Recently, lawsuits filed by out-of-state resident applicants seeking licensure in Oklahoma, Maine, and Missouri allege that these states’ durational residency requirements create discrimination by favoring in-state residents to the detriment of non-residents who are otherwise restricted from applying for a cannabis license if the state’s regulation requires that the applicant be a resident of the state for a certain period of time prior to submission of the application. As such, the non-resident plaintiffs have moved to bar those states, such as Missouri and Maine (Mark Toigo v. Department of Health and Senior Service, and NPG, LLC d/b/a Wellness Connection and High Street Capital Partners, LLC v. City of Portland, Maine), and others— from enforcing such regulation.
Plaintiffs in these cases successfully argued that even if the state has a legitimate interest in enforcing its durational residency requirement, the state still has the burden to prove that no alternative mechanism exists under which that same interest may be achieved. If the state cannot provide justification for durational residency requirements as imperative to protecting the state’s interests, recent case law demonstrates a likelihood that the non-resident shall prevail in arguing that the state requirement is in violation of the Dormant Commerce Clause.
Given New Jersey’s similar durational residency requirements, lawsuits involving similar allegations of unconstitutionality may be filed. For example, as stated in our article published earlier this month titled “NJ’s Framework for Social Equity Within the Adult-Use Recreational Cannabis Industry,” readers learned that when applying for a microbusiness license, the applicant needs to prove that 100% of the ownership in the microbusiness is held by New Jersey residents who have resided in New Jersey for at least two years prior to the submission of the microbusiness application. Additionally, a non-microbusiness adult use license will be issued only to an applicant whose individual ownership includes a “significantly involved person” who is an in-state resident of at least two years. In light of the durational residency requirements for cannabis licenses in New Jersey, this article takes a closer look at the lawsuits filed in Missouri and in Maine and examines each court’s ruling that the Dormant Commerce Clause was in fact violated, barring each state from enforcing its durational residency requirements.