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A federal court in Washington state has rejected a cannabis entrepreneur’s initial effort to upend the market’s marijuana social equity program.
And U.S. District Judge Tiffany Cartwright hinted in her Jan. 5 ruling that a constitutional challenge to social equity programs and preferential licensing similar to other actions that’s wreaked havoc in legal markets such as California and New York is likely to ultimately fail in Washington state.
Those challenges were launched by Kenneth Gay, a self-identified Michigan resident with a below-median income and a marijuana charge in his home state on his record.
Companies affiliated with Gay have filed for social equity permits across the country and then filed lawsuits challenging the social equity laws when he’s been denied.
According to court records, Gay is a 51% owner in a company called Peridot Tree WA that applied for a social equity permit in King County, Washington, which includes metro Seattle.
The state awards social equity licenses based on a scored application that “favors applicants who have lived in areas of Washington that were disproportionately impacted by prosecution of cannabis offenses, have been arrested for or convicted of a cannabis offense, and earn below-median income,” according to court records.
Washington’s program also requires applicants to have lived in the state for six months.
After the Washington State Liquor and Cannabis Board rejected Peridot’s application because it did not meet the residency requirement, the company filed suit in December.
The lawsuit challenged the residency requirement and asked a federal court to bar the state from issuing any social equity permits until the suit was resolved.
In her ruling denying Peridot’s request for temporary relief, Cartwright added that she “concludes that Peridot is unlikely to succeed on the merits because the dormant Commerce Clause does not protect a right to participate in an interstate market that Congress has declared illegal.”
In New York, a Gay-affiliated company called Variscite NY One was awarded an adult-use license as part of a settlement for a similar suit.
A separate challenge filed by another Gay-affiliated company against the city of Sacramento, California, is pending at the U.S. 9th Circuit Court of Appeals.
Oral arguments in that case were heard in November, according to court records.
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