Amicus Curiae Brief — Susan K. Musta, Petitioner v. Mendota Heights Dental Center, et al.

No. 21-676

In the Supreme Court of the United States

__________________

SUSAN K. MUSTA,

Petitioner,

v.

MENDOTA HEIGHTS DENTAL CENTER AND

HARTFORD INSURANCE GROUP,

Respondents.

__________________

On Petition for Writ of Certiorari to the

Minnesota Supreme Court

__________________

BRIEF OF EMPIRE STATE NORML, NEW YORK

STATE AFFILIATE OF THE NATIONAL ORGANIZATION

FOR THE REFORM OF MARIJUANA LAWS (NORML),

NEW YORK CITY CANNABIS INDUSTRY ASSOCIATION

(NYCCIA), AND HUDSON VALLEY CANNABIS

INDUSTRY ASSOCIATION (HVCIA) AS AMICI CURIAE IN

SUPPORT OF PETITIONERS

__________________

DAVID C. HOLLAND, Esq.

Counsel of Record

Bar #313361

LAW OFFICES OF DAVID CLIFFORD

HOLLAND, P.C.

201 East 28th Street - Suite 2R

New York, New York 10016

212-842-2480 Office

DCH@HollandLitigation.com

Counsel for Amici Curiae

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

CORPORATE DISCLOSURES

All parties and amici are listed on the cover.

Pursuant to Rule 29.6 of this Court, Empire State

NORML, NYCCIA, and HVCIA, are each independent

non-profit organizations which have no parent

corporations and no publicly-held corporation owns

any stock in those entities.

