Two Interesting Developments in Maryland’s Medical Marijuana Law
The Maryland legislature just passed a bill amending the state’s medical marijuana law. The Governor is expected to sign the legislation, which can be viewed here. Two particular changes struck me as noteworthy:
1. First, the bill adopts new—and carefully designed—measures to address racial disparities in the state-licensed commercial marijuana industry.
As I discuss in the book (pages 454n.1 and 522-525) and in previous posts here, here, and here, Maryland’s original medical marijuana law appeared to instruct the state’s licensing board (the Maryland Medical Cannabis Commission) to consider race in the award of commercial marijuana licenses. Because of doubts about the constitutionality of using racial preferences, however, the MMCC refused to consider race in awarding licenses. Only 1 out of the 30 original commercial licenses subsequently awarded by the MMCC went to a minority-led business. (The MMCC has recently released some data on ethnic and gender diversity in Maryland’s marijuana industry—see here. The agency’s data suggest Maryland’s industry is somewhat more diverse if we define participation more broadly (e.g., to include employment, and not just majority ownership).)
The low rate of minority participation in the state’s newly legalized marijuana industry—and the board’s refusal to consider race in licensing—caused a stir in the Maryland legislature. In response, it considered simply ordering the MMCC to consider race when awarding new licenses. Ultimately, however, the legislature choose a more careful approach, one that could eliminate the need for affirmative action in the first instance, or, failing that, help the state defend the use of racial preferences should they prove necessary.
In particular, the new legislation does two things to address racial disparities in Maryland’s marijuana industry:
For one thing, the legislation explicitly calls upon the Commission to employ race neutral means to boost minority participation:
“[The Commission shall] evaluated race-neutral programs or other methods that may be used to address the needs of minority and women applicants and minority and women-owned businesses seeking to participate in the medical cannabis industry.”
Section 13-3305.2 (2).
The basic idea is that the MMCC might be able to boost racial (and gender) diversity in the marijuana industry without resorting to racial (or gender) preferences. As discussed in the book (see pages 520-522), there are a number of regulations states have imposed that might be contributing to low rates of minority participation in the licensed marijuana industry (think of steep licensing fees or strict bars on participation by convicted felons). A state might be able to relax or eliminate some of these regulations—and thereby boost diversity—without undermining its marijuana program. The new legislation specifically instructs the MMCC (at the very least) to “conduct ongoing, thorough, and comprehensive outreach to small, minority, and women business owner and entrepreneurs who may have an interest in applying for medical cannabis” supplier licenses, section 13-3303.1(f)(1), and it no longer disqualifies all prior drug felons from holding a license, section 13-3306(a)(5)(iii).
Unlike race preferences, these race-neutral measures are not vulnerable to an equal protection challenge. If successful, they would eliminate the need for race preferences; and if not successful, the adoption of them would still help the state defend the later use of racial preferences in the award of marijuana licenses. Indeed, in City of Richmond v. Croson, discussed here, the Supreme Court warned state and local governments that they should only use racial preferences as a last resort—i.e., only after exhausting race-neutral means to combat troubling racial disparities.
In addition, the legislation also expands the number of licenses available (by a few), and it again appears to call upon the MMCC to use racial preferences in the award of these new licenses—but crucially, only if they would be constitutional:
“[The Commission shall] to the extent permitted by federal and state law, actively seek to achieve racial, ethnic, and geographic diversity when licensing” [growers, dispensaries, and processors]”
Sections 13-3306, 3307, 3309. The bolded language is what the new legislation added to Maryland’s original 2014 medical marijuana law. The “actively seek to achieve . . . diversity” language has been interpreted as a call for racial preferences.
Importantly, the legislation also calls upon the MMCC (in consultation with the Attorney General, among others) to evaluate a study of Maryland’s medical marijuana industry “to determine whether there is a compelling interest to implement remedial measures . . . to assist minorities and women in the medical cannabis industry,” and to “submit emergency regulations . . . to implement remedial measures, if and to the extent permitted by state and federal law, based on the findings of the study.. .” Section 13-3305(2).
Remedial measures in this context appears to refer to racial preferences. Again, this step—conducting a study—is probably required by Croson to sustain the use of racial preferences against an equal protection challenge. The legislation appears to reference a study of racial disparities in the marijuana industry that was commissioned by the Governor and published in January 2018. I discuss that study and its limitations in New Study Defends Constitutionality of Racial / Gender Preferences in the Award of State Marijuana Licenses.
So, Maryland has done it’s homework. It won’t necessarily use racial preferences in the award of marijuana licenses; but it may not need them, given the additional steps the state has vowed to take to address lingering racial disparities, and if does employ them down the road, I think it will have a much better chance of defending them in any litigation.
2. The Maryland legislation makes a second notable change unrelated to race and licensing—its subsidizes medical marijuana for the poor!
In relevant part, the new bill provides:
“There is [created] a Natalie M. LaPrade Medical Cannabis Compassionate Use Fund.”
. . .
The purpose of the Compassionate Use Fund is to provide access to medical cannabis for individuals enrolled in the Maryland Medical Assistance Program or in the Veterans Administration Maryland Health Care System.”
. . .
[The MMCC and related agencies] shall establish a program to allow eligible individuals enrolled in the Maryland Medical Assistance Program or in the Veterans Administration Maryland Health Care System to (I) Obtain medical cannabis from a licensed dispensary at no cost or a reduced cost; and (II) reimburse a licensed dispensary for the cost of the medical cannabis dispensed to an eligible individual under the program from the compassionate use fund”
Section 13-3303.1. The program will be funded by fees charged to licensees. Think of it as Medicaid for Marijuana.
I think this second feature of the new legislation may be even more noteworthy than the first. Maryland is the first state to directly subsidize the purchase of marijuana. (Oregon voters turned down a similar proposal several years ago.)
There’s a good reason why states haven’t tried this in the past—state subsidies for marijuana possession, production, or distribution are clearly preempted. I explain why in more detail in On the Limits of Supremacy (pages 1448-1449) and Preemption Under the Controlled Substances Act (pages 17-18 and 35-36—the Oregon proposal is noted on pages 35-36). Excerpts and discussions of those articles can also be found in my book at pages 278-283 and 545-546. With subsidies, the state is actively facilitating the violation of federal law—indeed, the stated purpose of this new fund is to help people get a federally banned substance they couldn’t otherwise afford.
NEVERTHELESS, it’s not clear anyone will be able to challenge the Maryland subsidy in court. For one thing, opponents of a subsidy might not have a cause of action to challenge it as preempted (as explained in the book on page 549 and in this earlier post on the Safe Streets case). In addition, opponents might lack standing to bring a claim—at least in federal court (as explain in this article on pages 661-664). Opponents might have more luck under state law (if it incorporates federal law) or in state court (given that states generally have more relaxed standing rules), but I’m not sure whether Maryland provides a cause of action or would grant standing to taxpayers (or other possible opponents) to bring such an action.
Again, this is an interesting and notable development. It represents a further step in the evolution of state medical marijuana laws—namely, they are looking increasingly like laws governing other medicines (the costs of which are normally covered by Medicaid and similar programs).
For more on the latest legislation, the Baltimore Sun has coverage at Maryland lawmakers vote to expand medical marijuana industry with plan to expand diversity.