Suit Challenging Maryland’s Refusal to Use Racial Preferences in Licensing Has Been Settled
When Maryland’s legislature passed a medical marijuana law in spring 2013, it instructed state regulators to consider race in awarding a limited number of licenses to cultivate and distribute marijuana (see page 454 n.1 of the book). In 2015, however, the state’s licensing commission abandoned those preferences, apparently due to concerns that racial preferences might violate the Equal Protection Clause (pages 522-525).
When the commission later awarded 15 cultivation licenses, none went to minority led businesses (see the story in the Washington Post here). In fall 2016, one minority led business that had unsuccessfully applied for a license sued the licensing commission for failing to consider race in making its licensing decisions. The suit asked the court to set aside the commission’s earlier licensing decisions and to restart the whole licensing process anew. The story of the suit can be found in the Baltimore Sun here.
Now it appears that the Maryland suit has been settled. The Baltimore Sun has the story here. The terms of the settlement are not known, but it leaves the commission’s original licensing decisions intact. It appears the aggrieved applicant is now hoping the state legislature will create additional licenses and that the applicant might fare better if and when those licenses are awarded—especially if the state considers race in its decisions. As detailed in this earlier post here, a recent study commission by Maryland might provide the evidence the state needs to defend an affirmative action program against an Equal Protection challenge.
Two quick thoughts on the suit and its broader relevance:
First, it remains unclear whether or not states like Maryland may consider race in the award of commercial marijuana licenses. No court has yet opined directly on the issue. This means that, for now, at least, we have to make do with judicial decisions analyzing analogous practices. For example, in City of Richmond v. Croson, the Supreme Court invalidated the use of racial preferences in the award of city construction contracts. The Croson Court found the city had failed to gather enough evidence to demonstrate race discrimination in the construction industry or the need for race preferences to combat such discrimination. Maryland’s licensing commission may have been thinking of Croson when it abandoned racial preferences; indeed, Croson was cited in a brief letter from a deputy state attorney general that questioned the constitutionality of the preferences in Maryland’s medical marijuana law. (The letter and the commission’s response to it are discussed in the book on pages 522-525.)
As noted above, the state has since commissioned a study that appears to demonstrate race discrimination in the marijuana (and related issues). But for the reasons discussed in the post linked above, it’s not clear whether the study would satisfy the lofty demands imposed by Croson. Without a suit to test Maryland’s program, we may never know if the use of racial preferences in marijuana licensing is constitutional (at least in the eyes of the courts). To be sure, there is a pending lawsuit challenging the use of racial preferences in Ohio that might provide some guidance to state lawmakers (that suit is discussed in another post here). But there is no guarantee those claims will ever be decided by a court on the merits (e.g., this suit might also be settled), or that Ohio’s program provides a good test of racial preferences in this domain (Ohio, unlike Maryland, has not yet conducted a study of race discrimination relating to the marijuana industry).
Second, the Maryland suit highlights some of the divisions that exist within the marijuana industry. Members of the industry disagree about a host of state policies, including the use of race preferences, size limits imposed on marijuana operations (see this post here), and the procedures used to award licenses, among many other things. And those members have not been shy about challenging disagreeable policies in court, and even asking courts to set aside prior decisions that benefited their rivals—a request that could delay the launch of the entire marijuana industry in a state. Understanding the potential divisions in a state–e.g., between big and small firms, medical and recreational suppliers, minority-led applicants and non-minority led applicants, etc.—can help lawyers and lawmakers anticipate potential disputes and better understand some of the otherwise puzzling features of state law the states have adopted to resolve them.