ii

TABLE OF CONTENTS

CORPORATE DISCLOSURES .................................... i

TABLE OF AUTHORITIES ...................................... iii

INTEREST OF AMICI CURIAE ................................ 1

SUMMARY OF ARGUMENT ..................................... 2

ARGUMENT ................................................................ 7

POINT I ....................................................................... 7

SUPREMACY

OF

THE

CONTROLLED

SUBSTANCES ACT AND 21 U.S.C §903 .................. 7

THE RISE OF THE NULLIFICATION CRISIS ........ 8

Acts of the Executive Branch ...................................... 8

Acts of Congress ........................................................ 12

Acts of the Judiciary .................................................. 14

POINT II .................................................................... 19

THE NEED TO INVOKE ESTOPPEL ..................... 19

THE PRECEDENT FOR ESTOPPEL ...................... 21

CONCLUSION .......................................................... 27

iii

TABLE OF AUTHORITIES

Cases

Cox v. Louisiana,

379 U.S. 559 (1965) ................................................ 22

Energy Labs, Inc. v. Edwards Engineering, Inc.,

2015 WL 3504974 (N.D. Ill. 2015) ......................... 16

Gade v. Nat'l Solid Wastes Mgmt. Ass'n,

505 U.S. 88 (1992) .................................................... 8

Garcia v. Does,

779 F.3d 84 (2d Cir. 2015)(en banc)....................... 23

Ginsburg v. ICC Holdings, LLC,

2017 WL 5467688 (N.D. Tex. Nov. 13, 2017) ........ 16

Gonzales v. Raich,

545 U. S. 1 (2005) ......................................... 4, 12, 19

Green Earth Wellness Ctr., LLC v. Atain Specialty

Ins. Co., 163 F. Supp. 3d 821 (D. Colo. 2016) ........ 17

Green Sol. Retail, Inc. v. U.S.,

855 F.3d 1111 (10th Cir. 2017) .............................. 15

Haeberle v. Lowden,

2012 WL 7149098 (Colo. Dist. Ct. 2012) ............... 17

iv

Heckler v. Community Health Services,

467 U.S. 51, 104 S.Ct. 2218,

81 L.Ed.2d 42 (1984) .............................................. 24

Hillman v. Maretta,

569 U.S. 483 (2013) .................................................. 7

Hillsborough Cnty., Fla. v. Automated Med. Labs.,

471 U.S. 707 (1985) .................................................. 8

In re Malul,

614 B.R. 699 (Bankr. D. Colo. 2020) ...................... 18

In Re Pharmacann LLC,

123 U.S.P.Q.2d 1122 (T.T.A.B. 2017) .................... 18

In re Way to Grow, Inc.,

597 B.R. 111 (Bankr. D. Colo. 2018) ................ 17, 18

INS v. Hibi,

414 U.S. 5, 94 S.Ct. 19, 38 L.Ed.2d 7 (1973)

(per curiam) ............................................................ 24

INS v. Miranda,

459 U.S. 14, 103 S.Ct. 281, 74 L.Ed.2d 12

(1982) (per curiam) ................................................. 26

James Stewart & Co. v. Sadrakula,

309 U.S. 94 (1940) ................................................ 7, 8

v

Landgraf v. USI Film Productions,

511 U.S. 244 (1994) ................................................ 21

Mann v. Gullickson,

2016 WL 6473215 (N.D. Cal. Nov. 2, 2016) .......... 16

McCracken v. Progressive Direct Ins. Co.,

896 F.3d 1166 (10th Cir. 2018) .............................. 17

Montana v. Kennedy,

366 U.S. 308, 81 S.Ct. 1336,

6 L.Ed.2d 313 (1961) ........................................ 24, 25

Montilla v. U.S.,

457 F.2d 978 (Ct. Cl. 1972) .............................. 21, 23

Office of Pers. Mgmt. v. Richmond,

496 U.S. 414, 110 S. Ct. 2465,

110 L. Ed. 2d 387 (1990) .................................. 24, 25

Raley v. Ohio,

360 U.S. 423, 79 S.Ct. 1257,

3 L.Ed.2d 1344 (1959) ...................................... 21, 26

Sandusky v. Goetz,

944 F.3d 1240 (10th Cir. 2019) .............................. 15

Schweiker v. Hansen,

450 U.S. 785, 101 S.Ct. 1468,

67 L.Ed.2d 685 (1981) (per curiam) ....................... 25

vi

Standing Akimbo, L.L.C., v. United States,

cert. denied, 594 U.S. __, 141 S.Ct. 2236 (2021) 6, 20

U.S. v. Blood,

435 F.3d 612 (6th Cir.2006) ................................... 22

U.S. v. Canori,

787 F.3d 181 (2nd Cir. 2013) ................................... 8

U.S. v. Cox,

906 F.3d 1170 (10th Cir. 2018), cert. denied,

139 S. Ct. 2690, 204 L. Ed. 2d 1090 (2019),

cert. denied sub nom. Kettler v. U.S.,

139 S. Ct. 2691 (2019) ............................................ 26

U.S. v. Giffen,

473 F.3d 30 (2nd Cir. 2006) ................................... 21

U.S. v. Oakland Cannabis Buyers' Cooperative,

532 U.S. 483, 121 S.Ct. 1711,

149 L.Ed.2d 722 (2001) .......................................... 19

U.S. v. Ormsby,

252 F.3d 844 (6th Cir.2001) ................................... 21

U.S. v. Pennsylvania Industrial Chemical Corp.

(PICCO), 411 U.S. 655 (1973) .......................... 23, 26

U.S. v. Pisarski,

965 F.3d 738 (9th Cir. 2020) .................................. 15

vii

U.S. v. Washington,

887 F.Supp.2d 1077 (D.Mont.), adhered to on

reconsideration, 2012 WL 4602838

(D. Mont. 10/2/2012) ............................................... 25

United States v. McIntosh,

833 F.3d 1163 (9th Cir., 2016) ................... 6, 14, 27d

Washington v. Barr,

141 U.S. 555 (Mem), __ S.Ct. __,

208 L.Ed.2d 176 (2020) cert. denied ........................ 7

Constitution

U.S. Const. art. II, §3 .................................................. 8

U.S. Const. art. VI ....................................................... 7

Statutes and Legislation

21 U.S.C. §812 ......................................................... 8, 9

21 U.S.C. §841 ........................................................... 19

21 U.S.C. §846 ........................................................... 19

21 U.S.C. §812 ............................................................. 9

21 U.S.C §903 .................................................... passim

viii

“Rohrbacher-Farr Amendment” to the Commerce,

Justice, Science, and Related Agencies

Appropriations Act, 2015 (H.R. 4660) ................... 12

California Health and Safety Code §11350 ................ 9

Consolidated Appropriations Act, 2020,

H.R. 1158 ................................................................ 13

H.R. 4378 ................................................................... 13

IRS Code 280(e) ........................................................... 4

MORE Act of 2019 – H.R. 3884................................. 13

Secure and Fair Enforcement Act

(SAFE ACT of 2019 - H.R. 1468 ............................ 13

STATES ACT, H.R. 2093 of 2019 ............................. 13

Other Authorities

“A House Divided” speech by Abraham Lincoln,

given in Springfield, Illinois, June 16, 1858,

https://www.nps.gov/liho/learn/historyculture/

housedivided.htm .................................................... 6

ix

“CHICAGO-October

30,

2019-(BUSINESS

WIRE)–Cresco

Labs,

https://www.newcannabisventures.com/cresco

-labs-cannabis-acquisition-clears-departmentof-justice-initial-waiting-period-withoutsecond-request/................................................. 10, 11

“DOJ Allows MedMen To Buy PharmaCann Great News For Origin House” Sep. 11, 2019

https://seekingalpha.com/article/4291015-dojallows-medmen-to-buy-pharmacann-greatnews-for-origin-house ............................................ 10

“Guidance Subject: BSA Expectations Regarding

Marijuana-Related Businesses” FIN-2014G001https://www.FinCEN.gov/resources/statu

tes-regulations/guidance/bsa-expectationsregarding-marijuana-related-businesses ............. 10

“Memorandum for All United States Attorneys –

Guidance Regarding Marijuana Enforcement”

https://www.justice.gov/iso/opa/resources/3052

013829132756857467.pdf ...................................... 10

“Memorandum for Selected United States

Attorneys – Investigations and Prosecution In

States Authorizing the Medical Use of

Marijuana”

https://www.justice.gov/sites/default/files/opa/l

egacy/2009/10/19/medical-marijuana.pdf ............... 9

https://news.yahoo.com/barr-signals-supportending-marijuana-legalization212041886.html; See also, Kyle Jagger,

x

Marijuana

Moment,

1/15/2019

https://www.marijuanamoment.net/trumpattorney-general-nominee-pledges-not-to-goafter-legal-marijuana-businesses/ ......................... 11

Robert J. Reinstein, The Limits of Executive

Power, 59 Am. U. L. Rev. 259 (2009) ...................... 9

1

INTEREST OF AMICI CURIAE 1

Empire State NORML, New York State affiliate

of the National Organization for the Reform of

Marijuana Laws (NORML)

Empire State NORML is a not for profit

corporation registered in the State of New York, which

advocates for public policy changes to allow

responsible possession and use of marijuana and safe

and regulated markets in the newly legalized state. It

further advocates for non-profit and for-profit

production and retail sale of cannabis products,

transparent, consumer friendly accessibility, and

business enterprises which address the harms of the

Drug War and restore impacted communities.

New York City Cannabis Industry Association

(NYCCIA)

Hudson Valley Cannabis Industry Association

(HVCIA)

The New York City Cannabis Industry

Association (NYCCIA.org), and its sister entity, the

Hudson Valley Cannabis Industry Association

(HVCIA.org), are affiliated regional not-for-profit

organizations formed under the laws of the State of

New York. Each facilitates and fosters dialogue and

policy discussions for legacy and newly entering stake

holder and drafts proposed rules grounded in fairness

and inclusion for the perpetuation of the newly

1 Amici have timely notified counsel for all parties of their

intention to file this brief and received consent. No counsel for a

party authored this brief in any part, and no person or entity,

other than amici and their counsel, made a monetary

contribution to fund its preparation and submission.

2

legalized cannabis market in New York City, the

Hudson Valley, and the State of New York.

