Montana Cannabis Industry Assoc. v. State

Montana Cannabis Industry Assoc. v. State, 2016 MT 44 (Feb. 25, 2016) (Baker, J., for the majority; McKinnon, J., concurring & dissenting; Rice, J., concurring & dissenting; Wheat, J.,concurring & dissenting) (6-1 on 5 of 6 issues; 4-3 on the 6th issue; aff’d & rev’d) (Cotter, J., recused and replaced by District Judge Robert Olson)

Issue: (1) Whether the district court properly held unconstitutional the statutory requirement that DPHHS notify the Board of Medical Examiners of any physician who certifies more than 25 patients a year for medical marijuana; (2) whether the district court properly held unconstitutional (a) the statute’s 3-patient limit and (b) the remuneration restriction; (3) whether the district court properly applied strict scrutiny to the statutory provision prohibiting advertising by medical marijuana providers; (4) whether the district court properly held that the statutory provision prohibiting probationers from becoming registered cardholders for medical marijuana was facially constitutional; and (5) whether the district court properly held constitutional the statutory provision allowing warrantless inspections of medical marijuana providers’ business by DPHHS and law enforcement.

Short Answer: (1) No; (2) (a) yes for the 3-patient limit, (b) no for the remuneration restriction; (3) no; (4) yes; and (5) yes.

Affirmed in part, reversed in part, and remanded

Note: Upon Plaintiffs’ Petition for Rehearing and Motion to Stay, the Court ordered the effective date of this decision postponed until August 31, 2016. Justice Rice concurred, Justice Wheat dissented (he would grant the petition for rehearing and delay the effective date until the conclusion of the 2017 legislative session), and Justice McKinnon concurred in the denial of rehearing but dissented from the stay.

Facts: Plaintiffs challenge portions of the 2011 Montana Marijuana Act, alleging denial of equal protection and due process rights under the Montana Constitution. Their constitutional claims are facial challenges to certain parts of the Act.

This is the state’s second appeal from the district court’s injunctions preventing implementation of certain provisions of the 2011 Montana Marijuana Act, §§ 50-46-301 to -344, MCA. In the first appeal, MCIA I, 2012 MT 201, this Court held that the challenged provisions were subject to rational basis review.

On remand, the district court maintained the preliminary injunction against the Act’s commercial prohibitions. Both parties moved for summary judgment, and the court heard oral argument in April 2014.

Procedural Posture & Holding: In its January 2, 2015 order, the district court reviewed the commercial ban and the 25-patient trigger and found there was no rational basis for either. It applied strict scrutiny to the advertising prohibition and enjoined it because it impermissibly restricted content-based political and educational speech. It declined to enjoin the warrantless inspection provision or the ban on access to medical marijuana for probationers. The state appeals and the plaintiffs cross-appeal. The Supreme Court heard oral argument Nov. 4, 2015, and now affirms in part, reverses in part, and remands for further proceedings.

Reasoning: The Court begins by analyzing Plaintiffs’ equal protection claims. It concludes that the regulation of different substances for medical treatment does not create two legitimate classes for equal protection purposes, as the single identifying factor – use of a substance prohibited by federal law – sufficiently distinguishes the classes and renders them dissimilar.

The Court next analyzes Plaintiffs’ substantive due process claims. It looks at (1) whether the legislation in question is related to a legitimate governmental concern, and (2) whether the means chosen by the legislature are reasonably related to the result sought to be attained. The Court concludes that the Act’s purposes serve a legitimate state interest. “The careful regulation of access to an otherwise illegal substance for limited use by persons for whom there is little or no other effective alternative serves a legitimate state objective.” ¶ 29. It then concludes that the statutes are reasonably related to achieving that objective before turning to the specific issues on appeal.

(1) The district court concluded the 25-patient review trigger was not necessary to the goals of the medical marijuana laws, but the proper question is whether the provision is arbitrary or has a reasonable relation to some permitted end of governmental action. The legislative history and testimony from the June 2011 preliminary injunction hearing show there were problems with over-certification under the 2004 Act. It is not the court’s role to second-guess the wisdom or expediency of legislation. “[R]ational distinctions may be made with substantially less than mathematical exactitude.” ¶ 39. The Court holds that the legislature’s policy choice in this instance is not constitutionally invalid, and vacates the district court’s injunction against that part of the Act.

