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Memo
Date: April 1, 2020

To: Robert Ross, Chief Legal Counsel

cc: David Torrisi, CEO, Commonwealth Dispensary Association
From: Kevin Conroy
Jesse Alderman
Regarding: The Commerce Clause is Inapplicable to Residency Restrictions for
Cannabis Sales

We write this memorandum on behalf of our client the Commonwealth Dispensary

Association. Governor Baker has stated that he cannot deem adult use cannabis an “essential
service,” in the same manner as package stores, pursuant to COVID-19 Order No. 21, issued
March 31, 2020, because out-of-state customers would travel to the Commonwealth to
purchase cannabis and thereby further spread COVID-19. The Governor could lawfully
address this valid concern by only authorizing sales to consumers showing proof of
Massachusetts residency (in addition to curbside pickup, and other social distancing
measures to prevent the transmission of COVID-19 that have already been implemented by
the Cannabis Control Commission). However, it has been suggested that limiting adult use
cannabis sales to Massachusetts residents would violate the Commerce Clause of the United
States Constitution. Contrary to that suggestion, the Commerce Clause is inapplicable to
residency restrictions for cannabis sales.

Such a residency restriction would not violate the Commerce Clause as a matter of
well-established law. Because Congress has affirmatively banned interstate commerce in
cannabis through the Controlled Substances Act, the Commerce Clause does not protect out-
of-state cannabis purchasers from “discrimination” (i.e., differential treatment) by the
Commonwealth. No legal challenge under the Commerce Clause would lie, and a court
would summarily dismiss any such action under longstanding Commerce Clause
jurisprudence. Likewise, even if an action did lie, the United States Supreme Court has held
that temporary measures, such as residency restrictions, in public health emergencies do not
violate the Commerce Clause.

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I. The Dormant Commerce Clause’s Prohibition on Unjustified Discrimination
Against Out-of-State Commerce Does Not Apply Where Congress Has
“Affirmatively Acted” to Forbid Interstate Commerce in Cannabis.

The Commerce Clause provides that Congress has the power “to regulate commerce
with foreign nations, and among the several states, and with the Indian tribes.” U.S. CONST.
Art. I, section 8, cl. 3. That is the totality of the text. However, the US Supreme Court has
long held that the Commerce Clause has a “negative aspect” known as the Dormant
Commerce Clause. Alliance of Auto Mfrs. v. Gwadosky, 430 F.3d 30, 35 (1st Cir. 2005). The
Dormant Commerce Clause protects Congress’ residual authority to regulate interstate
commerce even when it has not directly legislated in the area.

The purpose of the Dormant Commerce Clause is to “prevent[] state and local
governments from impeding the free flow of goods from one state to another.” Houlton
Citizens Coalition v. Town of Houlton, 175 F.3d 178, 184 (1st. Cir. 1999) (emphasis
supplied). It is critical to note that “[t]he dormant Commerce Clause does not affect state or
local regulations directly authorized by Congress, but rather, acts as a brake on the states’
authority to regulate in areas in which Congress has not affirmatively acted.” Id. (emphasis
supplied). Cf. Southern Pacific Co. v. Arizona, 325 U.S. 761, 768 (1945)( Dormant
Commerce Clause only applies where Congress has “not spoken”); Pharmaceutical Care
Mgmt. Assoc. v. Rowe, 429 F.3d 294, 310-11 (1st Cir. 2005) (Dormant Commerce Clause
only applies only “in the absence of conflicting legislation by Congress”); See Portland Pipe
Line Corp. v. City of South Portland, 288 F.Supp.3d 321 (D. Me. 2017) (“In matters not
governed by federal legislation, the Clause has long been understood to have a ‘negative’
aspect that denies the States the power unjustifiably to discriminate . . . .”).

