The Oklahoma law requiring the cannabis business owners to reside in the state for at least two years is likely to be struck down as unconstitutional, according to attorneys who represent clients in the industry.
Under Oklahoma House Bill 2612 passed in last year, 75 percent of a cannabis business’s ownership must have lived in the state for at least two years. The legislature approved the so-called Unity Bill eight months after medical cannabis became legal in the state. By then, there already were a number of existing businesses that were owned by people who did not meet the residency requirement.
“When Oklahoma adopted the two-year residency requirement, they didn’t bother to grandfather in existing businesses, and people weren’t able to renew licenses,” said Ron Durbin, an attorney who filed a class-action lawsuit contesting the law.
As of Sept. 1, there were 9,458 businesses licensed to operate in Oklahoma’s cannabis industry. More than 1,000 of those businesses did not meet the residency requirement, said Durbin, who won an injunction that prohibited the state from refusing to renew licenses for those businesses.
“We have a lot of people in the state that have come from California, Colorado, Oregon, Wisconsin and Minnesota,” Durbin said. “We’re the reddest state to have medical marijuana.”
“We’re the reddest state to have medical marijuana.”
Washington dispensary challenges the law
A federal lawsuit filed on behalf of Original Investments LLC challenges the constitutionality of the law. The lawsuit states that the residency requirement violates the dormant Commerce Clause of the U.S. Constitution by “explicitly and purposefully favoring Oklahoma residents over non-residents.” The business in question is based in Olympia, Washington and does business as Dank’s Wonder Emporium.
Oklahoma City attorney Sarah Lee Gossett Parrish said if the court takes on the case, the residency requirement is likely to be struck down because a precedent already has been set. Last year, the U.S. Supreme Court struck down Tennessee’s two-year residency requirement for obtaining retail liquor licenses, holding that it discriminates against interstate commerce in violation of the dormant Commerce Clause.
“The legislature wants to allow Oklahomans to have an advantage,” Gossett Parrish said. “I understand that, but at the same time, you can’t just do things like that that are violative of the U.S. Constitution. The precedent is there.”
Because the lawsuit is filed in federal court, the judge could pass on taking the case because marijuana is illegal under federal law, Gossett Parrish said.
“I tend to think our court is going to address it, and I think it should be addressed,” she said. “But the judge could certainly say he doesn’t have jurisdiction.”
New bill could allow for adult use of cannabis
Durbin said he’s writing a bill that would eliminate the residency requirement, include delivery and clear up zoning issues that are problematic in the existing bill, which established a 1,000-foot boundary around schools that was not required when medical marijuana first became legal. The bill also could allow for adult use of cannabis.
“We put in our application, we opened up business, and then somebody sent a complaint that we were too close to the softball field,” said one dispensary owner who requested he not be named. “They (Oklahoma Medical Marijuana Authority) came out and checked it out. Once we decided to sue them, they backed off.”
Earlier this year, Oklahoma legislators approved a bill that would have allowed existing dispensaries to remain in operation if they later fall within 1,000 feet of a school. Gov. Kevin Stitt vetoed the bill because of the wording that would have allowed for delivery of marijuana, Durbin said.
“It could have allowed an ice cream truck or a food truck — they could have just parked wherever,” Durbin said. “Delivery would be a fantastic thing, and we need to have it, but it needs to be written correctly.”