Brinkmeyer v. Washington State Liquor and Cannabis Board, No. 3:2020cv05661 - Document 64 (W.D. Wash. 2023)

Court Description: ORDER denying Petitioner's 34 Motion for Summary Judgment; granting Respondent's 39 Motion for Summary Judgment. (see order for specifics) Signed by Judge Benjamin H. Settle.(MW)

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Brinkmeyer v. Washington State Liquor and Cannabis Board Doc. 64 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 1 of 37 1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 6 7 8 TODD BRINKMEYER, Petitioner, 9 10 v. CASE NO. C20-5661 BHS ORDER GRANTING DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT WASHINGTON STATE LIQUOR AND CANNABIS BOARD, 11 Respondents. 12 13 14 15 16 17 This matter comes before the Court on Petitioner Todd Brinkmeyer and Respondent Washington State Liquor and Cannabis Board’s (“LCB”) cross Motions for Summary Judgment, Dkts. 34 (Petitioner), 39 (Respondent). Brinkmeyer seeks a declaratory judgment that Washington’s residency requirements for obtaining a commercial cannabis 1 license are facially unconstitutional. LCB argues that Brinkmeyer 18 1 19 20 21 22 For clarity and consistency, the Court generally refers to the substance at issue as “cannabis” rather than “marijuana” except when marijuana is the more accurate term. Washington’s residency requirements apply to “cannabis.” As the Court understands it, cannabis is the broader term, encompassing products that contain both high and low amounts of tetrahydrocannabinol (“THC”). Both marijuana and THC, aside from THC in hemp, are illegal under federal law. See 21 U.S.C. § 812, Schedule I. Nevertheless, the terms are often used interchangeably, and to the extent quoted or referenced sources use the term marijuana, the Court considers them to be interchangeable for the purposes of this order. ORDER - 1 Dockets.Justia.com Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 2 of 37 1 lacks standing and that his claims fail on the merits, primarily because cannabis remains 2 federally illegal. The Court has considered the briefing filed in support of and in 3 opposition to the motions and the remainder of the file and grants LCB’s motion for the 4 reasons stated below. 5 I. FACTUAL BACKGROUND 6 The citizens of Washington State enacted Initiative Measure 502 in 2012, 7 legalizing the possession and sale of cannabis in the state for those twenty-one years of 8 age and older. Dkt. 34 at 7. Washington and Colorado were the first states to pass such 9 initiatives. Nineteen more states, two territories, and Washington, D.C., have since 10 legalized recreational cannabis; 2 sixteen other states and two additional territories have 11 comprehensive medicinal cannabis programs; 3 and ten states have cannabidiol (“CBD”) 12 or low THC programs. 4 Cannabis remains fully illegal in only three states and one 13 territory. 5 Nevertheless, cannabis continues to be federally illegal under the Controlled 14 Substances Act (“CSA”). See 21 U.S.C. § 812, Schedule I. 15 16 17 18 19 20 21 22 2 The states and territories that allow adult non-medical cannabis use are Alaska, Arizona, California, Colorado, Connecticut, District of Columbia, Guam, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Northern Mariana Islands, Oregon, Rhode Island, Vermont, Virginia, and Washington. National Conference of State Legislatures, State Medical Cannabis Laws, https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx (last updated Nov. 9, 2022). 3 Those states and territories are Alabama, Arkansas, Delaware, Florida, Hawaii, Louisiana, Minnesota, Mississippi, New Hampshire, North Dakota, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Dakota, U.S. Virgin Islands, Utah, and West Virginia. Id. 4 Those states are Georgia, Indiana, Iowa, Kentucky, North Carolina, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. Id. 5 Those states and territories are American Samoa, Idaho, Kansas, and Nebraska. Id. ORDER - 2 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 3 of 37 1 Despite marijuana’s federal status, the federal government has maintained a policy 2 of non-enforcement in states that have legalized marijuana for nearly a decade. In August 3 2013, Deputy Attorney General James M. Cole issued a memorandum to all United 4 States Attorneys (the “Cole Memo”) encouraging them to exercise prosecutorial 5 discretion in enforcing federal marijuana laws in states where it had been legalized. 6 Attorney General Jeff Sessions rescinded the Cole Memo in 2018. Nevertheless, in each 7 fiscal year since fiscal year 2015, Congress has prohibited the Department of Justice 8 (“DOJ”) from using its appropriated funds to take legal action against states that have 9 implemented laws legalizing medicinal marijuana. See Consolidated Appropriations Act 10 of 2022, Pub. L. No. 117-103, 136 Stat. 49, § 530 (2022) (“Rohrabacher-Farr 11 Amendment”). That spending rider has also been interpreted to prohibit the DOJ from 12 prosecuting individuals or organizations that produce, distribute, or possess marijuana in 13 compliance with their state’s medical marijuana laws. 14 Washington, like other states that have legalized cannabis, has a comprehensive 15 regulatory scheme that governs the market. Washington’s cannabis market is regulated by 16 LCB. Before an individual or organization can operate a legal cannabis business, they 17 must obtain a license from LCB. Under Washington law, 18 19 20 21 22 No license of any kind may be issued to: (i) A person under the age of twenty-one years; (ii) A person doing business as a sole proprietor who has not lawfully resided in the state for at least six months prior to applying to receive a license; (iii) A partnership, employee cooperative, association, nonprofit corporation, or corporation unless formed under the laws of this state, and unless all of the members thereof are qualified to obtain a license as provided in this section; or ORDER - 3 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 4 of 37 1 2 (iv) A person whose place of business is conducted by a manager or agent, unless the manager or agent possesses the same qualifications required of the licensee. 3 RCW 69.50.331(1)(b) (emphasis added). This “residency requirement” applies to all 4 cannabis license applicants, not just sole proprietors, including all “true parties of 5 interest.” See WAC 314-55-020(11), 314-55-035. 6 Petitioner Todd Brinkmeyer is an Idaho resident who wishes to invest in and own 7 cannabis retail stores in Washington. Dkt. 34 at 6. His friend, Scott Atkison, owns 8 cannabis retail stores in the state. Id. Brinkmeyer has provided debt financing for 9 Atkison’s stores, but he is unable to directly invest in or hold ownership interest in the 10 stores because of Washington’s residency requirements. Id. Atkison would also like 11 Brinkmeyer to invest in and own part of his business. Id.; see also Dkt. 35, ¶ 5. Atkison is 12 a Stage IV cancer survivor and claims he would like to make arrangements for his 13 business in case his health declines. Dkt. 34 at 6; Dkt. 35, ¶ 5. He claims, that “if the 14 State is enjoined from enforcing the Residency Requirements . . . and if the LCB 15 approves Todd’s application related to the transaction, [he would] immediately transfer a 16 portion of [his] interest in the [business] to Todd.” Dkt. 35, ¶ 6. Atkison asserts that 17 “[t]he only thing stopping Todd and [him] from moving forward with the 18 transactions . . . is that the LCB has confirmed it will rely on the Residency Requirements 19 to deny Todd’s application to hold equity in the [business.]” Id. 20 Brinkmeyer has never applied for a cannabis license, but LCB has approved him 21 as a debt financier three times, which Brinkmeyer asserts involves “the same vetting and 22 approval process that [LCB] performs on licensees.” Dkt. 34 at 10. Debt financiers, ORDER - 4 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 5 of 37 1 however, are not subject to the State’s residency requirements. Id. Brinkmeyer’s counsel 2 inquired with LCB whether it would approve Brinkmeyer as an owner of Atkison’s stores 3 and LCB made clear that Brinkmeyer could not inherit Atkison’s businesses until he 4 complied with the residency requirements. Dkt. 37 at 5. 