SUMMARY OF ARGUMENT

A once festering carbuncle in the form of a

constitutional supremacy and nullification crisis

regarding medical cannabis has erupted into an

infectious legal lesion on the corpus of American

jurisprudence. This Court should take this

opportunity to prevent the further spread of this

insidious condition by invocation of the Doctrine of

Estoppel. It should find that the Schedule I status of

cannabis under the federal Controlled Substances Act

is no longer enforceable. Doing so will cure the

problem.

This pernicious chafing of state medical

marijuana laws bumping up against the Schedule I

designation of cannabis under the federal Controlled

Substances Act (“CSA”), for the past 25 years, without

proper attention and care, is the root cause. Today, 36

states have legalized marijuana in some form. These

regulated programs are not only in contravention of

the supremacy of the Schedule I status, but in fact,

those programs have been indirectly bolstered by the

concerted efforts of the three coordinate branches of

the federal government to nullify the CSA through a

lack of enforcement. Such intentional efforts have

consisted of prosecutorial guidance by the Department

of Justice, Congressional spending appropriations

preventing prosecutions of medical cannabis patients

and businesses, and court rulings upholding those

decisions and actions of Congress and the Executive

Branch.

3

Due to the continual friction over the last two

decades, rulings from state and federal courts are

without protocol, prophylaxis to prevent further

spread of the constitutional crisis, or enforced

precedent which are the cornerstones of American

jurisprudence.

The juridical ulceration of this

supremacy and nullification crisis is evident in the

conflicting decisions at issue in the Petition.

The Supreme Courts of Minnesota and Maine

held that the Schedule I designation of cannabis under

the federal Controlled Substances Act (“CSA”),

prohibiting medical use of marijuana, entirely

preempts and invalidates the state laws mandating

that worker’s compensation insurance reimburse

injured employees for the cost of their medicine. To

the contrary, the Supreme Courts of New Hampshire

and New Jersey held that post-purchase patient

reimbursement for prior acquisition of that medicine

did not require the insurer to violate any federal law

and was therefore not preempted. As such, New

Hampshire and New Jersey held that the cost of the

medicine must be reimbursed.

Both Minnesota and Maine found preemption

based upon an inherent ‘positive conflict’ between

their state laws and the CSA Schedule I designation

prohibiting the medical use of cannabis. In the 25

years since California first passed its Compassionate

Use Act legalizing medical marijuana, no United

States Attorney General has exercised his power

under 21 U.S.C. §903 to declare such a ‘positive

conflict’ and preempt any state cannabis law, medical

or recreational. Arguably, the Supreme Courts of

Minnesota and Maine usurped the authority of the

4

U.S. Attorney General to fill a federal legal void and

substantiate their preemption rulings. This overreach

only exacerbates the legal carbuncle presented here

and should prompt this Court to grant the Writ and

resolve this supremacy and nullification crisis.

The conflicting decisions of the four Supreme

Courts are the natural manifestation of decades of

legal uncertainty.

Justice Thomas recently alluded to the ongoing

crisis involving the issue of the deductibility of

cannabis expenses under IRS Code 280(e) stating:

“Sixteen years ago, this Court held that

Congress’ power to regulate interstate

commerce authorized it “to prohibit the

local cultivation and use of marijuana.”

Gonzales v. Raich, 545 U. S. 1, 5 (2005).

The reason, the Court explained, was

that

Congress

had

“enacted

comprehensive legislation to regulate the

interstate market in a fungible

commodity” and that “exemption[s]” for

local use could undermine this

“comprehensive” regime. Id., at 22–29.

The Court stressed that Congress had

decided “to prohibit entirely the

possession or use of [marijuana]” and had

“designate[d] marijuana as contraband

for any purpose.” Id., at 24–27 (first

emphasis added). Prohibiting any

intrastate use was thus, according to the

Court, “‘necessary and proper’” to avoid a

“gaping

hole”

in

Congress’

5

“closed regulatory system.” Id., at 13, 22

(citing U. S. Const., Art. I, §8).

Whatever the merits of Raich when it

was decided, federal policies of the past

16 years have greatly undermined its

reasoning. Once comprehensive, the

Federal Government’s current approach

is a half-in, half-out regime that

simultaneously tolerates and forbids

local

use

of

marijuana.

This

contradictory and unstable state of

affairs strains basic principles of

federalism and conceals traps for the

unwary.

…[T]hough federal law still flatly forbids

the intrastate possession, cultivation, or

distribution of marijuana, Controlled

Substances Act, … the Government,

post-Raich, has sent mixed signals on its

views. In 2009 and 2013, the Department

of

Justice

issued

memorandums

outlining a policy against intruding on

state legalization schemes or prosecuting

certain individuals who comply with

state law. [Fn omitted]. In 2009,

Congress enabled Washington D. C.’s

government to decriminalize medical

marijuana under local ordinance. [Fn

omitted]. Moreover, in every fiscal year

since 2015, Congress has prohibited the

Department of Justice from “spending

funds to prevent states’ implementation

of their own medical marijuana laws.”

6

United States v. McIntosh, 833 F.3d

1163, 1168, 1175–1177 (9th Cir., 2016)

(interpreting the rider to prevent

expenditures on the prosecution of

individuals who comply with state law).

[Fn omitted]. That policy has broad

ramifications given that 36 States allow

medicinal marijuana use and 18 of those

States also allow recreational use. [Fn.

Omitted].

Given all these developments, one can

certainly understand why an ordinary

person might think that the Federal

Government has retreated from its onceabsolute ban on marijuana. See, e.g.,

Halper, Congress Quietly Ends Federal

Government's

Ban

on

Medical

Marijuana, L. A. Times, Dec. 16, 2014.”

Standing Akimbo, L.L.C., v. United

States, cert. denied, 594 U.S. __, 141

S.Ct. 2236, 2236-37 (2021).

