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Another Federal Court Rules Dormant Commerce Clause Applies to Cannabis Licenses

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2 days agoon

New York’s argument that the U.S. Constitution does not apply to its state cannabis licensing program is flawed, a federal court ruled Aug. 12.
The U.S. Court of Appeals for the Second Circuit ruled that the New York Cannabis Control Board’s (CCB) licensing procedure for adult-use dispensaries violated the dormant Commerce Clause by providing in-state applicants with cannabis-related offenses an advantage.
Under the dormant Commerce Clause of the U.S. Constitution, states are forbidden from adopting protectionist measures in order to preserve a national market for goods and services.
However, many state cannabis programs have evaded constitutional attack while prioritizing in-state applicants for licensure because interstate commerce is outlawed under cannabis’s Schedule I federal status—meaning there is no national cannabis marketplace to protect from state economic isolationism.
In New York, state officials argue that the CCB’s residency requirement for preferred licensure does not violate the dormant Commerce Clause because the board’s purpose following adult-use legalization was to award licenses to business owners previously impacted by drug war policies as a restorative justice measure, not an economic protectionism measure.
Furthermore, the state argued that because cannabis is federally illegal, a pair of license applicants with ownership ties to California has no standing to challenge state law.
The plaintiffs/appellants in the case, Variscite NY Four LLC and Variscite NY Five LLC, submitted adult-use dispensary license applications for the CCB’s December 2023 licensing pool. While Variscite’s majority owners had lived in “communities disproportionately impacted by cannabis prohibition” in Los Angeles, they did not have cannabis convictions in New York and therefore failed to satisfy New York’s “extra priority” requirements for licensure.
Variscite filed a motion in December 2023 for a temporary restraining order and a preliminary injunction, but the U.S. District Court for the Northern District of New York denied preliminary relief to Variscite in February 2024, ruling that the dormant Commerce Clause does not apply to markets that Congress has criminalized.
Variscite appealed, and, on Aug. 12, the Second Circuit vacated the district court’s decision in a 2-1 ruling.
“That was [an] error,” Circuit Judge Dennis Jacobs wrote in Tuesday’s majority opinion about the district court’s ruling.
“We hold that Plaintiffs-Appellants have standing to challenge certain of New York’s licensing practices under the dormant Commerce Clause, and that their suit is ripe; that the dormant Commerce Clause applies and Congress has given New York no clear permission to enforce protectionist marijuana licensing laws; and that New York’s prioritization of applicants with convictions under New York law is a protectionist measure that cannot stand,” Jacobs wrote.
In other words, the Second Circuit’s opinion is that New York’s conditional adult-use retail dispensary (CAURD) licenses, issued beginning in 2022, to businesses owned by justice-involved individuals are unconstitutional.
Specifically, New York’s cannabis regulators issued 291 CAURD licenses.
Jeffrey Jensen, a California and New York lawyer who founded the Variscite companies that have sued New York’s cannabis regulators multiple times, was not surprised by the Second Circuit ruling in Variscite’s favor.
“The Second Circuit reached the conclusion mandated by the Constitution,” Jensen told Cannabis Business Times. “The dormant Commerce Clause applies to all cannabis licenses because the federal government’s power to make cannabis illegal under the Commerce Clause is wholly separate from a state’s inability to prefer its own residents for economic advantages under the dormant Commerce Clause.”
The Second Circuit’s ruling falls in line with a First Circuit Court ruling from August 2022, which upheld a lower judge’s ruling in Maine that the state’s residency requirement for medical cannabis business owners was unconstitutional.
Matthew S. Warner, a partner at law firm Preti Flaherty Beliveau & Pachios LLP who represented the plaintiffs in Maine, told CBT at the time that the First Circuit’s ruling “confirms that the U.S. Constitution applies to the marijuana industry like it does to any other. … To have constitutional protections in place that every other industry has will be good for the industry in the long run, and it should certainly influence the way policymakers start doing their jobs, now.”
In addition to the First and Second Circuit rulings that are now finalized, there are three active appeals—one in the Fourth Circuit and two in the Ninth Circuit—that also relate to the dormant Commerce Clause’s application to state cannabis license preferences.
Notably, Jensen is a lawyer tied to the appeals in both the Fourth and Ninth circuits, but for different clients.
Should there be an eventual circuit split, the losing parties could seek relief before the U.S. Supreme Court.
RELATED: Revisiting Gonzalez in the Face of a Potential Circuit Split
In Tuesday’s Second Circuit ruling, Jacobs wrote that “a prohibition intended to eradicate an interstate market is not a license for states to incubate intrastate markets in the same product.”
The judge explained that while bans on interstate commerce can lead to complementary state bans, New York has not banned interstate cannabis traffic but rather provided licensing preferences to individuals who obtained cannabis convictions in New York, whether they left the state thereafter or not.
“To privilege state protectionist legislation, Congress must do more than disapprove of an interstate market: It must approve the protectionism itself,” Jacobs wrote.
“The only thing Congress has clearly authorized by criminalizing marijuana is federal prosecution for the manufacture, distribution and possession of marijuana,” the judge wrote. “Congress has given New York no clear permission to favor its residents over others whose businesses skirt the federal drug laws.”

Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
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Klutch Cannabis Opening 5th Ohio Dispensary in Northfield

Published
16 minutes agoon
August 15, 2025
[PRESS RELEASE] – NORTHFIELD VILLAGE, Ohio, Aug. 15, 2025 – Klutch Cannabis, one of Ohio’s leading vertically integrated cannabis companies, announced the grand opening of its newest dispensary, located at 10650 Northfield Road in Northfield Village, Ohio. Doors will officially open at 10 a.m. Aug. 21, 2025.
The new location marks Klutch’s first dispensary in Summit County, where the company is headquartered. Conveniently situated directly across the street from the MGM Northfield Park Casino and Racetrack, the dispensary is easily accessible from Route 8 and I-271, finally bringing much-needed access to medical cannabis patients and adult-use consumers in Northern Summit County communities, including Northfield Village, Macedonia, Northfield Center Township, Twinsburg, Hudson, Sagamore Hills, Boston Township, Richfield Township, Bath Township, and more.
The expansion further solidifies Klutch’s retail footprint in Northeast Ohio and represents an important milestone as the company begins delivering its renowned top-shelf products on its home turf. Offerings will include exclusive drops and limited releases along with customer favorites from the company’s Klutch Cannabis and Habitat by Klutch lines, its Ohio-exclusive brand partners, and other Ohio cannabis companies. The Northfield dispensary will also feature Klutch’s signature aesthetic and exceptional customer service, as well as a convenient drive-thru pickup window for pre-orders.
Hours of operation for the new Northfield Village location will be:
- 10 a.m. to 10:45 p.m. Thursday through Saturday
- 10 a.m. to 10 p.m. Sunday through Wednesday
“We’re incredibly excited to expand Klutch Cannabis’s retail footprint to Summit County,” Klutch founder and CEO Adam Thomarios said. “This location has been years in the making and will finally provide patients and adult-use customers in Northern Summit County with access to the quality, care, and consistency that Klutch is known for. Our thanks go out, especially, to the community, administration, and officials in Northfield Village for being such great partners from the start. The Village is a great place to do business, and we can’t wait to start making a positive impact in the community.”
For more information about Klutch Cannabis, its dispensaries, and its award-winning products, visit KlutchCannabis.com and HabitatbyKlutch.com or follow @KlutchxCommunity and @HabitatbyKlutch on Instagram.

Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
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Book Review: The Traveling Cannabis Writer’s Guide to America’s Hidden Gems

Published
1 hour agoon
August 15, 2025
Every so often, a cannabis book comes along that feels like it has been missing from the shelf for years. Veronica “Vee” Castillo’s Cannabis Legacy Chronicles Series: The Traveling Cannabis Writer’s Guide to America’s Hidden Gems – Part 1: The 30,000-Foot View is one of those rare finds.
We read it cover to cover and it is clear: Vee has built something more than a travelogue. This is six years of crisscrossing the United States, living out of suitcases, rental cars, and guest rooms, documenting over 200 stories that mainstream media rarely touches.
The book brims with voices from every corner of the cannabis map: Black, Brown, and woman-owned businesses, legacy cultivators preserving genetics through prohibition, Caribbean entrepreneurs blending tradition with modern cannabis tourism, and women who left corporate jobs to open dispensaries, grow medicine, and build communities.
What sets it apart is Vee’s perspective. She writes like someone who has been in the grow rooms, sat at the kitchen tables, and walked the fields, not parachuting in for a quick profile but staying long enough to see the heartbeat of each place. Her chapters on women innovators, cultural preservation, and equity-driven tourism do not just inform, they inspire.
This is not a story about cannabis, the commodity. It is about cannabis, the connector.
If you care about the soul of this industry, if you want to see the people and places that make cannabis culture rich and resilient, this book delivers. It is equal parts history, advocacy, and celebration, wrapped in storytelling that is as authentic as it gets.
Vee will soon be bringing that same depth of reporting to High Times, and if Cannabis Legacy Chronicles is any indication, readers are in for something special.
We cannot recommend it enough. Grab your copy of Cannabis Legacy Chronicles: Part 1 here and see why we are so excited to welcome her to the High Times family.

Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
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Texas Senators Unanimously Pass Hemp THC Ban Bill Hours After Governor Convenes Second Special Session