5 6 II. PROCEDURAL HISTORY Brinkmeyer sued LCB in Thurston County Superior Court in June 2020 seeking a 7 declaratory judgment that Washington’s residency requirements violate the dormant 8 Commerce Clause, Article IV’s Privileges and Immunities Clause, the Fourteenth 9 Amendment’s Privileges or Immunities Clause, the Fourteenth Amendment’s Due 10 Process Clause, and the Fourteenth Amendment’s Equal Protection Clause of the United 11 States Constitution. Dkt. 1-2, ¶¶ 30–57. He also sought a declaratory judgment that 12 Washington’s residency requirements violate the Privileges or Immunities Clause of the 13 Washington State Constitution and that the regulations exceed statutory authority in 14 violation of RCW 34.05.570(2)(c). Id. ¶¶ 58–65. He further sought a permanent 15 injunction, preventing LCB from enforcing Washington’s residency requirements along 16 with fees and costs. Id. at 10. LCB removed the case to this Court in July 2020. Dkt. 1. 17 Brinkmeyer moved for a preliminary injunction. Dkt. 6. Rather than ruling on the 18 motion, this Court ordered the parties to show cause why the Court has jurisdiction over 19 Brinkmeyer’s claims. Dkt. 17. The Court “question[ed] its authority to declare [the] state 20 law unconstitutional,” which it reasoned would allow Brinkmeyer “to participate in 21 violations of the CSA.” Id. at 2. The parties agreed that the Court has subject matter 22 ORDER - 5 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 6 of 37 1 jurisdiction and that granting relief in this case would not require the Court to order a 2 violation of the CSA. Dkts. 18, 19. 3 Satisfied that it had jurisdiction, the Court invoked Pullman abstention, reasoning 4 that the case touched on a sensitive area of public policy, that federal constitutional 5 questions could be avoided with a definitive ruling on the state issues, and that state laws 6 on the issue were unclear. Dkt. 20. It therefore severed Brinkmeyer’s state law claims, 7 remanded those claims case to Thurston County Superior Court, and administratively 8 closed the case pending resolution of the state law claims. Id. 9 Thurston County Superior Court concluded that Brinkmeyer is not a Washington 10 citizen and therefore Article I, Section 12, of the Washington Constitution—the 11 Privileges and Immunities Clause—did not apply to him. Dkt. 24-6 at 3. It dismissed 12 Brinkmeyer’s state law claims with prejudice and Brinkmeyer did not appeal. Dkt. 23 at 13 1. 14 This Court reinstated the case and the parties filed cross-motions for summary 15 judgment. Dkts. 34, 39. The parties agree that there are no disputed issues of material fact 16 and that therefore the case should be decided on summary judgment. 17 Brinkmeyer argues, generally, that the state’s residency requirements are 18 unconstitutional because they discriminate, without justification, against out-of-state 19 citizens. Dkt. 34 at 6–7. LCB argues that Brinkmeyer’s claims are not justiciable because 20 he has not suffered an injury-in-fact and his claims are not ripe. Dkt. 39 at 8. It further 21 argues that at least parts of the United States Constitution do not apply to the state’s 22 cannabis market because no federally legal market exists and that, even if the ORDER - 6 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 7 of 37 1 Constitution does apply, the state is justified in restricting the market to in-state citizens 2 given the fact that cannabis remains federally illegal. Id. The parties’ arguments are 3 discussed in further detail below. 4 The Court also permitted Amici Craft Cannabis Coalition and Washington 5 CannaBusiness Association to file briefing. Amici urge the Court to adopt and apply a 6 four-part test to determine whether a federal right may be enforced in the context of 7 illegal activity. Dkt. 49 at 11–16. Specifically, they argue that the Court should consider 8 (1) “the extent of the illegality of the activity,” (2) “the purposes of the federal right to be 9 enforced,” (3) “whether the court can award a remedy that does not compel or authorize 10 illegal activity,” and (4) “the public interests at stake.” Id. at 11. According to Amici, 11 these factors support Brinkmeyer’s claim that the residency requirements are 12 unconstitutional. Id. 13 III. THE LEGAL LANDSCAPE 14 This case presents several unique questions that arise only because cannabis 15 remains federally illegal under the CSA but legal in the State of Washington. It is further 16 complicated by the fact that the federal legislature has limited DOJ’s ability to enforce 17 federal cannabis law. While it is an issue of first impression in this district, several 18 federal courts across the country have confronted these novel questions and it is helpful 19 to start with an explanation of those decisions. 20 The Supreme Court’s most recent dormant Commerce Clause case, Tennessee 21 Wine & Spirits Retailers Association v. Thomas, 139 S. Ct. 2449, 2461 (2019), mirrors 22 this case in many ways. There, the Court considered Tennessee’s residency requirements ORDER - 7 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 8 of 37 1 for individuals or companies seeking to operate retail liquor stores. Id. at 2546. Tennessee 2 required license applicants to have resided in the state for at least the prior two years, 3 among other requirements. Id. at 2457. The Court held that the residency requirements 4 violated the dormant Commerce Clause. Id. at 2476. The residency requirements at issue 5 in Tennessee Wine are similar to those at issue in this case. The main difference is that 6 cannabis, unlike alcohol, remains illegal under federal law. 7 Following Tennessee Wine, many federal courts have considered states’ cannabis 8 licensing residency requirements. The majority of federal district courts to consider the 9 issue have held that the dormant Commerce Clause applies and that their states’ 10 respective residency requirements violate it or likely violate it. See, e.g., NPG, LLC v. 11 City of Portland, Me., No. 2:20-cv-00208-NT, 2020 WL 4741913, at *8–12 (D. Me. Aug. 12 14, 2020) (granting plaintiff’s motion for preliminary injunction after concluding that 13 plaintiff was likely to succeed on its argument that Maine’s cannabis licensing residency 14 requirements violated the dormant Commerce Clause); Variscite NY One, Inc. v. New 15 York, No. 1:22-cv-1013 (GLS/DJS), 2022 WL 17257900, at *5–9 (N.D.N.Y. Nov. 10, 16 2022) (same as to New York’s cannabis licensing residency requirements); Toigo v. 17 Dep’t of Health and Senior Servs., 549 F. Supp. 3d 985, 990–96 (W.D. Mo. 2021) (same 18 as to Missouri’s cannabis licensing residency requirements); Lowe v. City of Detroit, 544 19 F. Supp. 3d 804, 812–16 (E.D. Mich. 2021) (same as to Detroit’s cannabis licensing 20 residency requirements); Finch v. Treto, No. 22 C 1508, 2022 WL 2073572, at *12–20 21 (N.D. Ill. June 9, 2022) (concluding plaintiff was likely to succeed on the merits of its 22 claim that Illinois’ cannabis licensing residency requirements violated the dormant ORDER - 8 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 9 of 37 1 Commerce Clause, but denying preliminary injunctive relief because the balance of 2 hardships favored defendant); Attitude Wellness, LLC v. Vill. of Pinckney, No. 21-cv- 3 12021, 2022 WL 1050305, at *2–4, *7–8 (E.D. Mich. Apr. 7, 2022) (same as Finch as to 4 the Village of Pinckney’s cannabis licensing residency requirements 6). 5 Similarly, the only circuit court to consider the issue held that Maine’s cannabis 6 residency requirements violated the dormant Commerce Clause. See Ne. Patients Grp. v. 7 United Cannabis Patients & Caregivers of Me., 45 F.4th 542 (1st Cir. 2022); see also 8 Dkt. 54. There, the First Circuit affirmed the district court’s ruling that Maine’s residency 9 requirements, which are similar to Washington’s, violated the dormant Commerce Clause 10 of the United States Constitution. See Ne. Patients Grp., 45 F.4th at 544. Notably, 11 Maine’s residency requirements applied to only medical cannabis dispensaries. 12 Two federal district courts have taken different paths. In Peridot Tree, Inc. v. City 13 of Sacramento, No. 22-cv-00289-KJM-DB, 2022 WL 10629241, at *11 (E.D. Cal. Oct. 14 18, 2022), the district court refused to rule on the issue, invoking general abstention 7 to 15 allow the plaintiff to pursue its claims in state court or in an “administrative venue.” It 16 reasoned that deciding the case would risk “disrupting California’s efforts to ‘establish a 17 coherent policy with respect to a matter of substantial public concern.’ And the 18 19 20 6 The district court in Attitude Wellness also dismissed the plaintiff’s case because it determined that the plaintiff would objectively not qualify for a license, even absent the state’s residency requirements. 2022 WL 1050305, at *10. 