The District of Columbia submitted additional legal filings in an ongoing federal lawsuit challenging the city’s cannabis licensing framework, pointing to a recent appellate court decision that could influence how the case is resolved.
In Alliance for Recreational Cannabis Entities LLC v. District of Columbia, pending in the U.S. District Court for the District of Columbia, the city is seeking dismissal of claims that its cannabis licensing system violates the Constitution’s dormant Commerce Clause. That clause generally limits states from enacting policies that discriminate against interstate commerce.
As part of its defense, the District recently filed a notice highlighting a 2026 decision from the U.S. Court of Appeals for the Ninth Circuit in Peridot Tree WA, Inc. v. Washington State Liquor & Cannabis Control Board. In that case, the court considered whether state and local cannabis licensing systems that favor in-state residents violate the dormant Commerce Clause.
The Ninth Circuit ultimately upheld lower court rulings dismissing those challenges. The court concluded that the dormant Commerce Clause does not apply to cannabis markets because cannabis remains illegal under federal law pursuant to the Controlled Substances Act. According to the opinion, extending constitutional protections for interstate commerce to a market that Congress has deemed unlawful would conflict with federal policy.
The decision addressed licensing systems in Washington State and the City of Sacramento, both of which included residency requirements or preferences tied to local applicants, including certain social equity programs. Plaintiffs in those cases argued such requirements unfairly disadvantaged out-of-state businesses.
However, the Ninth Circuit held that when Congress has prohibited a national market—such as the interstate cannabis trade—the underlying rationale of the dormant Commerce Clause does not apply. The court emphasized that it should not be used to promote or protect interstate commerce in an industry that is federally illegal.
The District of Columbia argues that this reasoning supports its position that similar constitutional claims in the current case should be dismissed. Specifically, the city contends that the Ninth Circuit’s analysis reinforces its argument that the dormant Commerce Clause cannot be used to challenge local cannabis licensing structures.
The broader legal question remains unsettled nationwide. Other federal appellate courts have reached different conclusions, with some finding that the dormant Commerce Clause can apply to state cannabis laws despite federal prohibition. The divergence reflects an ongoing tension between federal law, which continues to classify cannabis as a controlled substance and state-level legalization efforts.
The D.C. case is still pending, and the court has not yet ruled on the District’s motion to dismiss. Its decision could further shape how courts address constitutional challenges in the evolving cannabis regulatory landscape.