This irrational “half-in, half-out” approach to

federal cannabis regulation is reminiscent of Abraham

Lincoln’s statement: “It must become all one thing, or

the other” … “A house divided cannot stand.” 2 Federal

laws and policies designed to nullify the supremacy of

federal law in order to assist promotion of state

cannabis programs cannot further stand. This

infectious lesion across the national legal landscape

“A House Divided” speech by Abraham Lincoln, given in

Springfield,

Illinois,

June

16,

1858,

https://www.nps.gov/liho/learn/historyculture/housedivided.htm

2

7

must be eradicated by invocation of the Doctrine of

Estoppel to prevent further enforcement of the

Schedule I designation of cannabis.

Doing so will eliminate the constitutional crisis

and prevent further constitutional peril attributable

to the erratic and unequal enforcement of the CSA

with regard to cannabis.

ARGUMENT 3

POINT I. Upholding the supremacy of the

designation of cannabis under the CSA is futile when

the coordinate branches of government have

affirmatively promoted and protected state medical

cannabis programs

SUPREMACY

OF

THE

CONTROLLED

SUBSTANCES ACT AND 21 U.S.C §903

The Supremacy Clause of the United States

Constitution promotes national uniformity by

precluding state law from interfering with the

enforcement of federal law. U.S. Const., art. VI, cl. 2.

It gives Congress the power to preempt state law if it

is found to be in conflict with federal law. Hillman v.

Maretta, 569 U.S. 483 (2013). “Where enforcement of

. . . state law would handicap efforts to carry out the

plans of the United States, the state enactment

must…give way.” James Stewart & Co. v. Sadrakula,

These arguments were previously presented by the amici

parties in the matter of Washington v. Barr, 141 U.S. 555 (Mem),

__ S.Ct. __, 208 L.Ed.2d 176 (2020), cert. denied.

3

8

309 U.S. 94, 103-104 (1940). To avoid a constitutional

crisis, where “compliance with both federal and state

regulations is a physical impossibility,” the “state law

is nullified to the extent that it actually conflicts with

federal law.” Hillsborough Cnty., Fla. v. Automated

Med. Labs., 471 U.S. 707, 713 (1985); See, Gade v.

Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992).

The CSA is a series a federal statutes that

organizes controlled substances into five schedules

based on (1) their potential for abuse, (2) their

accepted medical uses, and (3) their accepted safety for

use under medical supervision and potential for

psychological or physical dependence. See 21 U.S.C.

§ 812. Cannabis was placed in Schedule I, “…the most

restrictive of the five schedules, the violation of which

may result in criminal penalties.” U.S. v. Canori, 787

F.3d 181, 183 (2nd Cir. 2013).

Congress did not intend to completely occupy

the field of controlled substance regulation to the

exclusion of any state law. State laws may operate

provided that the Attorney General does not find a

“positive conflict” between and the it CSA such “that

the two cannot consistently stand together” requiring

complete preemption of the state law. 21 U.S.C. §903.

THE RISE OF THE NULLIFICATION CRISIS

Acts of the Executive Branch

While the Executive Branch, headed by the

President, is charged with the duty to “faithfully

execute the laws of the United States” U.S.

Constitution, Article II, §3, it has not done so with

regard to cannabis. “Dispensing power” occurs when

the Executive, rather than “faithfully executing” the

9

law, instead attempts to bypass or suspend legal

prohibitions imposed by it.” See, Robert J. Reinstein,

The Limits of Executive Power, 59 Am. U. L. Rev. 259,

278-279 (2009).

The nullification crisis started in 1996 when the

Executive branch failed to preempt California’s

Proposition 215, the “Compassionate Use Act”, which

established the country’s first medical cannabis

program. California Health and Safety Code §11350,

et. seq. State recognition of cannabis as a form of

medical intervention subverts the Schedule I finding

that is has, “no currently accepted medical use in the

United States.” 21 U.S.C. §812. Thirty-six states have

established medical cannabis programs since 1996.

Since then, no Attorney General, the nation’s Chief

law enforcement officer, has invoked 21 U.S.C. §903

finding a “positive conflict” between the CSA and state

cannabis programs.

In 2009, the Justice Department’s “Ogden

Memorandum” gave guidance to federal prosecutors in

districts within medical cannabis states advising them

to conserve resources and refrain from pursuing

medical patients who were compliant with state

cannabis laws. 4 That guidance was enhanced by in

2013 by the “Cole Memorandum” which advised

federal prosecutors not to investigate or prosecute

“Memorandum for Selected United States Attorneys –

Investigations and Prosecution In States Authorizing the

Medical Use of Marijuana”

https://www.justice.gov/sites/default/files/opa/legacy/2009/10/19/

medical-marijuana.pdf

4

10

compliant medical cannabis operators. 5 While the

guidance memoranda did not dispense power to the

states, they did exemplify the commitment of the

Executive branch to allow state cannabis programs to

persist without interference. Due to the proliferation,

the industry’s commercial needs required guidance for

federally regulated banks to facilitate cannabis

related transactions.

In 2014, the “FinCEN Memorandum” advised

banks that, subject to guidance criteria and

transparency, they could do so without fear of

violating money laundering or other federal criminal

statutes. 6 In 2019, the Justice Department’s AntiTrust Division approved the merger of multi-state

operators making them some of the largest cannabis

related businesses in the United States despite

nullifying the supremacy of the CSA. 7

“Memorandum for All United States Attorneys – Guidance

Regarding Marijuana Enforcement”

https://www.justice.gov/iso/opa/resources/3052013829132756857

467.pdf

6 “Guidance Subject: BSA Expectations Regarding MarijuanaRelated Businesses” FIN-2014-G001

https://www.FinCEN.gov/resources/statutesregulations/guidance/bsa-expectations-regarding-marijuanarelated-businesses

7 “DOJ Allows MedMen To Buy PharmaCann - Great News For

Origin House” Sep. 11, 2019

https://seekingalpha.com/article/4291015-doj-allows-medmen-tobuy-pharmacann-great-news-for-origin-house

5

“CHICAGO-October 30, 2019-(BUSINESS WIRE)–Cresco Labs

… one of the largest vertically integrated multistate cannabis

operators in the United States, today announced the expiration

11

Preemption and fundamental fairness became a

stated concern of then Attorney General Nominee,

William Barr, during his confirmation hearings.