7 21 22 The court acknowledged that because there was no state case pending, none of the traditional abstention doctrines applied. Peridot Tree, 2022 WL 10629241, at *4. The court concluded, however, that abstention is broader than the doctrines traditionally used and that it was appropriate in a case such as this. Id. at *4–11. ORDER - 9 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 10 of 37 1 constitutional question, how to apply the Dormant Commerce Clause, is difficult. It is 2 better to allow state courts to answer that question, as they are well-equipped to do.” Id. 3 (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 814–16 4 (1976)). Peridot Tree is on appeal before the Ninth Circuit. See Peridot Tree, Inc. v. City 5 of Sacramento, No. 22-16783 (9th Cir. Nov. 17, 2022). 6 In Original Investments, LLC v. State of Oklahoma, 542 F. Supp. 3d 1230, 1235 7 (W.D. Okla. 2021), the district court dismissed the case, concluding that holding 8 otherwise would require it to grant relief in violation of federal law. The court did seem 9 to acknowledge, however, that if cannabis was legal, the residency requirements would 10 likely violate the dormant Commerce Clause under Action Wholesale Liquors v. 11 Oklahoma Alcoholic Beverage Laws Enforcement Commission, 463 F. Supp. 2d 1294 12 (W.D. Okla. 2006). Original Invs., 542 F. Supp. 3d at 1237. In Action Wholesale, the 13 district court struck down an Oklahoma law that allowed in-state wineries, but not out-of- 14 state wineries, to ship wine directly to retail stores and restaurants in Oklahoma. 15 The parties in this case also cite various authority dealing with the interplay 16 between cannabis law and the United States Constitution outside of the dormant 17 Commerce Clause context. LCB submitted one of those cases as supplemental authority: 18 Fried v. Garland, No. 4:22-cv-164-AW-MAF, 2022 WL 16731233 (N.D. Fla. Nov. 4, 19 2022). In Fried, plaintiffs challenged 18 U.S.C. § 922(g), a federal law that prohibits 20 certain individuals from possessing firearms, including anyone “who is an unlawful user 21 of or addicted to any controlled substance.” Fried, 2022 WL 16731233, at *1. The parties 22 in that case agreed that, under § 922(g), medical cannabis users complying with Florida ORDER - 10 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 11 of 37 1 state law would still be considered unlawful users such that it would be a federal crime 2 for them to possess firearms. Id. The plaintiffs argued that such a result violated the 3 Second Amendment of the United States Constitution and the Rohrabacher-Farr 4 Amendment. Id. at *2. The court concluded that § 922(g) did not violate either. Id. at *9. 5 Fried’s applicability to this case is somewhat unclear, though the Court presumes 6 that LCB submitted it to combat Brinkmeyer’s submission of Northeast Patients Group, 7 where the First Circuit relied heavily on the Rohrabacher-Farr Amendment. Indeed, the 8 Fried court pointed out that, regardless of the amendment, “possession of marijuana 9 remains a federal crime” and that the amendment “does not make marijuana users law- 10 abiding citizens.” Fried, 2022 WL 16731233, at *6. In other words, the district court in 11 Fried concluded that the Rohrabacher-Farr Amendment did not upend the CSA and did 12 not legalize marijuana, medical or otherwise. 13 While a court in this district has never addressed this issue directly, it is worth 14 noting that this Court recently decided a case dealing with LCB and Washington’s 15 cannabis licensing requirements. In Shelton v. Liquor and Cannabis Board of the State of 16 Washington, the plaintiffs alleged that LCB and the City of Seattle had deprived them of 17 their ability to participate in Washington’s cannabis market. No. 21-5135, 2022 WL 18 2651617, at *2. The plaintiffs were participants in Washington’s medical cannabis 19 market before it was consolidated with the recreational market. Id. They did not seek 20 licenses to participate in the consolidated market and were therefore unable to continue 21 operating their dispensaries. Id. 22 ORDER - 11 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 12 of 37 1 The Court dismissed the plaintiffs’ claims for several reasons. But relevant to this 2 case, the Court refused to grant the plaintiffs declaratory relief, concluding that it could 3 not “order activity that remains federally illegal.” Id. at *5. The remedy requested in 4 Shelton, however, was somewhat different from that which Brinkmeyer seeks. In Shelton, 5 the plaintiffs asked the Court to declare that LCB wrongfully revoked their licenses. Id. 6 Declaring as much would have effectively ordered LCB to issue the plaintiffs licenses to 7 sell cannabis. That is clearly a type of relief this Court cannot issue under federal law. 8 Brinkmeyer, however, asks the Court to enjoin the state from discriminating against him, 9 and other out-of-state residents, in its licensing application process. The parties have 10 agreed that such relief would not require the Court to order conduct that violates federal 11 law. See Dkts. 18, 19. Nonetheless, the Court acknowledges that ruling in Brinkmeyer’s 12 favor would appear to be a concession that Washington’s cannabis market is a “legal” 13 one. 14 15 16 IV. DISCUSSION A. Summary Judgment Standard Summary judgment is proper if the pleadings, the discovery and disclosure 17 materials on file, and any affidavits show that “there is no genuine dispute as to any 18 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 19 56(a). In determining whether an issue of fact exists, the Court must view all evidence in 20 the light most favorable to the nonmoving party and draw all reasonable inferences in that 21 party’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–50 (1986); Bagdadi v. 22 Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine issue of material fact exists where ORDER - 12 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 13 of 37 1 there is sufficient evidence for a reasonable factfinder to find for the nonmoving party. 2 Anderson, 477 U.S. at 248. 3 On cross-motions, the defendant bears the burden of showing that there is no 4 evidence which supports an element essential to the plaintiff’s claim. Celotex Corp. v. 5 Catrett, 477 U.S. 317, 322 (1986). Conversely, the plaintiff “must prove each essential 6 element by undisputed facts.” McNertney v. Marshall, No. C-91-2605-DLJ, 1994 WL 7 118276, at *2 (N.D. Cal. Mar. 4, 1994) (citing Fontenot v. Upjohn Co., 780 F.2d 1190, 8 1194 (5th Cir. 1986)). Either party may defeat summary judgment by showing there is a 9 genuine issue of material fact for trial. Id.; Anderson, 477 U.S. at 250. Although the 10 parties may assert that there are no contested factual issues, this is ultimately the court’s 11 responsibility to determine. Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 12 249 F.3d 1132, 1136 (9th Cir. 2001). 13 The Court agrees there are no disputed issues of fact and that this matter can be 14 decided on the briefing. 15 B. Dormant Commerce Clause 16 1. Brinkmeyer’s Dormant Commerce Clause Claim is Justiciable. 17 A plaintiff has standing to sue only if he presents a legitimate “case or 18 controversy,” meaning the issues are “definite and concrete, not hypothetical or abstract.” 19 Thomas v. Anchorage Equal Rts. Comm’n, 220 F.3d 1134, 1139 (9th Cir. 2000). To 20 establish Article III standing, he must show that he (1) suffered an injury in fact that is (2) 21 fairly traceable to the alleged conduct of the defendants, and that is (3) likely to be 22 redressed by a favorable decision. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 ORDER - 13 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 14 of 37 1 (1992). A plaintiff who faces a threat of future injury “has standing to sue if the 2 threatened injury is certainly impending, or there is a substantial risk” that the injury will 3 occur. In re Zappos.com, Inc., 888 F.3d 1020, 1024 (9th Cir. 2018) (citing Susan B. 4 Anthony List v. Driehaus, 573 U.S. 149, 158 (2014)). 5 “A plaintiff must demonstrate standing for each claim he or she seeks to press and 6 for each form of relief sought.” Wash. Env’t Council v. Bellon, 732 F.3d 1131, 1139 (9th 7 Cir. 2013) (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 555, 561 (1992)). At 8 summary judgment, the plaintiff “must set forth by affidavit or other evidence specific 9 facts, which for purposes of the summary judgment motion will be taken to be true.” 10 11 Lujan, 504 U.S. at 561 (internal quotations omitted). LCB disputes only whether Brinkmeyer has suffered an injury. It argues that 12 Brinkmeyer has not suffered an injury because he has not applied for and been denied a 13 license, nor has Atkison attempted to sell or bequeath his business to Brinkmeyer. Dkt. 14 39 at 15–17. Brinkmeyer argues that LCB has made it clear he would not qualify for a 15 license, that the only reason Atkison has not assigned the business to him is LCB’s 16 residency requirements, and that he need not take a futile action to have suffered an 17 injury. Dkt. 43 at 8–14. 