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Montana Supreme Court Ruling Guts State’s MMJ Industry

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The sky has fallen in Montana.

The state Supreme Court issued a ruling on Thursday in a case that’s been ongoing since 2011 over a law approved by the state legislature that was intended to basically regulate the medical cannabis industry out of existence. Though the court didn’t side completely with lawmakers, it upheld enough of the law to signal a virtual end to dispensaries and cannabis businesses in Montana.

According to the Associated Press, the court ruled that MMJ “providers” can sell cannabis to no more than three patients each, but are allowed to accept payment. It also upheld a ban on MMJ advertising, as well as a requirement that any doctor who recommends cannabis for more than 25 patients be subject to an automatic state review.

In a statement, Marijuana Policy Project called the ruling “a huge blow to Montana’s patients and those who provide to them.”

The ruling marks the most significant rollback in cannabis reform in recent history. Montana legalized MMJ in 2004 at the ballot box, but conservative lawmakers have been trying to crack down on dispensaries and marijuana businesses since they began proliferating in 2009 after the Ogden Memo was released.

There are only an estimated 50-60 dispensaries left in Montana, since many have closed down over the years as the state has made it increasingly difficult to do business in the cannabis trade. The ruling from the Supreme Court will likely mean the end of those storefronts as well, and if the MMJ trade survives, it’ll likely be in the form of small-scale legal caregivers and the underground market.

SYNOPSIS OF THE CASE
2016 MT 44: DA 15-0055, MONTANA CANNABIS INDUSTRY ASSOCIATION,
MARC MATTHEWS, SHELLY YEAGER, JESSE RUMBLE, JOHN STOWERS,
M.D., POINT HATFIELD, and CHARLIE HAMP, Plaintiffs, Appellees, and
Cross-Appellants, v. STATE OF MONTANA, Defendant, Appellant, and
Cross-Appellee.1

The Montana Supreme Court has upheld all but one provision of the 2011
Montana Marijuana Act, rejecting most of the arguments by the Montana Cannabis
Industry Association (MCIA) that the 2011 Act is unconstitutional. The MCIA brought
suit after the 2011 Legislature repealed a 2004 voter initiative to legalize medical
marijuana. The Legislature enacted numerous additional restrictions that MCIA claimed
were unreasonable and overly burdensome. Specifically, MCIA challenged 1) a
requirement that the Department of Public Health and Human Services (DPHHS) notify
the Board of Medical Examiners of any doctor who certifies 25 or more medical
marijuana patients in a year, 2) a three-patient limit for medical marijuana providers, 3) a
ban on medical marijuana provider advertising, 4) a restriction against providers
receiving any compensation for medical marijuana products or services, 5) a prohibition
against persons on probation becoming registered cardholders for medical marijuana use,
and 6) a provision allowing inspections of medical marijuana providers’ businesses
without a warrant. The Supreme Court struck down the restriction against medical
marijuana providers receiving compensation but upheld the remaining provisions.
The Supreme Court reviewed the statutes to determine whether the Legislature’s
restrictions are rationally related to a legitimate state interest. The Court held that the
State does have a legitimate interest in carefully regulating the cultivation and
distribution of marijuana for medical purposes based on the fact that marijuana is illegal
for all purposes under federal law. The Legislature considered abuses that had occurred
under the 2004 law, such as telemedicine, traveling certification caravans, and a
disproportionate number of medical marijuana users who falsified or exaggerated their
need for medical marijuana. Additionally, federal law enforcement authorities had
conducted raids of Montana marijuana businesses and the federal government has
expressed an expectation that states carefully regulate and monitor marijuana activities
authorized by state law.

1 This synopsis has been prepared for the convenience of the reader. It constitutes no part of the
Opinion of the Court and may not be cited as precedent.
February 25 2016
Case Number: DA 15-0055
The Supreme Court upheld the 25-patient physician review provision and the
three-patient limit because they are rational responses to the over-certification problems
and the “drastic increase” in the number of caregivers and users under the 2004 Act. The
Court noted that whether the restrictions are the most effective means to achieving the
Legislature’s goals is not for the Court to decide because the Constitution does not allow
courts to make such policy choices. Moreover, the restrictions are rationally related to
the Legislature’s goals in keeping marijuana away from large-scale manufacturing
operations that may attract illegal drug traffickers, and in addressing the federal
government’s concern in making sure that the State has a strong and effective regulatory
system.
The Court determined that the advertising ban is a permissible regulation of
commercial speech because sale and possession of marijuana are not “lawful activities”
under federal law, which controls the First Amendment analysis. The Court also upheld
the laws prohibiting persons on probation from possessing medical marijuana and
allowing inspection of a marijuana business without a warrant because those laws are not
invalid on their face. The Court noted that specific challenges to those laws would have
to be decided on a case-by-case basis.
In contrast, the Court struck down the compensation prohibition because it is at
odds with the Act’s stated purpose of allowing the limited possession and use of medical
marijuana where certified by a physician. The Court determined that the prohibition
arbitrarily sets apart the patient who is unable to produce medical marijuana for her own
use—which is not within any of the Act’s legitimate objectives or based on any
reasonable consideration of differences between people with debilitating medical
conditions. Additionally, the Court determined that prohibiting providers from charging
for their services is contrary to the Legislature’s purpose of keeping revenues out of the
hands of criminal enterprises because it would drive the business into the black market.
Two members of the Court would have upheld all of the challenged provisions of
the Act, including the compensation provision. Justice Rice argued that the Legislature’s
decision not to allow marijuana providers to charge for their product also was reasonable
when considered in light of the complete prohibition against marijuana use and
distribution under federal law. Eliminating commercial access to marijuana is a
legitimate legislative purpose given concerns such as the need to police, license, and tax
commercial goods. The Legislature well may have determined that prohibiting financial
remuneration would alleviate those concerns, and that is within the Legislature’s
prerogative.
Justice McKinnon emphasized that the Act was intended only to provide legal
protections against prosecution for violation of state laws associated with the
manufacture, possession or cultivation of marijuana, when a person possesses only the
amount allowed for medical use. Because of that limited protection, and the federal
prohibition against marijuana, she argued that it was inappropriate to analyze the Act
under the usual constitutional standards. There is no substantive right to possess a
substance that is illegal under both federal and state law.
Dissenting from the Court’s opinion, Justice Wheat would have invalidated all of
the challenged provisions and imposed a permanent injunction against their enforcement.
He would conclude that, despite the federal prohibition, the State cannot go so far in
creating a regulatory framework that it violates the rights of patients by limiting or
eliminating access and destroys the law’s purpose.