Speaking from the perspective of detrimental

reliance on federal guidance and issues of

fundamental fairness, Mr. Barr stated: “…it was

important not to upset the interests and expectations

of the businesses and investors who have entered the

legal marijuana industry.” He furthered: “I said I’m

not going to go after companies that have relied on the

Cole memorandum.” 8 Mr. Barr articulated Due

Process and fairness concerns in not wanting to

retroactively prosecute those who in good faith

entered into state medical cannabis industries based

upon prior federal statements, actions, and abstinence

from enforcing the supremacy of the CSA.

of the waiting period under the Hart-Scott-Rodino Antitrust

Improvements Act of 1976 … in respect to Cresco Labs’ pending

acquisition of Tryke Companies (“Tryke”) (the “Transaction”).

The waiting period, during which the Transaction could not be

completed, expired without the issuance of a so-called “second

request” by the United States Department of Justice Antitrust

Division (the “DOJ”).”

https://www.newcannabisventures.com/cresco-labs-cannabisacquisition-clears-department-of-justice-initial-waiting-periodwithout-second-request/

8

https://news.yahoo.com/barr-signals-support-endingmarijuana-legalization-212041886.html; See also, Kyle Jagger,

Marijuana

Moment,

1/15/2019

https://www.marijuanamoment.net/trump-attorney-generalnominee-pledges-not-to-go-after-legal-marijuana-businesses/

12

Mr. Barr testified: “However, I think the

current situation is untenable and really has to be

addressed. It’s almost like a backdoor nullification of

federal law.” 9 Questioned further about the “backdoor

nullification” Senator Booker asked: “Do you think it’s

appropriate to use federal resources to target

marijuana businesses that are compliant with state

law?” to which Mr. Barr responded “No”. 10 He further

explained that “…to the extent that people are

complying with the state law’s distribution and

production and so forth, we’re not going to go after

that. But I do feel we can’t stay in the current

situation.” He testified that the nullification was

“…breeding disrespect for the federal law.” 11 It is this

disrespect for the law that has turned state cannabis

programs chafing against the supremacy clause into a

full blown infectious lesion which has been remedied

in diametrically opposed ways by the Supreme Courts

of Minnesota, Maine, New Hampshire, and New

Jersey.

Acts of Congress

Congress through the “commerce clause” can

preempt all state cannabis programs and criminalize

the conduct of patients and market participants.

Gonzales v. Raich, 545 U.S. 1, 125 S.Ct. 2195, 162

L.Ed.2d 1 (2005). In 2014, Congress took a different

tack passing the “Rohrbacher-Farr Amendment” to

the Commerce, Justice, Science, and Related Agencies

Appropriations Act, 2015 (H.R. 4660). The

Amendment prohibited federal law enforcement from

9 Id.

10 Id.

11 Id.

13

using federal funds to investigate and prosecute state

compliant medical cannabis operators and patients. It

was extended as the “Rohrbacher - Blumenauer

Amendment”

by

means

of

Consolidated

Appropriations Act of 2016 (a/k/a the 2016 Omnibus

Spending Bill, Pub. L. 114-113), signed into law on

December 18, 2015. Further extensions have been in

the Consolidated Appropriations Act 2018 (a/k/a the

2018 Omnibus Spending Bill, Pub. L. 115-141) signed

by President Trump on March 23, 2018, and extended

again by him to November 21, 2019 (H.R. 4378). On

December 20, 2019, President Trump signed the

“Consolidated Appropriations Act, 2020” (H.R. 1158),

which is still in effect.

are:

Pending before various committees of Congress

a.

the Cannabis Administration and

Opportunity Act (CAOA Act of 2021);

b.

the

Marijuana

Opportunity

Reinvestment and Expungement Act

(MORE Act of 2019 – H.R. 3884);

b.

the

Strengthening

the

Tenth

Amendment Through Entrusting States Act

(STATES ACT, H.R.2093 of 2019);

c.

the Secure and Fair Enforcement Act

(SAFE ACT of 2019 – H.R. 1468)

Congress is clearly trying to do indirectly that

which it can do directly, namely, promote state

cannabis programs in contravention of the CSA. It is

quixotic why Congress chooses to proceed only halfway in efforts to legalize cannabis rather than simply

14

de-schedule it. The result is a legal quagmire as

evidenced by the split decisions of the four Supreme

Courts at issue in the Petition. That is why invocation

of the doctrine of estoppel is needed to end the

nullification crisis and to protect those who relied on

the guidance of federal officials and agencies and

engaged in the cannabis industry despite federal

illegality.

Acts of the Judiciary

In the context of criminal law, the RohrbacherFarr Amendment’s handcuffing of federal law

enforcement by prohibiting federal prosecution of

state compliant individuals and businesses was

upheld in U.S. v. McIntosh, 833 F.3d 1163 (9th Cir.

2016). There, the Ninth Circuit Court of Appeals

stated:

“[Department of Justice] is currently

prohibited from spending funds from

specific

appropriations

acts

for

prosecutions of those who complied with

state

law.

But

Congress

could

appropriate funds for such prosecutions

tomorrow. Conversely, this temporary

lack of funds could become a more

permanent lack of funds if Congress

continues to include the same rider in

future appropriations bills.” U.S. v.

McIntosh, 833 F.3d at 1179.

The Ninth Circuit reiterated the legitimacy of

Congressional nullification by limiting the ability of

the Executive branch to faithfully execute the laws

stating:

15

“…Congress passed the Consolidated

and Further Continuing Appropriations

Act of 2015 (“Appropriations Act of

2015”), which put the kibosh on all

expenditures of federal prosecutions for

marijuana use, possession, or cultivation

if the defendant complied with the state's

medical marijuana laws.”); U.S. v.

Pisarski, 965 F.3d 738, 740 (9th Cir.

2020).