18 An injury in fact is “an invasion of a legally protected interest which is (a) 19 concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” 20 Lujan, 504 U.S. at 560 (internal quotations and citations omitted). “A concrete injury is 21 one that actually exists, meaning that it is real, and not abstract.” Safer Chems., Healthy 22 Fams. v. U.S. Env’t Prot. Agency, 943 F.3d 397, 411 (9th Cir. 2019) (cleaned up). This ORDER - 14 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 15 of 37 1 can include both a “risk of real harm” and “intangible harms.” Id. An injury is 2 particularized if it “affect[s] the plaintiff in a personal and individual way.” Spokeo, Inc. 3 v. Robins, 578 U.S. 330, 340 (2016) (citations omitted). 4 “[S]tanding does not require exercises in futility.” Taniguchi v. Schultz, 303 F.3d 5 950, 957 (9th Cir. 2002). Other district courts that have considered this issue have 6 concluded that an individual who failed to apply for a cannabis license nevertheless has 7 standing to challenge the state’s residency requirements if that individual is “able and 8 ready to apply” if the requirements are removed. Finch, 2022 WL 2073572, at *9; see 9 also NPG, 2020 WL 4741913, at *5–6. 10 LCB asserts three main arguments why Brinkmeyer lacks standing to assert his 11 dormant Commerce Clause claim. First, LCB argues that Brinkmeyer failed to establish 12 standing in his petition and that “[s]tanding must exist at the time the complaint is filed 13 and through all stages of the litigation.” Dkt. 39 at 15 (citing DaimlerChrysler, 547 U.S. 14 at 352). Brinkmeyer argues that, while it is true he had to have standing at the time he 15 filed his petition, he is permitted to supplement his pleadings with affidavits to prove 16 standing in response to a summary judgment motion. Dkt. 43 at 9–10. 17 Brinkmeyer is correct. Although a motion to dismiss tests the sufficiency of a 18 plaintiff’s allegations, a motion for summary judgment tests the sufficiency of his 19 evidence. Compare Fed. R. Civ. P. 12(b) with Fed. R. Civ. P. 56. When moving for 20 summary judgment on standing, the defendant bears the initial burden to show there is no 21 evidence that supports standing. See Anderson, 477 U.S. at 248–50. The plaintiff must 22 then “set forth by affidavit or other evidence specific facts” to show that his claim is ORDER - 15 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 16 of 37 1 justiciable. See Lujan, 504 U.S. at 561 (internal quotations omitted). LCB moved for 2 summary judgment and, while it may allege that Brinkmeyer lacks standing, Brinkmeyer 3 is entitled to show that his claims are justiciable through additional evidence provided in 4 response to LCB’s motion. 5 LCB next argues that Brinkmeyer failed to show his injuries are “actual or 6 imminent.” Dkt. 39 at 15–16. It argues that his injuries are not “certainly impending,” as 7 required by the Supreme Court, because “[h]is claims rely on a ‘some day’ future transfer 8 of ownership upon Atkison’s death.” Id. Similarly, LCB argues that Brinkmeyer failed to 9 allege a concrete injury because his ownership interest in Atkison’s cannabis business is 10 “purely speculative” and based on him outliving Atkison and Atkison keeping 11 Brinkmeyer in his will. Id. at 16–17. Brinkmeyer argues that the state is actively blocking 12 Atkison’s transfer of ownership to Brinkmeyer by enacting and enforcing the residency 13 requirements, which Brinkmeyer claims is an injury in and of itself. Dkt. 43 at 9–11. 14 Brinkmeyer also cites to the fact that LCB already confirmed it would deny his cannabis 15 license application if he submitted one, and that Atkison intends to both immediately sell 16 and bequeath his business interests to Brinkmeyer and the transfer is thus not wholly 17 dependent on Atkison’s death. Id. at 11–12. 18 Brinkmeyer has sufficiently alleged an injury in fact to assert his dormant 19 Commerce Clause claim. The statutes and regulations are unambiguous—as an Idaho 20 resident, Brinkmeyer does not qualify for a cannabis license in Washington. He has 21 submitted declarations and affidavits asserting that the only reason Atkison has yet to 22 sign over his business to Brinkmeyer is because of the residency requirements. He also ORDER - 16 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 17 of 37 1 submitted an email from LCB confirming that an out-of-state resident would not be 2 eligible for a license transfer until he meets the residency requirements, even where he 3 would be taking over for a terminally ill or deceased licensee. See Dkt. 37. All of these 4 facts were true when Brinkmeyer first sued LCB. Requiring Brinkmeyer to apply for a 5 license would be futile—it is sufficiently clear that he does not qualify because he does 6 not reside in Washington. 7 For similar reasons, Brinkmeyer’s claims are ripe. The ripeness doctrine is 8 “designed to ‘prevent the courts, through avoidance of premature adjudication, from 9 entangling themselves in abstract disagreements.’” Thomas, 220 F.3d at 1138 (quoting 10 Abbott Lab’ys v. Gardner, 387 U.S. 136, 148 (1967), abrogated on other grounds by 11 Califano v. Sanders, 430 U.S. 99, 105 (1977)). The doctrine “is drawn both from Article 12 III limitations on judicial power and from prudential reasons for refusing to exercise 13 jurisdiction.” Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993). It therefore 14 “contains both a constitutional and prudential component.” Thomas, 220 F.3d at 1138 15 (internal quotation marks omitted). 16 The constitutional component of ripeness overlaps almost completely with the 17 injury-in-fact question in standing analysis. See id.; see also Susan B. Anthony List, 573 18 U.S. at 157 n.5 (explaining that Article III standing and ripeness issues can “boil down to 19 the same question”). In this case, the questions overlap. Brinkmeyer’s claims are ripe for 20 precisely the same reasons that he sufficiently alleges an injury in fact—LCB is currently 21 preventing him from obtaining a license which would allow him to participate in the 22 ORDER - 17 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 18 of 37 1 state’s cannabis market. He cannot take any further, non-futile action that would make his 2 injury more concrete or ripe. 3 The prudential component of ripeness involves two considerations: (1) “the fitness 4 of the issues for judicial decision” and (2) “the hardship to the parties of withholding 5 court consideration.” Thomas, 220 F.3d at 1141 (quoting Abbott Lab’ys, 387 U.S. at 149). 6 Courts have ruled cases were not fit for judicial decision, for example, when a case is 7 “devoid of any factual context” or where a case involves “many unknown facts” and 8 contains a “sketchy record.” Id. at 1142 (quoting San Diego Cnty. Gun Rights Committee 9 v. Reno, 98 F.3d 1121, 1132 (9th Cir. 1996); American-Arab Anti-Discrimination Comm. 10 11 v. Thornburgh, 970 F.2d 501, 510–11 (9th Cir. 1991)). Brinkmeyer’s case is fit for judicial decision. The factual record is clear, and while 12 Brinkmeyer has not applied for a license to sell cannabis in Washington, it is beyond 13 dispute that he would not qualify. Atkison has sworn via affidavit his desire to transfer 14 ownership of his company to Brinkmeyer and that the only thing preventing him from 15 doing so are Washington’s residency requirements. See Dkt. 35, ¶¶ 5–6. 16 Further, Brinkmeyer would certainly suffer hardship if the Court withheld 17 consideration in this case. If Atkison were to die before the legality of the residency 18 requirements was adjudicated, Brinkmeyer could be precluded from buying or inheriting 19 Atkison’s business. Moreover, he is already suffering hardship in that he is unable to 20 purchase any share of Atkison’s business. LCB, on the other hand, has not argued that it 21 would suffer any hardship in having this case decided. 22 ORDER - 18 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 19 of 37 1 LCB also argues that Brinkmeyer lacks standing because “he does not claim injury 2 to a legally cognizable interest” because cannabis remains federally illegal. Dkt. 39 at 17. 