The Tenth Circuit has a concise explanation: “As to matters within the scope of the
Commerce Clause power, Congress may choose to regulate, thereby preempting the states
from doing so, or to authorize the states to regulate. If Congress is silent—neither
preempting nor consenting to state regulation—and a state attempts to regulate in the face of
that silence, the Supreme Court . . . has interpreted the Commerce Clause to limit state
regulation of interstate commerce by applying the negative implications of the Commerce
Clause . . . Accordingly, the Commerce Clause is both an express grant of power to Congress
and an implicit limit on the power of state and local government.” United States v. Durham,
902 F.3d 1180, 1204 (10th Cir. 2018). The common law prohibition on unjustified
discrimination against out-of-state commerce is found within the Dormant Commerce Clause
jurisprudence – in other words, only when Congress has not already regulated in the area of
commercial activity. The Dormant Commerce Clause is a reservation of exclusive interstate
authority to Congress. That is why it does not apply when Congress has acted.

Here, Congress has already “affirmatively acted” in the area of cannabis commerce.
Town of Houlton, 175 F.3d at 184. Therefore, the Dormant Commerce Clause’s implied ban
on discrimination of out-of-state commerce is not applicable. An action alleging violation of
the Dormant Commerce Clause for a restriction of cannabis sales to Massachusetts residents
could not lie. As the First Circuit explained, the Dormant Commerce Clause’s implicit
proscription on discrimination against interstate commerce is only “a brake on the states'
authority to regulate in areas in which Congress has not affirmatively acted.” Town of

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Houlton, 175 F.3d at 184. It is well known that the Commonwealth’s cannabis laws
authorizing state-regulated sales of adult use cannabis, namely G. L. c. 94G, are preempted
by the federal Controlled Substances Act, which makes that activity federally illegal.
Congress – through the Controlled Substances Act – has prohibited all interstate commerce
in cannabis – a power the Supreme Court has held derives from the Commerce Clause. See
Gonzales v. Raich, 545 US 1 (2005).

Where Congress has explicitly preempted state authorization of cannabis regulation

that allows its flow into interstate commerce, a plaintiff could not avail herself of the
Commerce Clause’s dormant protections at all, yet alone to claim Massachusetts has
impeded the free flow of something Congress has banned. Indeed, the Dormant Commerce
Clause works to protect “the free flow of goods from one state to another.” Town of Houlton,
175 F.3d at 184. Where Congress has made that free flow a criminal act, the Commerce
Clause’s dormant protections are unavailable.

As a final matter, it should be noted that – precisely because Dormant Commerce

Clause protections are inapplicable – numerous states have imposed residency restrictions in
their cannabis laws. In fact, only Massachusetts residents may receive a medical marijuana
registration in Massachusetts. 935 CMR 501.002 (defining in relevant part, “Qualifying
Patient” to mean “a Massachusetts Resident 18 years of age or older who has been
diagnosed by a Certifying Healthcare Provider as having a Debilitating Medical Condition . .
.) (emphasis supplied). See also Missouri Code. Regs. tit. 19 § 30-95.025(4)(A)(2) (requiring
owners of medical marijuana businesses to be 51% owned by Missouri residents); Okla.
Admin. Code 310:681-1-6 (restricting medical marijuana business owners to Oklahoma
residents). In other words, like many other states, Massachusetts already has lawfully
imposed residency restrictions in its cannabis laws.

II. Even if a Court Were to Entertain a Legal Challenge, Temporary Quarantines

in Public Health Emergencies Do Not Violate the Dormant Commerce Clause.

Separately, in the extremely unlikely event that a Court were to entertain a

Commerce Clause challenge in spite of the Controlled Substances Act, there are a long line
of federal cases that hold that temporary quarantines in public health emergencies that
discriminate against out of state interests do not violate the Commerce Clause. A legal
challenge to a quarantine against out-of-state cannabis purchasers (particularly where
Massachusetts borders New York and Connecticut) would be immediately dismissed based
on the well-settled authority that temporary public health residency restrictions do not violate
the Commerce Clause. Oregon-Washington R. & Nav. Co. v. State of Washington, 270 U.S.
87, 93 (1926) (commerce clause case calling state power to exclude out of state commerce in
public health quarantine “well settled”); Compagnie Francaise de Navigation a Vapeur v.
Louisiana State Board of Health, 186 U.S. 380 (1902); Gibbons v. Ogden, 22 U.S. 1, 18
(1824). See Congressional Research Service, Federal and State Quarantine and Isolation
Authority (Oct. 9, 2014) at 8-9.

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