Likewise, the Tenth Circuit Court of Appeals

has stated that:

“Despite its legalization in” numerous

states and Washington, D.C. “for medical

use” and in a number of states “for

recreational use, marijuana is still

classified as a federal ‘controlled

substance’ under schedule I of the

Controlled Substances Act.” The United

States Department of Justice, however,

“has declined to enforce [21 U.S.C.] § 841

when a person or company buys or sells

marijuana in accordance with state law.”

Sandusky v. Goetz, 944 F.3d 1240, 1242

(10th Cir. 2019), quoting, Green Sol.

Retail, Inc. v. U.S., 855 F.3d 1111, 111314 (10th Cir. 2017)

16

Unlike the Supreme Courts of Minnesota,

Maine, New Hampshire and New Jersey, addressing

the legality of state mandates directing worker’s

compensation insurance reimbursement for medical

cannabis patients, courts in other commercial contexts

have broached the preemption issue, but declined to

address it.

In Mann v. Gullickson, the District Court

upheld contractual payment obligations of a cannabis

business purchaser since the transaction could be

accomplished without violating the CSA. 2016 WL

6473215 at *7 (N.D. Cal. Nov. 2, 2016). Likewise, in

Energy Labs, Inc. v. Edwards Engineering, Inc., the

District Court required defendants to follow through

with the purchase of air conditioning units to be

specifically used for a cannabis cultivation because

fulfilling that obligation was not a violation of the

CSA. 2015 WL 3504974 at *4 (N.D. Ill. 2015).

Similarly, in Ginsburg v. ICC Holdings, LLC, the

District Court upheld Defendant’s obligations to pay

sums certain due on promissory notes related to the

acquisition of a cannabis business because the

payments under the notes were not derived from the

profits of the cannabis business. 2017 WL 5467688

(N.D. Tex. Nov. 13, 2017).

Regarding insurance, the District Court in

Green Earth Wellness Ctr., LLC v. Atain Specialty Ins.

Co., dismissed an insurer’s argument that it had no

obligation to pay damage claims related to the

insured’s cannabis business because the contract was

void as a matter of public policy. Rather than focus on

assurances given to cannabis related contracts, the

Court focused on obligations that were negotiated in

17

the policy stating: “[a]ny judgment issued by this

Court will be recompense to Green Earth based on [the

carrier’s] failure to honor its contractual promises, not

an instruction to [the carrier] to ‘pay for damages to

marijuana plants and products.’” 163 F. Supp. 3d 821,

834 (D. Colo. 2016). The Court stated: “[the carrier]

having entered into the Policy of its own will,

knowingly and intelligently, is obligated to comply

with its terms or pay damages for having breached it.”

Id. at 835.

But, contracts have been voided on public policy

grounds because of cannabis being a Schedule I drug

under the CSA. The Tenth Circuit observed: “Colorado

courts will not enforce a contract that violates public

policy’” McCracken v. Progressive Direct Ins. Co., 896

F.3d 1166, 1172 (10th Cir. 2018). The District Court

also voided on grounds that: “Contracts for the sale of

marijuana are void as they are against public policy

....” Haeberle v. Lowden, 2012 WL 7149098 (Colo. Dist.

Ct. 2012). However, is declining to enforce a contract

on public policy the same as the Supreme Courts of

Minnesota and Maine inherently finding a ‘positive

conflict’ between federal and state law when no

Attorney General declared as such under his power

pursuant to 21 U.S.C. §903?

The legal anomalies brought about by the

nullification crisis have vexed Bankruptcy courts. One

held that a party cannot seek bankruptcy relief “while

in continuing violation of federal law” or “where the

trustee or court will necessarily be required to possess

and administer assets which are illegal under the CSA

or constitute proceeds of activity criminalized by the

CSA.” In re Way to Grow, Inc., 597 B.R. 111, 120

18

(Bankr. D. Colo. 2018); See also, In Re Pharmacann

LLC, 123 U.S.P.Q.2d 1122 (T.T.A.B. 2017). As

expressed by another Court:

If the uncertainty of outcomes in

marijuana-related bankruptcy cases

were an opera, Congress, not the

judiciary, would be the fat lady. Whether,

and under what circumstances, a federal

bankruptcy case may proceed despite

connections to the locally “legal”

marijuana industry remains on the

cutting-edge of federal bankruptcy law.

Despite the extensive development of

case law, significant gray areas remain.

Unfortunately,

the

courts

find

themselves in a game of whack-a-mole;

each time a case is published, another

will arise with a novel issue dressed in a

new shade of gray. This is precisely one

such case.

In re Malul, 614 B.R. 699 (Bankr. D.

Colo. 2020):

Respectfully, Congress is not the “Fat Lady” Congress has sung with the Executive branch to

protect and promote state cannabis programs, and the

federal Courts have provided vocal legal support when

possible. With each of those three coordinate branches

of government singing in unison to protect state

cannabis programs, the legitimacy of the Schedule I

status of cannabis under the CSA is no longer a

political question. Rather, the final aria must be sung

by this Court with the invocation of the doctrine of

19

estoppel. Doing so will eliminate the Zeno’s paradox of

being ‘half-in, half-out’ issue cited by Justice Thomas

and will further avert the backdoor nullification and

unfairness concerns.

The time has come for this Court to play the role

of the “Fat Lady” and close down this nullification

saga by invoking the Doctrine of Estoppel.

POINT II. Estoppel is Warranted and Necessary to

Cure This Legally Untenable Condition

THE NEED TO INVOKE ESTOPPEL

This Court has stated: “It is clear from the text

of the Act that Congress has made a determination

that marijuana has no medical benefits worthy of an

exception.” U.S. v. Oakland Cannabis Buyers'

Cooperative, 532 U.S. 483, 491, 121 S.Ct. 1711, 149

L.Ed.2d 722 (2001). It Court concluded that federal

law prohibits the manufacture, distribution or sale of

marijuana for any purpose. Id. at 489–90; See also, 21

U.S.C. § 841; §846. In 2005, it observed that “[d]espite

considerable efforts to reschedule marijuana” through

the administrative process, “it remains a Schedule I

drug.” Gonzales v. Raich, 545 U.S. 1, 15 n. 23, 125

S.Ct. 2195, 162 L.Ed.2d 1 (2005). It opined that

“evidence proffered by [defendants]... regarding the

effective medical uses for marijuana, if found credible

after trial, would cast serious doubt on the accuracy of

the findings that require marijuana to be listed in

Schedule I.” 545 U.S. at 27 n. 37, 125 S.Ct. 2195.