3 The Court views this as a substantive argument, and LCB advances it in its dormant 4 Commerce Clause analysis. Indeed, LCB does not cite to any law to support the idea that 5 such a question should factor into the Court’s standing analysis. 6 7 Thus, Brinkmeyer’s dormant Commerce Clause claim is justiciable. 2. The Dormant Commerce Clause Does Not Apply to Washington’s Federally Illegal Cannabis Market. 8 The Commerce Clause provides that “[t]he Congress shall have Power . . . [t]o 9 regulate Commerce with foreign Nations, and among the several States, and with the 10 Indian Tribes.” Art. I, § 8, cl. 3. The Supreme Court has long held that the Commerce 11 Clause “also prohibits state laws that unduly restrict interstate commerce.” Tenn. Wine, 12 139 S. Ct. at 2459. This “negative” aspect of the Commerce Clause is known as the 13 “dormant Commerce Clause.” Id. Under the dormant Commerce Clause, “state statutes 14 that clearly discriminate against interstate commerce are routinely struck down, unless 15 the discrimination is demonstrably justified by a valid factor unrelated to economic 16 protectionism.” New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 274 (1988). As 17 recently as 2019, the Supreme Court has recognized the importance of the dormant 18 Commerce Clause “as the primary safeguard against state protectionism.” Tenn. Wine, 19 139 S. Ct. at 2461. 20 The Supreme Court has adopted a “two-tiered approach” to determining whether a 21 state statute violates the dormant Commerce Clause: 22 ORDER - 19 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 20 of 37 1 4 (1) When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, [the Court has] generally struck down the statute without further inquiry. (2) When, however, a statute has only indirect effects on interstate commerce and regulates evenhandedly, [the Court has] examined whether the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits. 5 Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 578–79 (1986); 6 see also Ass’n des Eleveurs de Canards et d’Oies du Quebec v. Harris, 729 F.3d 937, 948 7 (9th Cir. 2013) (applying the Supreme Court’s test in Brown-Forman). Plainly 8 discriminatory laws fall under category one and are subject to an almost per se rule of 9 invalidity. Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 338 (2008). They may survive 2 3 10 only if they advance “a legitimate local purpose that cannot be adequately served by 11 reasonable nondiscriminatory alternatives.” Id. (internal quotation marks omitted). 12 Nevertheless, even with an explicitly discriminatory law, an exception applies 13 where the law is expressly authorized by Congress. Ne. Bancorp, Inc. v. Bd. of Governors 14 of Fed. Rsrv. Sys., 472 U.S. 159, 174 (1985) (“When Congress so chooses, state actions 15 which it plainly authorizes are invulnerable to constitutional attack under the Commerce 16 Clause.”). For this exception to apply, Congress’s intent must be “unmistakably clear.” 17 South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 91 (1984). 18 Brinkmeyer argues that the residency requirements violate the dormant Commerce 19 Clause because they facially discriminate against out-of-state residents, are in place for 20 economic protectionist reasons, and none of LCB’s given state interests provide a 21 legitimate basis to uphold them. Dkt. 34 at 12–18; Dkt. 43 at 14–22. LCB, however, 22 argues that Brinkmeyer skips a step in his analysis by ignoring a threshold question: ORDER - 20 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 21 of 37 1 whether the dormant Commerce Clause even applies. Dkt. 39 at 18–20; Dkt. 42 at 10–12. 2 It argues that the dormant Commerce Clause does not apply to a federally illegal market. 3 Dkt. 39 at 19–20; Dkt. 42 at 10–12. It further argues that, even if the dormant Commerce 4 Clause applies, Congress has granted states permission to create intrastate cannabis 5 markets and that its justifications provide sufficient basis to uphold the residency 6 requirements. Dkt. 39 at 18–19, 21–23; Dkt. 42 at 12–20. 7 The Court agrees with LCB that it must first address the question of whether the 8 dormant Commerce Clause applies. 9 a. markets. The dormant Commerce Clause does not apply to federally illegal 10 LCB argues that for the dormant Commerce Clause to apply, a national market 11 must exist, and that it cannot apply when there is no legal interstate market. Dkt. 39 at 12 19–20. In support of its argument, LCB cites two cases where courts held the dormant 13 Commerce Clause was inapplicable to goods that were illegal to sell. Id. at 20 (citing 14 Predka v. Iowa, 186 F.3d 1082, 1085 (8th Cir. 1999); Terk v. Ruch, 655 F. Supp. 205, 15 215 (D. Colo. 1987)). Brinkmeyer points to other federal courts that have ruled their 16 respective states’ residency requirements violate the dormant Commerce Clause, despite 17 cannabis’s federally illegal status. Dkt. 34 at 18–21. 18 Congress’s Commerce Clause power has been read to apply broadly to “regulate 19 purely local activities that are part of an economic ‘class of activities’ that have a 20 substantial effect on interstate commerce.” Gonzalez v. Raich, 545 U.S. 1, 17 (2005). 21 That power includes the ability to deem certain substances federally illegal. See, e.g., id. 22 ORDER - 21 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 22 of 37 1 at 19 (concluding that the prohibition of marijuana under the CSA was “squarely within 2 Congress’ commerce power because production of the commodity meant for home 3 consumption . . . has a substantial effect on supply and demand in the national market for 4 that commodity”). Under the Constitution’s Supremacy Clause and preemption doctrine, 5 once Congress has deemed a substance federally illegal, states do not then have the 6 power to “legalize” the same substance. See U.S. Const. art. VI, cl. 2 (declaring that 7 federal law is the “supreme Law of the Land”); Altria Grp., Inc. v. Good, 555 U.S. 70, 76 8 (2008) (“[S]tate laws that conflict with federal law are without effect.” (internal quotation 9 marks omitted)). States may enact laws that are consistent with congressional intent, but 10 not contrary to it. Chae v. SLM Corp., 593 F.3d 936, 941 (9th Cir. 2010) (explaining 11 federal preemption applies when “state law actually conflicts with federal law”). 12 Despite Congress prohibiting the sale and use of cannabis under the CSA and 13 despite preemption doctrine, Washington, and most other states, have purported to 14 legalize cannabis under state law. Brinkmeyer does not challenge the legality of 15 Washington’s cannabis market. Indeed, he wants the market to exist, and he wants to 16 participate in it. 17 The problem, however, is that cannabis remains federally illegal. Conceptually, 18 the dormant Commerce Clause exists to “preserve[] a national market for competition 19 undisturbed by preferential advantages conferred by a State upon its residents or resident 20 competitors.” Gen. Motors v. Tracy, 519 U.S. 278, 299 (1997). In other words, it is 21 designed to protect interstate commerce. No party in this case suggests that citizens have 22 a federal statutory or constitutional property right to cannabis while it remains federally ORDER - 22 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 23 of 37 1 illegal and, in fact, they do not. See Shulman v. Kaplan, -- F.4th --, 2023 WL 225625, at 2 *5 (9th Cir. Jan. 18, 2023) (quoting the CSA in saying that “substances which have been 3 manufactured, distributed, dispensed, or acquired in violation of [the CSA], shall be 4 subject to forfeiture to the United States and no property right shall exist in them.” 5 (emphasis in original) (internal quotation marks omitted); see also, e.g., Grandpa Bud, 6 LLC v. Chelan Cnty. Wash., No. 19-cv-51 RMP, 2020 WL 2736984, at *4 (E.D. Wash. 7 May 26, 2020) (“Even when cannabis production is a legitimate use of one’s property at 8 the state level, such use is not recognized as a protectable property interest under the U.S. 9 Constitution.”). 