2d Circuit strikes down portion of New York's marijuana dispensary law

The dormant Commerce Clause may be the least interesting strand of constitutional law. But every few years, a case arises in the Second Circuit that invokes that provision. This time, we are dealing with New York State's mechanism for issuing licenses to sell legal marijuana. The state's procedure is stricken under the dormant Commerce Clause.

The case is Variscite NY Four v. New York State Cannabis Control Board, issued on August 12. When New York legalized marijuana, it adopted a method for issuing licenses to sell it. If you want a dispensary license, you stand a better chance if you or a close relative were convicted for a marijuana-related offense under New York law. The state argues this provision is merely restorative justice, not a constitutional violation nor economic protectionism, which would violate the Commerce Clause. The Second Circuit disagrees, granting the plaintiff organization a preliminary injunction against the state enforcing this provision.

The Commerce Clause says Congress has authority to regulate interstate commerce. The Constitution does not expressly provide for a "dormant" Commerce Clause. That is a creature of the Supreme Court, which holds the Commerce Clause is violated when the state practices "protectionism," favoring state entities without congressional authorization. The idea is that states cannot favor one state over another in regulating commerce. Hey, we are all Americans! 

The majority (Jacobs and Calabresi, with Livingston in dissent) holds that "Congress has given New York no clear permission to favor its residents over others whose businesses skirt the federal drug laws. Under traditional dormant Commerce Clause principles, New York’s prioritization of applicants with convictions under New York law is a protectionist measure that cannot stand." Plaintiffs convinced the Second Circuit to strike down this provision because they are from California and want a New York dispensary license. Since they were never convicted of any drug offenses under New York law, they are harmed by this statute simply because they are not New Yorkers and therefore lose priority in receiving a dispensary license.