Monday, January 5, 2026
Page 1
Ninth Circuit:
Challenge to City’s Residency Requirement for Cannabis Dispensers Properly Dismissed
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals on Friday affirmed a District Court decision dismissing a challenge to a Sacramento ordinance that limits issuance of cannabis dispensary licenses to current or former residents of the city, rejecting the contention that the Dormant Commerce Clause prohibits such legislation.
The “Dormant Commerce Clause” is founded on an inference from the Commerce Clause, which grants Congress the power to regulate interstate commerce, a restriction on state and local legislation that inhibits interstate commerce.
In an opinion by Circuit Judge Daniel Aaron Bress, the Ninth Circuit, upheld the dismissal by District Court Judge Kimberly J. Mueller of the Eastern District of California of the action by Peridot Tree, Inc., a California corporation, against the City of Sacramento. Joining in the opinion were Circuit Judges Johnnie B. Rawlinson and Patrick J. Bumatay.
Seeking the license on behalf of Peridot was Kenneth Gay, a shareholder in the corporation who resides in Michigan. The application was rejected and suit was brought, with Peridot pleading that Gay “meets every requirement” of the ordinance “except that he has never lived in Sacramento.”
Earlier Decision
On March 4, 2024, a different panel reversed Mueller’s decision to abstain from exercising jurisdiction over the Dormant Commerce Clause claim under the view that the parties should litigate in state court. Circuit Judge Salvador Mendoza Jr. said that “this case does not meet the requirements for abstention under any abstention doctrine established by the Supreme Court.”
Friday’s opinion also affirms dismissal by District Court Judge Tiffany M. Cartwright of the Western District of Washington of an action by Peridot Tree against the State of Washington based on a statute similar to Sacramento’s ordinance.
Bress wrote:
“We decline to extend the dormant Commerce Clause to interstate commerce in a drug market that Congress has declared illegal. Although we appreciate that judges on other courts are divided on this question, we see insufficient license in Supreme Court precedent to use the judge-made dormant Commerce Clause to promote a constitutional right to interstate commerce that is unlawful under federal law. The two district courts in these cases both reached the same conclusion. In both cases, we therefore affirm.”
‘Ongoing Debate’
He remarked:
“There is an ongoing debate in our country, at both the national and local levels, about whether marijuana should be legalized and, if so, what kinds of regulatory schemes should govern. But when Congress has made the national marketplace illegal, the premises of the dormant Commerce Clause do not require the courts to leapfrog the political process and inaugurate free trade in the market for marijuana dispensary licenses. And we are uncertain where the contrary logic would take us, if for example, a state were to legalize even more harmful drugs, such as heroin.”
The jurist continued:
“A doctrine of constitutional law that catapults a state’s legalization of an illicit drug into dormant Commerce Clause protection would have courts facilitating, if not creating, the very national marketplaces that Congress has disallowed. This is a far cry from what the dormant Commerce Clause set out to do.”
The case is Peridot Tree WA. Inc. v. Washington State Liquor and Cannabis Control Board, 24-3481.
Copyright 2026, Metropolitan News Company