10 Similarly, citizens do not have a legal interest in participating in a federally illegal 11 market. Cf. Ne. Patients Grp., 45 F.4th at 559 (Gelpí, J., dissenting) (“The Commerce 12 Clause does not recognize an interest in promoting a competitive market in illegal goods 13 or services or forestalling hypothetical interstate rivalries in the same.”). It is not clear to 14 this Court how the dormant Commerce Clause can be read to protect illegal interstate 15 commerce. The Supremacy Clause, preemption, general principles of federalism, and 16 common sense suggest it does not. 17 The dormant Commerce Clause is a judicially created doctrine read into the 18 Constitution’s Commerce Clause. See Davis, 553 U.S. at 337. The doctrine undoubtedly 19 serves an important purpose—limiting economic protectionism by states. But “it makes 20 little sense to retain the presumption that [the public interest is best served by maintaining 21 an unencumbered national market for competition] when Congress has explicitly acted to 22 make the market in question illegal.” Ne. Patients Grp., 45 F.4th at 559 (Gelpí, J. ORDER - 23 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 24 of 37 1 dissenting). The dormant Commerce Clause does not apply to federally illegal markets, 2 including Washington’s cannabis market and, thus, it does not apply to Washington’s 3 residency requirements. 4 b. 5 While the Court’s analysis could certainly end there with respect to the dormant 6 Commerce Clause, LCB asserted a second argument as to why the dormant Commerce 7 Clause does not apply: congressional intent. The Court views the congressional approval 8 exception as just that, an exception to the dormant Commerce Clause, and not a reason 9 why it would not apply. Nevertheless, the Court agrees with LCB that Congress’s intent Restricting interstate commerce is in line with Congress’s intent. 10 is relevant given the unique situation at hand. It also chooses to analyze this issue to 11 further explain why it refuses to follow the only circuit court to have examined this issue. 12 LCB argues that the congressional approval exception to the dormant Commerce 13 Clause applies because, in deeming cannabis a Schedule I drug in the CSA, Congress 14 “expressly and unambiguously declared that marijuana is not among the legitimate 15 subjects of trade and commerce for any purpose.” Dkt. 39 at 18–19 (internal quotation 16 marks omitted). It argues that the dormant Commerce Clause applies only “when 17 Congress has not exercised its Commerce Clause power to regulate the matter at issue,” 18 and that here Congress exercised such power in enacting the CSA. Id. at 18 (internal 19 quotation marks omitted) (quoting Tenn. Wine, 139 S. Ct. at 2459). It emphasizes that 20 “Congress enacted the CSA to establish ‘a comprehensive regime to combat 21 the . . . interstate traffic in illicit drugs.’” Id. (quoting Raich, 545 U.S. at 13). 22 ORDER - 24 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 25 of 37 1 Brinkmeyer responds that neither the CSA, nor any other law, grants states the 2 authority to discriminate against out-of-state residents in their cannabis markets. Dkt. 43 3 at 15–16. He also asserts that the Court should consider Justice Thomas’s recent 4 criticisms of Raich: “the Federal Government’s current approach to marijuana bears little 5 resemblance to the watertight nationwide prohibition that a closely divided Court found 6 necessary to justify the Government’s blanket prohibition in Raich.” Id. at 16 (quoting 7 Standing Akimbo, LLC v. United States, 141 S. Ct. 2236, 2238 (2021)). 8 “When Congress so chooses, state actions which it plainly authorizes are 9 invulnerable to constitutional attack under the Commerce Clause.” Ne. Bancorp., 472 10 U.S. at 174. “An unambiguous indication of congressional intent is required before a 11 federal statute will be read to authorize otherwise invalid state legislation.” Maine v. 12 Taylor, 477 U.S. 131, 139 (1986). The court is not permitted to read congressional intent 13 into a statute where it does not exist. South-Central Timber, 467 U.S. at 92–93 (“The fact 14 that the state policy in this case appears to be consistent with federal policy—or even that 15 state policy furthers the goals we might believe that Congress had in mind—is an 16 insufficient indicium of congressional intent.”). 17 Courts across the country considering this issue have consistently held that 18 Congress did not expressly permit state discrimination in passing the CSA. See, e.g., 19 Finch, 2022 WL 2073572, at *13 (“[F]or this exception to apply, Congress’s direction 20 must be unmistakably clear. It is not enough to simply regulate on the matter, without 21 clearly authorizing the states’ ability to restrict interstate commerce.” (internal quotation 22 marks and citations omitted)); NPG, 2020 WL 4741913, at *10 (“[A]lthough the ORDER - 25 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 26 of 37 1 Controlled Substances Act criminalizes marijuana, it does not affirmatively grant states 2 the power to burden interstate commerce in a manner which would otherwise not be 3 permissible. And I have no authority to invent such an affirmative grant where Congress 4 has not provided it.” (internal quotation marks and citations omitted)); Lowe, 544 F. 5 Supp. 3d at 815 (quoting NPG, above)). 6 There is no dispute that Congress exercised its Commerce Clause power in 7 enacting the CSA and criminalizing cannabis. Moreover, it is true that Congress 8 continues to classify cannabis as an illegal substance, regardless of the DOJ’s inability to 9 bring charges. It is also true that the CSA does not affirmatively grant states any power to 10 regulate cannabis, to create wholly intrastate markets in cannabis, or to discriminate 11 against out-of-state citizens in relation to any such state markets. Rather, the CSA flatly 12 forbids the sale and use of cannabis. 13 While courts usually look to whether Congress has explicitly granted states the 14 right to discriminate against out-of-state citizens, the traditional dormant Commerce 15 Clause analysis does not apply in this case. Courts are to interpret statutes in line with 16 congressional intent. Here, there is no doubt that Congress intended to restrict all 17 commerce in cannabis by adding it to Schedule I of the CSA. Although Washington’s 18 “legalization” of cannabis certainly does not align with Congress’s intent, the residency 19 requirements do. The residency requirements attempt to prevent any interstate commerce 20 in cannabis and to prevent cannabis from Washington from moving into states where it 21 remains illegal, like Idaho. 22 ORDER - 26 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 27 of 37 1 The Court does not agree with Brinkmeyer, Amici, or the First Circuit that 2 Congress has “substantially legalized” cannabis. There is no such thing. First, 3 prosecutorial discretion is not equivalent to legalization. DOJ and other prosecutorial 4 agencies frequently must make decisions about how to allocate resources. Those 5 decisions do not amount to binding law. See Larson v. Saul, 967 F.3d 914, 925 (9th Cir. 6 2020) (“[P]olicy statements, agency manuals, and enforcement guidelines do not carry 7 the force of law and are not entitled to Chevron deference.”). Thus, the Cole Memo did 8 not repeal and could not have repealed the CSA. Moreover, the Cole Memo has been 9 rescinded. 10 Second, the Rohrabacher-Farr Amendment applies only to medical cannabis 11 markets. It is unclear what its application would or should be in Washington, where the 12 recreational and medical markets are consolidated. 13 Third, the Rohrabacher-Farr Amendment did not repeal the CSA. “When a later- 14 enacted statute does not repeal existing federal law, we ask whether the later-enacted 15 statute implicitly repeals earlier law.” Swinomish Indian Tribal Cmty. v. BNSF Railway 16 Co., 951 F.3d 1142, 1156 (9th Cir. 2020). “[R]epeals by implication are not favored.” 17 Posados v. Nat’l City Bank, 296 U.S. 497, 503 (1936). “The intention of the legislature to 18 repeal must be clear and manifest.” United States v. Borden Co., 308 U.S. 188, 198 19 (1938). “An implied repeal will only be found where provisions in the two statutes are in 20 irreconcilable conflict, or where the latter Act covers the whole subject of the earlier one 21 and is clearly intended as a substitute.” Branch v. Smith, 538 U.S. 254, 273 (2003). The 22 Rohrabacher-Farr Amendment cannot be interpreted as Congress’s attempt to repeal the ORDER - 27 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 28 of 37 1 CSA. It does not do so expressly, and it is limited to medical cannabis markets in states 2 that have legalized the substance under state law. 3 Finally, the Court finds unpersuasive the First Circuit’s reliance on the 4 Rohrabacher-Farr Amendment in determining Congress’s intent. As mentioned, the 5 Rohrabacher-Farr Amendment did not repeal the CSA. Moreover, it is not an exercise of 6 Congress’s Commerce Clause authority and thus can have no application in the Court’s 7 analysis of the dormant Commerce Clause. It does not indicate Congress’s intent in 8 exercising its Commerce Clause authority. See Ne. Bancorp., 472 U.S. at 174. 