20

As recently stated by Justice Thomas:

“Whatever the merits of Raich when it

was decided, federal policies of the past

16 years have greatly undermined its

reasoning. Once comprehensive, the

Federal Government’s current approach

is a half-in, half-out regime that

simultaneously tolerates and forbids

local

use

of

marijuana.

This

contradictory and unstable state of

affairs strains basic principles of

federalism and conceals traps for the

unwary.”

Standing Akimbo, LLC v. U.S., 141 U.S. at

2236-37.

With the legalization of medical and adult use

cannabis in some 36 states, it is hard to describe the

situation as being just “half-in” and “half-out”. The

vast majority of states have found cannabis to be an

effective medicine and passed legislation to that effect

in direct contravention of the CSA. It seems

fundamentally unfair to place the onus on State

Supreme Courts to have to make determinations

about the applicability of federal preemption and

determine the existence of a “positive conflict” when

the U.S. Attorney Generals have refused to do for the

past 25 years. The outcome from this festering wound

is evident in the split decisions of the four Supreme

Courts which are at issue here. Invocation of the

Doctrine of Estoppel is necessary and precedent exists

for it.

21

THE PRECEDENT FOR ESTOPPEL

As forecasted by the Court of Claims: “...we

know of no case where an officer or agent of the

government, …has estopped the government from

enforcing a law passed by Congress. Unless a law has

been repealed or declared unconstitutional by the

courts, it is a part of the supreme law of the land and

no officer or agent can by his actions or conduct waive

its provisions or nullify its enforcement.” Montilla v.

U.S., 457 F.2d 978, 986–87 (Ct. Cl. 1972). Here, the

Executive branch through the Cole Memorandum,

FinCEN

Memorandum,

and

the

spending

appropriations restrict federal law enforcement, all

serve to nullify the Schedule I status of cannabis

under the CSA.

Estoppel emanates from Due Process’s

requirement of fair notice of what conduct is illegal

and will incur sanctions. See, Landgraf v. USI Film

Productions, 511 U.S. 244, 265-66 (1994). Entrapment

by estoppel is where the defendant reasonably relies

on the inducements of government agents with

apparent authority to authorize otherwise criminal

acts, even if they do not in fact possess such authority.

U.S. v. Giffen, 473 F.3d 30 (2nd Cir. 2006). This defense

stems from the notion that “[o]rdinarily, citizens may

not be punished for actions undertaken in good faith

reliance

upon

authoritative

assurance

that

punishment will not attach.” Raley v. Ohio, 360 U.S.

423, 487, 79 S.Ct. 1257, 3 L.Ed.2d 1344 (1959). The

defense “is based upon fundamental notions of

fairness embodied in the Due Process Clause of the

Constitution.” U.S. v. Ormsby, 252 F.3d 844, 851 (6th

Cir.2001), and focuses on government conduct instead

22

of a defendant’s state of mind. U.S. v. Blood, 435 F.3d

612, 626 (6th Cir.2006).

In Raley, Due Process required reversal of

convictions of those who were mis-advised of their

rights during a state investigation. Defendants relied

upon assurances of the state investigation commission

that they had privilege under state law to refuse to

answer, though in fact they did not. This Court

reasoned that failing to overturn the convictions

“would be to sanction an indefensible sort of

entrapment by the State—convicting a citizen for

exercising a privilege which the State had clearly told

him was available to him.” Id., at 426.

In Cox v. Louisiana, this Court overturned

disorderly conduct convictions of demonstrators who,

after being instructed in front of the Mayor and Chief

of Police that while the law prohibited protests “near”

a courthouse, defendants could demonstrate 101 feet

away from it. Defendants relied on that official

instruction, assembled, and protested. They were

thereafter arrested and convicted for violation of the

ordinance. 379 U.S. 559, 568-69 (1965). This Court

overturned their convictions finding Due Process was

violated because Defendants detrimentally relied

upon the statements and representations of officials in

good faith and their subsequent arrest constituted “an

indefensible sort of entrapment by the State.” Id. at

560. “As a matter of law, Cox establishes that, under

some circumstances, demonstrators or others who

have been advised by the police that their behavior is

23

lawful may not be punished for that behavior.” Garcia

v. Does, 779 F.3d 84, 96 (2d Cir. 2015)(en banc).

The detrimental reliance upon the statements

and acts of government officials is at the heart of the

indefensible entrapment concerns testified to by

Attorney General Barr. So great were his concerns

that he vowed not to retroactively or prospectively

prosecute state compliant cannabis industry

participants.

His vow was and is nonetheless

anathema to the CSA being a clear abdication of his

duties noted by the Court of Claims in the Montilla

case above. It is unclear where Attorney General

Garland presently stands on the preemption issue

after two and half decades of nullification. Invocation

of estoppel can prevent him from taking action that

would effectively impair Due Process and result in

fundamental unfairness to the States and citizens that

have engaged in the legal cannabis industry since

1996.

This Court invoked the doctrine against the

federal government in overturning the conviction of a

business which was deprived of opportunity to prove

at trial that it discharged waste into a waterway in

compliance with the Army Corps of Engineers “long

standing administrative construction” of the

environmental statute. See, U.S. v. Pennsylvania

Industrial Chemical Corp. (PICCO), 411 U.S. 655, 657

(1973). This Court found Due Process was violated by

the denial as defendant was “…affirmatively misled

by the responsible administrative agency into

believing that the law did not apply in this situation.”