(2) The Act prohibits commercial trade in marijuana and marijuana products by restricting providers to a limit of three patients, and prohibiting payment to providers. “The three-patient limit is rational so long as it is not a capricious or arbitrary means of accomplishing the Act’s legitimate purpose.” ¶ 48. It is not irrational for the state to limit the commercial profitability of marijuana. Whether the limit of three patients is the beset or most effective means is not for the Court to judge. The Court therefore concludes the three-patient limit passes rational basis review, and vacates the district court’s injunction against this part of the Act.

In analyzing the payment restrictions, the Court considers whether they bear a “fair and substantial relation to the object of the legislation.” ¶ 51. While the prevention of large-scale marijuana production is a legitimate objective, the Court finds no rational relationship between that objective and a complete prohibition against financial compensation. “The complete prohibition against compensation is invidious because medical marijuana, even when approved by a physician, would have no commercially available source of supply,” thereby driving the business to the black market. ¶ 54.

Additionally, this provision implicates equal protection concerns. “As between all users of medical marijuana, the remuneration provision imposes a peculiar disability upon those unable to provide for themselves.” ¶ 55.  The Court affirms the district court’s injunction against the remuneration restrictions of the Act.

(3) The district court applied strict scrutiny to the advertising prohibition in the Act and concluded it violates the First Amendment. The Court holds that the Act prohibits commercial speech only, which is afforded less constitutional protection. It applies the Central Hudson factors and holds that there is no First Amendment violation because the speech concerns activity that is unlawful under federal law.

The district court erred in applying strict scrutiny. The Court vacates the injunction against this part of the Act.

(4) The district court upheld the statutory prohibition against registered probationers becoming register cardholders for medical marijuana. Plaintiffs argue the “blanket prohibition” is facially invalid, and that courts should be able to make case-by-case determinations. To successfully mount a facial challenge, plaintiffs must establish no set of circumstances under which the challenged legislation would be valid. Plaintiffs cannot do that here. The Court affirms the district court’s order upholding this provision of the Act.

(5) The Act allows law enforcement and DPHHS to inspect a provider’s premises during normal hours without a warrant. The district court concluded the marijuana industry is “”closely regulated,” and upheld this provision under New York v. Burger, 482 U.S. 691 (1987). Because Plaintiffs fail to establish that there is no set of circumstances under which this provision would be valid, the Court affirms.

Justice McKinnon’s Concurrence & Dissent: Justice McKinnon would uphold all provisions of the Act. She believes the Court’s analysis must be premised on the purpose of the Act being to provide legal protections to persons who use medical marijuana, not to provide access to marijuana, as Plaintiffs suggest. States have inherent police powers under which they may create crimes, defenses, exceptions, and immunities. Justice McKinnon does not agree that the Act creates any classification of persons for purposes of equal protection or substantive due process. “The Act provides limited ‘legal protections’ to those who use marijuana for medical purposes; all other persons are using marijuana in violation of state law.’ ¶ 90. She disagrees with the Court’s substantive due process analysis as well as its holding that the remuneration restriction violates the equal protection clause.

Justice Rice’s Concurrence & Dissent: Justice Rice dissents from the Court’s holding that the remuneration provision is unconstitutional. “The Court counters that the remuneration provision will likely drive the business of medical marijuana back to the black market. Opinion, ¶ 54. Perhaps so, but the proper inquiry does not permit the Court to entertain such policy speculations, and, in fact, as properly applied, mandates the Court do just the opposite: speculation and presumption is required in favor of upholding the provision.” ¶ 102.

Justice Wheat’s Concurrence & Dissent: Justice Wheat concurs with the majority’s conclusion on the remuneration provision, but otherwise dissents. “The real question in this case is whether the statutory restrictions went too far and impaired the rights of those who need medical marijuana by severely limiting or eliminating their access to a drug made medicinally legal under the Act.” ¶ 105. “While I recognize a need for regulatory framework, I believe the State has gone too far in this case by creating a law that focuses so heavily on curbing the abuses of medicinal marijuana that it violates the rights of patients by so severely limiting or eliminating access to it, which ultimately destroys the law’s purpose.” Id. He would not only affirm the district court injunction of certain provisions of the Act, he would reverse the district court on the probationer restrictions and the warrantless search provision.