Federal Court of Appeals Holds State Residency Requirements Violate Dormant Commerce Clause

by Omar Figueroa

August 18, 2022

On August 17, 2022, the United States Court of Appeals for the First Circuit — whose jurisdiction extends to Maine, Massachusetts, New Hampshire, Rhode Island, and Puerto Rico — issued a landmark appellate opinion concerning state residency requirements.  The federal Court of Appeals held that the Maine Medical Marijuana Act violated the dormant Commerce Clause of the United States Constitution by requiring officers and directors of medical marijuana dispensaries operating in Maine to be Maine residents.

By way of background, the Commerce Clause provides that Congress shall have the power to regulate Commerce among the several States.  The Supreme Court has construed the Commerce Clause to be not only an affirmative grant of authority to Congress to regulate interstate commerce, but also a negative, self-executing limitation on the power of the states to enact laws that place substantial burdens on interstate commerce.  In other words, the negative or dormant implication of the Commerce Clause prohibits state taxation or regulation that discriminates against or unduly burdens interstate commerce and thereby impedes free private trade in the national marketplace.  Thus, the dormant aspect of the Commerce Clause in and of itself protects interstate commerce from the evils of economic isolation and protectionism that state regulation could bring about.

The appellate court affirmed a lower court ruling which concluded that the Maine residency requirement is a facially protectionist state regulation of an interstate market in medical cannabis that continues to operate even in the face of federal prohibition, and such a protectionists state regulation violates the dormant Commerce Clause.  Thus, the lower court concluded that the “dormant implication of the Commerce Clause” prohibits Maine’s residency requirement from being given legal effect.  Yet, the appellate opinion was not unanimous and the dissent opined that the dormant commerce clause should not apply to medical marijuana because cannabis remains federally illegal under the Controlled Substances Act.

This influential opinion will open the door to constitutional challenges to state cannabis laws and regulations which violate the dormant Commerce Clause by discriminating against out-of-state residents.

The opinion can be read below and downloaded here.

Maine Dormant Commerce Clause.