9 The dormant Commerce Clause does not apply to federally illegal markets such as 10 this one and Congress has clearly stated its intent for no interstate cannabis market to 11 exist. 8 The Court therefore need not review LCB’s justifications for the residency 12 requirements and LCB’s motion for summary judgment is GRANTED as to 13 Brinkmeyer’s dormant Commerce Clause claim. 14 C. 15 Privileges and Immunities Clause – Article IV Like with Brinkmeyer’s dormant Commerce Clause claim, LCB first challenges 16 whether Brinkmeyer’s Privileges and Immunities Clause claim is justiciable. See Dkt. 39 17 at 15–17. The parties’ standing and ripeness arguments on this claim are the same 18 arguments that they assert regarding Brinkmeyer’s dormant Commerce Clause claim. 19 20 21 22 8 The Court acknowledges that this outcome is contrary to the majority of courts that have considered this issue. However, most of those courts failed to fully consider whether the dormant Commerce Clause can apply to a federally illegal market. ORDER - 28 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 29 of 37 1 Thus, the Court need not say more than that Brinkmeyer has standing to assert his Article 2 IV Privileges and Immunities Clause claim. 3 Brinkmeyer argues that Washington’s residency requirements violate two 4 fundamental rights protected by the Privileges and Immunities Clause: the right to pursue 5 a livelihood and the right to travel. 9 Dkt. 34 at 22. He argues that the clause “has always 6 prohibited states from creating markets and then excluding nonresidents from those 7 markets.” Id. at 23 (citing Toomer v. Witsell, 334 U.S. 385, 396 (1948)). He also argues 8 that LCB cannot show a substantial reason to support the residency requirements and 9 that, even if it could, the requirements do not bear a substantial relationship to legitimate 10 11 state objectives because less restrictive means are available. Id. at 24–26. LCB argues that Brinkmeyer is misclassifying the right at issue as that of right to 12 travel or right to pursue a livelihood rather than the right to engage in interstate marijuana 13 commerce—which, of course, is not a fundamental right. Dkt. 42 at 20–21. It also argues 14 that there is no right to travel to pursue a federally illegal livelihood. Id. at 22–23. 15 Further, LCB argues that because Brinkmeyer is not asserting deprivation of a 16 fundamental right, the Court should review any potential Privileges and Immunities 17 violation under rational basis review and that Washington’s residency requirements are 18 clearly rationally related to legitimate state interests. Id. at 25. 19 20 Under Article IV’s Privileges and Immunities Clause, “The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.” In 21 9 22 The right to pursue a livelihood is classified as part of the right to travel. See Saenz v. Roe, 526 U.S. 489, 500–502 (1999). Therefore, the Court reviews the two rights together. ORDER - 29 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 30 of 37 1 other words, “by virtue of a person’s state citizenship, a citizen of one State who travels 2 in other States, intending to return home at the end of his journey, is entitled to enjoy the 3 ‘Privileges and Immunities of Citizens in the several States.’” Saenz v. Roe, 526 U.S. 4 489, 501 (1999). The clause was “designed to place the citizens of each State upon the 5 same footing with citizens of other States, so far as the advantages resulting from 6 citizenship in those States are concerned.” Supreme Court of Virginia v. Friedman, 487 7 U.S. 59, 64 (1988). 8 Courts apply a two-step inquiry in determining whether a “particular instance of 9 discrimination” violates Article IV’s Privileges and Immunities Clause. United Bldg. & 10 Constr. Trades Council of Camden Cnty. and Vicinity v. Mayor & Council of the City of 11 Camden, 465 U.S. 208, 218 (1984). First, the court determines “whether the [law] 12 burdens one of those privileges and immunities protected by the Clause.” Id. The 13 Privileges and Immunities Clause applies only to rights and activities considered 14 “fundamental”; 10 i.e., “those ‘privileges’ and ‘immunities’ bearing upon the vitality of the 15 Nation as a single entity.” Baldwin v. Fish & Game Comm’n of Montana, 436 U.S. 371, 16 383, 388 (1978). If the burdened privilege is protected by the Clause, “the court must 17 then determine whether there are substantial reasons for the difference in treatment and if 18 10 19 20 21 22 LCB asserts that the Court must determine whether the right is “fundamental,” and, if it is not, to apply rational basis review. See Dkt. 39 at 24. This is not true in relation to the Privileges and Immunities Clause; if the implicated right is not “fundamental,” the Clause simply does not apply, and the inquiry ends there. See, e.g., Baldwin, 436 U.S. at 388 (ending the inquiry after determining the right at issue was not fundamental); United Bldg., 465 U.S. at 219 (explaining the threshold step is to determine whether a right is “sufficiently fundamental to the promotion of interstate harmony so as to fall within the purview of the Privileges and Immunities Clause” (internal quotation marks omitted)). ORDER - 30 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 31 of 37 1 such reasons exist, whether the ‘degree of discrimination bears a close relation to them.’” 2 United Bldg., 960 F. Supp. at 829 (quoting Toomer, 334 U.S. at 396). 3 The Privileges and Immunities Clause “plainly and unmistakably secures and 4 protects the right of a citizen of one State to pass into any other State of the Union for the 5 purpose of engaging in lawful commerce, trade, or business without molestation.” Hicklin 6 v. Orbeck, 437 U.S. 518, 525 (1978) (quoting Ward v. State, 79 U.S. 418, 430 (1870)) 7 (emphasis added); see also United Bldg., 465 U.S. at 219 (“[T]he pursuit of a common 8 calling is one of the most fundamental of those privileges protected by the Clause.”)). 9 Nevertheless, it has never been established that there is any right, under the Privileges 10 and Immunities Clause or any other part of the Constitution, to engage in illegal 11 commerce. Such a “right” does not “bear on the vitality of the Nation as a single entity.” 12 see Baldwin, 436 U.S. at 388. 13 Washington has established a comprehensive market governing the sale of 14 cannabis in the state, including granting to its own residents (of more than six months) 15 the privilege of selling cannabis with a license without fear of prosecution under state 16 law. It has simultaneously denied that right to nonresidents. The Privileges and 17 Immunities Clause does not apply, however, because the right asserted here, to engage in 18 commerce that remains federally illegal, is not a fundamental one. 19 The Privileges and Immunities Clause of Article IV does not apply to 20 Washington’s residency requirements because they do not burden a fundamental right. 21 LCB’s motion for summary judgment is therefore GRANTED as to that claim. 22 ORDER - 31 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 32 of 37 1 2 D. Equal Protection Clause Brinkmeyer seems to assert both that Washington’s residency requirements violate 3 the Equal Protection Clause because they discriminate against new citizens by making 4 them wait six months before being eligible for a license and because they discriminate 5 against out-of-state citizens by disqualifying them from the market altogether. 6 LCB argues that Brinkmeyer does not have standing to assert the first part of his 7 Equal Protection Clause claim because the claim is based on the constitutionality of 8 treating new state residents different than existing state residents. Dkt. 39 at 16. To the 9 extent Brinkmeyer intends to challenge Washington’s residency requirements under the 10 argument that new residents must be treated like existing residents, he lacks standing to 11 assert such a challenge. See Dkt. 34 at 26. Brinkmeyer has made clear he is not a 12 Washington resident and does not intend on becoming one. Thus, he has not asserted an 13 injury in fact for such a claim. 14 LCB also argues that Brinkmeyer does not have standing to assert the second part 15 of his Equal Protection Clause claim because the clause does not protect the rights of out- 16 of-state citizens in relation to in-state citizens. Dkt. 39 at 16 (citing Saenz, 526 U.S. at 17 502–03; Zobel v. Williams, 457 U.S. 55, 59–60 (1982)). This is not always true. In 18 Metropolitan Life Insurance Co. v. Ward, for example, the Supreme Court explained that 19 the Equal Protection Clause is a viable “means of challenging a statute that seeks to 20 benefit domestic industry within the State only by grossly discriminating against foreign 21 competitors.” 