, they garnered little success in the courtroom and minimal attention in the media.

Image of Mason Tvert

Mason Tvert

For example, few people recall (or were ever aware) that the 2012 Colorado legalization initiative was subject to multiple lawsuits during the run up to its historic passage.

This might be why the recent string of successful challenges to cannabis-related ballot measures came as such a shock to industry members, advocates and outside political observers alike.

With support for legalization growing in every corner of the nation, initiative opponents are more inclined than ever to make their case in a court of law rather than in the court of public opinion.

It is critical that current and prospective cannabis operators and investors understand how these legal challenges typically arise so they can gauge the potential risks and factor them into their business decisions.

Initiative or referred measure

First, it is important to understand how measures make their way onto the ballot.

Historically, most cannabis-related measures have reached state ballots through citizen initiatives, in which one or more voters submit a proposal to state officials and collect voter signatures to qualify it for the ballot.

Measures can also be referred to the ballot by state lawmakers through a legislative process similar to the one they use to pass bills and resolutions. Both processes vary from state to state, and not every state has them.

Initiatives are more likely to encounter legal challenges than referred measures because they involve complex rules and multiple stages during which lawsuits can arise.

Referenda questions, on the other hand, are drafted by state officials, vetted throughout a legislative process, and do not require signature collection, making them less likely to wind up in the courts.

Statutory or constitutional

Another key consideration is whether the ballot measure amends state statutes or constitutions.

Some states allow one type but not the other, while others allow both options.

A key benefit of constitutional measures is that they cannot be easily altered, repealed or ignored by state legislators.

Because statutory measures are riper for legislative interference, several states have adopted measures that prohibit state lawmakers from altering or repealing them for a certain period of a time after their passage.

Constitutional initiatives often face trickier signature-collection requirements and additional restrictions on the types of changes that can be proposed, creating more openings for legal challenges.

And while constitutional measures are protected from simple legislative alteration, they are not immune from lawsuits.

The 2020 Nebraska and Mississippi medical initiatives and the South Dakota adult-use initiative were all constitutional in nature.

Types of challenges

When it comes to citizen initiatives, legalization opponents typically focus their legal challenges on one or more of the following areas:

  • Signature collection

Opponents often challenge the validity of signatures or the qualifications of signature collectors, leaving initiative campaigns with little room for error.

In Mississippi, proponents followed all the rules only to learn after the election that the rules themselves were flawed.

The Mississippi Supreme Court invalidated the voter-approved medical initiative because the state constitution required signatures to be collected equally across congressional districts so that no more than one-fifth of signatures came from a single district.

But since the addition of that requirement in 1992, Mississippi dropped from five districts to four, making the standard mathematically impossible.

  • Initiative or ballot language

The wording of initiatives, including proposed ballot titles and summaries, is subject to strict rules regarding accuracy and clarity.

For example, the Florida Supreme Court upended an adult-use initiative in April based on the short ballot summary submitted by proponents.

The summary stated that the measure would “permit” cannabis, but the justices said that adult-use legalization in Florida would not change federal law and, as such, the measure would not “permit” cannabis.

In June, the Florida Supreme Court rejected another 2022 ballot initiative for summary language it found similarly misleading.

  • Single-subject rules

Many states have laws that specify ballot measures can address only a single subject, and defining an initiative’s subject is usually open to interpretation by the courts or other state officials.

The 2020 medical initiative in Nebraska and adult-use initiative in South Dakota were both challenged for including more than one “subject.”

While industry participants might see home cultivation, employee criminal protections and business licensing as one subject under the umbrella of comprehensive cannabis regulation, the Nebraska Supreme Court viewed them each as a different subject.

The South Dakota measure was also overturned in court based on a single-subject challenge, and an appeal is pending.

  • Political landscape

Opponents’ legal challenges might be gaining traction because they are taking place in more conservative-leaning states where judges and other officials may be more inclined to rule in their favor.

Cannabis industry members should take into account that these more conservative courts have the power to invalidate voter opinion based on technical interpretations in detailed initiative requirements.

While it is impossible to know whether judges in California or Colorado would have reached the same conclusions as judges in Nebraska and Mississippi, it is not a coincidence that many successful ballot challenges occur in deep red states.

This is not to say advocates and businesses should not continue to support these efforts, as they are critical to the advancement of the industry at both the state and national levels.

But it does suggest that hopeful entrepreneurs and excited investors might want to wait until the dust settles and the state begins implementation before they begin spending significant resources on expanding their businesses.

Andrew Livingston can be reached at andrew@vicentesederberg.com and Mason Tvert at mason@vicentesederberg.com.

The previous installment of this series is available here.

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