Published
2 hours agoon
August 15, 2025
The governor of Texas has convened another special session—again directing lawmakers to advance legislation regulating consumable hemp and setting an age limit to access cannabinoids. Within hours, a Senate committee quickly and unanimously approved a reintroduced bill that would simply ban hemp THC products in contravention of Gov. Greg Abbott’s (R) call for regulation.
After Democratic House lawmakers staged a walkout during the first special session Abbott convened—denying the chamber a quorum in protest of a proposed redistricting plan for the state’s congressional map—the governor on Friday issued a proclamation to start a second special session. The session cannot last longer than 30 days under the state constitution, but there’s no limit on how many can be called.
On the same day Abbott declared the new session, the Senate State Affairs Committee quickly passed a reintroduced hemp bill from Sen. Charles Perry (R) in a 9-0 vote.
The legislation would continue to outright ban cannabis products with “any amount” of cannabinoids other the CBD and CBG. Even mere possession of a prohibited cannabis item would be punishable as a Class B misdemeanor, carrying up to 180 days in jail and a $2,000 fine.
The governor’s latest proclamation also renews his call for legislation “making it a crime to provide hemp-derived products to children under 21.”
But while Perry’s bill that moved through committee would impose a complete ban on hemp containing any THC, Abbott said in his latest proclamation that he wanted to see a measure sent to his desk that would “comprehensively regulate hemp-derived products, including limiting potency, restricting synthetically modified compounds, and establishing enforcement mechanisms, all without banning lawful hemp-derived products.”
Heather Fazio, director of the advocacy group Texas Cannabis Policy Center, told Marijuana Moment on Friday that the group is “disappointed to see the senate suspend their own rules to circumvent public notice requirements, disenfranchising the many Texans who would have testified in opposition to SB 6.”
“This is yet another sweeping ban on THC products,” she said. “Most Texans agree with Governor Abbott: The Texas legislature should regulate, not ban, THC products.”
(Disclosure: Fazio supports Marijuana Moment’s work via monthly Patreon pledges.)
An initial version of the governor’s new proclamation for the second special session said cannabinoid products should be age-gated to prohibit access for people under 18, but that was quickly revised and republished with the age limit of 21—similar to the call for the prior special session—for reasons that are unclear.
The proclamation for the new session also specifies that regulations should not ban “lawful hemp-derived products,” whereas the proclamation for the first session referenced a “lawful agricultural commodity.”
Special Session #2 begins immediately.
There is critical work that is left undone.
Texas will not back down from this fight.
That’s why I am calling them back today to finish the job.
Read my Special Session #2 agenda here: https://t.co/z9i949oQCw pic.twitter.com/jVE4S9hHAS
— Greg Abbott (@GregAbbott_TX) August 15, 2025
Hemp advocates and industry stakeholders say that would effectively eradicate the state’s market, as there are very few businesses that manufacture isolated CBD or CBG products that contain no traces to THC or other cannabinoids. Federal law allows hemp products containing up to 0.3 percent THC by dry weight.
A similar bill from Perry passed the Senate during the first special session but did not advance in the House.
The other new bill filed for the second special session from Rep. Charlie Geren (R) would follow the governor’s directive to make it so consumable hemp products could only be purchased by adults 21 and older.
Ahead of the end of the first special session, the House Public Health Committee took up the prior bill to ban consumable hemp products containing THC, without taking action on it.
Abbott vetoed an earlier version of the controversial proposal that passed during this year’s regular session, and he more recently outlined what he’d like to see in a revised version of the bill.
Some, including Lt. Gov. Dan Patrick (R) and Senate bill sponsor Perry, have insisted that an outright ban is a public safety imperative to rid the state of intoxicating products that have proliferated since the crop was federally legalized in 2018. Others say the legislature should instead enact regulations for the market to prevent youth access while still allowing adults 21 and older to access the products and preserving the massive industry.
—
Marijuana Moment is tracking hundreds of cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
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Meanwhile, Abbott in June signed a bill into law that expanded the state’s list of medical cannabis qualifying conditions, adding chronic pain, traumatic brain injury (TBI), Crohn’s disease and other inflammatory bowel diseases, while also allowing end-of-life patients in palliative or hospice care to use marijuana.
Texas officials took another step toward implementing that law this week—posting a draft of proposed rules to let physicians recommend new qualifying conditions for cannabis and create standards for allowable inhalation devices.
That came about a week after the the Department of Public Safety (DPS) previewed a separate set of rules to increase the number of licensed dispensaries under recently passed legislation.
During the first special session, Rep. Nicole Collier (D) introduced a one-page bill, HB 42, designed to protect consumers in the state from criminal charges if what they believed was a legal hemp product turned out to contain excessive amounts of THC, making it illegal marijuana. It would prevent the criminalization of someone found in possession of a product that’s labeled as hemp but is determined to contain “a controlled substance or marihuana.”
In order for the person to obtain the legal protection, the product would need to have been purchased “from a retailer the person reasonably believed was authorized to sell a consumable hemp product.”
Another bill—HB 195, introduced by Rep. Jessica González (D)—would legalize marijuana for people 21 and older, allowing possession of up to 2.5 ounces of cannabis, with no more than 15 grams of that amount being in concentrated form.
Yet another proposal would order state officials to conduct a study on testing for THC intoxication.
As for what Texans themselves want to see from their representatives, proponents of reining in the largely unregulated intoxicating hemp industry in Texas shared new polling data indicating that majorities of respondents from both major political parties support outlawing synthetic cannabinoids, such as delta-8 THC.
The survey also found that respondents would rather obtain therapeutic cannabis products through a state-licensed medical marijuana program than from a “smoke shop selling unregulated and untested hemp.”
Ahead of the governor’s veto in June of SB 3—the earlier hemp product ban—advocates and stakeholders had delivered more than 100,000 petition signatures asking Abbott to reject the measure. Critics argued that the industry—which employs an estimated 53,000 people—would be decimated if the measure became law.
Photo courtesy of Chris Wallis // Side Pocket Images.

Author: mscannabiz.com
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