470 U.S. 869, 879 (1985). 22 ORDER - 32 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 33 of 37 1 Under the Equal Protection Clause of the Fourteenth Amendment, no state shall 2 “deny to any person within its jurisdiction the equal protection of the laws.” U.S. Const., 3 Amdt. 14, § 1. In essence, the clause “mandates that similarly situated persons be treated 4 alike.” Nw. Grocery Ass’n v. City of Seattle, 526 F. Supp. 3d 884, 893 (W.D. Wash. 5 2021) (citing Plyler v. Doe, 457 U.S. 202, 216 (1982)). “[I]f a law neither burdens a 6 fundamental right nor targets a suspect class, [the court] will uphold the legislative 7 classification so long as it bears a rational relation to some legitimate end.” Romer v. 8 Evans, 517 U.S. 620, 631 (1996). 9 Brinkmeyer does not argue that a suspect class is at issue here, but rather that 10 Washington’s residency requirements are based on a classification that implicates a 11 fundamental right: the right to travel. Dkt. 34 at 26. Yet again, while the right to travel to 12 engage in lawful commerce is an established fundamental right, the same is not true for 13 the right to travel to another state to engage in federally illegal activity. The residency 14 requirements are thus not based on a classification that implicates a fundamental right. 15 Therefore, the requirements are analyzed under rational basis review. 16 A law survives rational basis review if it “bears a rational relation to some 17 legitimate end.” Romer, 517 U.S. at 631; see also Pena v. Lindley, 898 F.3d 969, 986 (9th 18 Cir. 2018). A law reviewed under the rational basis standard bears “a strong presumption 19 of validity” and the attacking party has the burden “to negative every conceivable basis 20 which might support it.” F.C.C. v. Beach Commc’ns, 508 U.S. 307, 314–15 (1993). 21 Whether the given reason actually motivated the legislature is irrelevant to the 22 constitutional analysis. Id. at 315. ORDER - 33 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 34 of 37 1 LCB asserts that Washington’s residency requirements assist the state in 2 “regulating a product that attracts organized crime.” Dkt. 42 at 25. It argues that 3 attempting to keep cannabis away from organized criminal activity is a legitimate state 4 interest and that the residency requirements are related to that interest. Id. (citing Chance 5 Mgmt., Inc. v. State of South Dakota, 97 F.3d 1107, 1114–15 (8th Cir. 1996) (upholding a 6 residency requirement for gambling licenses in part because “gambling is generally 7 understood to have a greater tendency to attract criminal infiltration than most other types 8 of business enterprises”)). 9 Brinkmeyer argues that Washington’s existing regulatory regime, absent the 10 residency requirements, “fully accounts for any legitimate interests the State may have.” 11 Dkt. 43 at 27. For example, Brinkmeyer argues that the residency requirements are not 12 necessary to investigate applicants’ backgrounds because LCB already conducts a 13 thorough investigation of all applicants under other existing regulations. Id. 14 Many of LCB’s goals for Washington’s residency requirements are legitimate and 15 the residency requirements are rationally related to those goals. Most persuasive to the 16 Court is LCB’s assertion that the residency requirements serve to advance the state’s goal 17 of preventing Washington’s legal cannabis from being associated with criminal activity 18 or diverted to black markets in states where the substance remains illegal under state law. 19 See Dkt. 32, ¶ 8; Dkt. 33, ¶ 2. This is especially concerning in a market such as cannabis 20 where an illegal market continues to exist alongside the state’s legal market. 21 22 Brinkmeyer’s argument in response, that Washington’s existing regulations are sufficient to address the state’s interest, fails. Unlike under strict scrutiny, the state’s ORDER - 34 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 35 of 37 1 means need not be narrowly tailored or necessary to achieve its goals. He cites to Gulch 2 Gaming, Inc. v. State of South Dakota, 781 F. Supp. 621, 632–32 (D.S.D. Dec. 20, 1991) 3 to support his argument that residency requirements are not rationally related to the goals 4 of preventing illegal or dangerous activity or conducting thorough investigations. 5 There are two main differences in this case, however. Cannabis remains federally 6 illegal and can be diverted into illegal markets in ways that gambling cannot. 11 Further, in 7 Gulch Gaming, non-residents were allowed to obtain a gaming license, they just could 8 not hold a majority ownership interest. 781 F. Supp. at 632. In Washington, nonresidents 9 cannot hold any interest in cannabis licenses. 12 10 Washington’s residency requirements do not violate the Fourteenth Amendment’s 11 Equal Protection Clause. LCB’s summary judgment motion on that claim is therefore 12 GRANTED. 13 E. 14 Privileges or Immunities Clause – Fourteenth Amendment Brinkmeyer argues that Washington’s residency requirements violate the 15 Fourteenth Amendment’s Privileges or Immunities Clause because they burden the right 16 to travel. Dkt. 34 at 26. Brinkmeyer’s primary assertion seems to be that the residency 17 18 19 20 11 Courts have recognized that gambling has a close relationship with organized crime. See, e.g., Chance Mgmt., 97 F.3d at 1115. Cannabis, however, can be illegally transported and sold across state lines, including in states where it remains illegal, making residency requirements much more relevant to cannabis regulation than the regulation of South Dakota’s gambling market. 12 21 22 Nonresidents can provide financial support for cannabis businesses, as Brinkmeyer has. LCB argues that that distinction makes sense because owners, generally not financiers, are responsible for any criminal conduct that may occur. See Dkt. 32 at 9 (citing Wash. Admin. Code 314-55-10(4) (2016)). ORDER - 35 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 36 of 37 1 requirements burden the right to travel “because they discriminate between newly arrived 2 bona fide residents and those residing in the state for over six months.” Id. 3 LCB argues that Brinkmeyer does not have standing to assert his Privileges or 4 Immunities Clause claim because it protects the rights of citizens new to a state in 5 relation to established state citizens. Dkt. 39 at 16 (citing Saenz, 526 U.S. at 502–03; 6 Zobel, 457 U.S. at 59–60). 7 The Privileges or Immunities Clause of the Fourteenth Amendment protects “the 8 right of the newly arrived citizen to the same privileges and immunities enjoyed by other 9 citizens of the same State.” Saenz, 526 U.S. at 502. As LCB points out, Brinkmeyer is not 10 a Washington citizen and does not intend to become one. In fact, he wishes to remain in 11 Idaho, which is why he is challenging Washington’s residency requirements. 12 To the extent Brinkmeyer is asserting that Washington’s residency requirements 13 violate the Privileges or Immunities Clause because they discriminate against new 14 Washington citizens in relation to established Washington citizens, he lacks standing. To 15 the extent he is instead attempting to challenge the requirements because they 16 discriminate against out-of-state citizens in relation to in-state citizens, the Privileges or 17 Immunities Clause does not authorize a cause of action for such a challenge. LCB’s 18 motion for summary judgment is therefore GRANTED as to the Fourteenth 19 Amendment’s Privileges or Immunities Clause. 20 F. 21 22 Due Process Clause Brinkmeyer concedes his Due Process Clause claim is subject to rational basis review. Dkt. 43 at 27. As explained above, Washington’s residency requirements survive ORDER - 36 Case 3:20-cv-05661-BHS Document 64 Filed 02/07/23 Page 37 of 37 1 rational basis review. Brinkmeyer’s Due Process Clause claim therefore fails, and LCB’s 2 motion for summary judgment is GRANTED as to that claim. 3 V. ORDER 4 Therefore, it is hereby ORDERED that Petitioner Todd Brinkmeyer’s Motion for 5 Summary Judgment, Dkt. 34, is DENIED, and Respondent Washington State Liquor and 6 Cannabis Board’s Motion for Summary Judgment, Dkt. 39, is GRANTED. 7 The Clerk shall enter a JUDGMENT and close the case. 8 Dated this 7th day of February, 2023. A 9 10 BENJAMIN H. SETTLE United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 ORDER - 37

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