New York state has approved more than 30 licenses to operate recreational cannabis stores this year.
But a good number of those new stores are tied up in litigation.
There are still no licensed adult-use retailers outside of Manhattan because of an ongoing suit filed by an out-of-state company claiming discrimination against operators based outside New York.
Based on recent case law, out-of-state companies looking to take advantage of New York’s new adult-use laws are unlikely to have much luck suing for protection under federal statute.
In Peridot Tree v. City of Sacramento, a federal court in California refused to hear a federal discrimination claim brought by a Michigan resident who was denied a retail marijuana permit in the state capital because he did not meet the municipality’s residency requirement.
Given that Congress declared marijuana distribution unlawful under the Controlled Substances Act, the court did not identify any federal interest in the case.
Citing Supreme Court authority, the court invoked an “extraordinary and narrow exception” – the federal abstention doctrine – to avoid injecting itself into a federally illegal enterprise.
The ruling, currently on appeal before the 9th Circuit, has enormous implications for any marijuana dispute that a party might bring to federal court.
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