Id. at 674-74. This Court, in holding that defendant

24

“had a right to look to the [agency’s] regulations”

ruled:

[The regulations] designed purpose was

to guide persons as to the meaning and

requirements of the statute. Thus, to the

extent that regulations deprived [the

defendant] of fair warning as to what

conduct the Government intended to

make criminal, we think there can be no

doubt that traditional notions of fairness

inherent in our system of criminal justice

prevent the Government from proceeding

with the prosecution. Id. at 674.

This Court has repeatedly questioned whether

estoppel can be invoked against the federal

government. It has noted that: “We have left the issue

open in the past, and do so again today.” Heckler v.

Community Health Services, 467 U.S. 51, 60, 104 S.Ct.

2218, 81 L.Ed.2d 42 (1984). It stated: “From our

earliest cases, we have recognized that equitable

estoppel will not lie against the Government as it lies

against private litigants.” Office of Pers. Mgmt. v.

Richmond, 496 U.S. 414, 419, 110 S. Ct. 2465, 2469,

110 L. Ed. 2d 387 (1990).

But that does not mean it will not lie against

the government. Historically, the question has

revolved around “affirmative misconduct” on behalf of

the federal government. Id. at 420-21. In INS v. Hibi,

this Court stated that: “While the issue of whether

‘affirmative misconduct’ on the part of the

Government might estop it from denying citizenship

was left open in Montana v. Kennedy, 366 U.S. 308,

25

314, 315, 81 S.Ct. 1336, 1340, 1341, 6 L.Ed.2d 313

(1961), no conduct of the sort there adverted to was

involved here.” 414 U.S. 5, 8, 94 S.Ct. 19, 21, 38

L.Ed.2d 7 (1973) (per curiam). In Schweiker v. Hansen,

this Court denied an estoppel claim for Social Security

benefits but observed it “has never decided what type

of conduct by a Government employee will estop the

Government from insisting upon compliance with

valid regulations governing the distribution of welfare

benefits.” 450 U.S. 785, 788, 101 S.Ct. 1468, 1470, 67

L.Ed.2d 685 (1981) (per curiam). The estoppel

question was averted in INS v. Miranda, when this

Court stated: “This case does not require us to reach

the question we reserved in Hibi, whether affirmative

misconduct in a particular case would estop the

Government from enforcing the immigration laws.”

459 U.S. 14, 19, 103 S.Ct. 281, 283, 74 L.Ed.2d 12

(1982) (per curiam). Deferring, the Court stated: “We

leave for another day whether an estoppel claim could

ever succeed against the Government” Office of Pers.

Mgmt. v. Richmond, 496 U.S. at 423. The day has

come to answer that question.

“[T]he words of federal officials were enough to

convince those who were considering entry into the

medical marijuana business that they could engage in

that

enterprise

without

fear

of

criminal

consequences.” U.S. v. Washington, 887 F.Supp.2d

1077, 1084 (D.Mont.), adhered to on reconsideration,

2012 WL 4602838 (D. Mont. 10/2/2012). The

constitutional nullification crisis of the past 24 years

caused by the affirmative misconduct of each of the

three coordinate branches of federal government

warrants invoking estoppel. This ensures fairness and

26

prevents future constitutional uncertainty to cannabis

industry participants who detrimentally relied upon

the nullifying statements and actions designed to

protect and promote state regulated medical cannabis

programs. Estoppel is warranted because the issues

are quasi-criminal like Raley and Cox given the

unquestionable violation of the CSA caused by official

statements and guidance, and quasi-administrative

law and interpretation based like PICCO given the

judicial rulings that attempt to uphold the inherent

federal nullification scheme and mergers approved by

the Department of Justice.

Estoppel may be asserted where there is: “(1)

misleading conduct, which may include not only

statements and actions but silence and inaction,

leading another to reasonably infer that rights will not

be asserted against it; (2) reliance upon this conduct;

and (3) due to this reliance, material prejudice if the

delayed assertion of such rights is permitted.” U.S. v.

Cox, 906 F.3d 1170, 1191 (10th Cir. 2018), cert. denied,

139 S. Ct. 2690, 204 L. Ed. 2d 1090 (2019), and cert.

denied sub nom. Kettler v. U.S., 139 S. Ct. 2691

(2019)(internal citations omitted).

As for the first prong, each branch of the federal

government has made affirmative statements and

taken actions designed to induce the growth of the

state medical cannabis programs at the expense of

violating federal law. This is evidenced by:

A. no Attorney General has found a “positive

conflict” and preempted as empowered to do under 21

U.S.C. §903;

27

B. FinCEN guidance encouraged banks to enter

into the cannabis related commerce by dispelling fears

of prosecution for financial crimes;

C. Congress passed multiple spending

appropriations amendments to prevent law

enforcement from interfering with state compliant

medical patients and industry participants;

D. Judicial determinations like U.S. v.

McIntosh upheld limitations placed by Congress upon

the Executive Branch to prevent enforcement of the

federal laws.

It is unfortunate that the Supreme Courts of

Minnesota and Maine have felt constrained by a

constitutional supremacy clause to invalidate the

worker’s compensation insurance mandate when no

branch of federal government is otherwise willing to

abide by it.

There is no prejudice to the worker’s

compensation insurance companies which are

contractually obligated to reimburse their insureds for

medicine that is properly administered in compliance

with a state statute.

CONCLUSION

The festering supremacy and nullification legal

carbuncle continues to infect the corpus of American

jurisprudence with regard to the Schedule I

designation of cannabis. It must be eradicated to end

this constitutional crisis. The need for supremacy of

rational federal laws, Due Process, and notions of

fairness all should compel this Court to invoke the

28

Doctrine of Estoppel to cure this problem once and for

all.

Respectfully submitted,

DAVID C. HOLLAND, Esq.

Counsel of Record

Bar #313361

LAW OFFICES OF DAVID CLIFFORD

HOLLAND, P.C.

201 East 28th Street - Suite 2R

New York, New York 10016

212-842-2480 Office

DCH@HollandLitigation.com

Counsel for Amici Curiae