United Cannabis Patients & Caregivers of Mainev. Me. Dep't of Admin. & Fin. Servs.

• Decision Date: 22 April 2021
• Docket Number: Docket No. 1:20-cv-00388-NT
• Citation: 535 F.Supp.3d 46
• Parties: UNITED CANNABIS PATIENTS AND CAREGIVERS OF MAINE, et al., Plaintiffs, v. MAINE DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES, et al., Defendants.
• Court: U.S. District Court — District of Maine

535 F.Supp.3d 46

UNITED CANNABIS PATIENTS AND CAREGIVERS OF MAINE, et al., Plaintiffs,

v.MAINE DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES, et al., Defendants.

Docket No. 1:20-cv-00388-NT

United States District Court, D. Maine.

Signed April 22, 2021

James G. Monteleone, Patrick I. Marass, Bernstein Shur, Portland, ME, for Plaintiffs.

Paul E. Suitter, Office of the Maine Attorney General, Augusta, ME, for Defendants.

ORDER ON MOTIONS TO DISMISS AND PLAINTIFFS’ SECOND MOTION TO AMEND COMPLAINT

Nancy Torresen, United States District Judge

In this case, the Plaintiffs challenge the Maine Department of Administrative and Financial Services’ (the "Department ") decision not to enforce a statutory provision restricting adult-use marijuana licenses to businesses wholly owned by Maine residents. The Plaintiffs contend that in granting licenses to entities that do not meet the residency requirement, the Defendants—the Department and its commissioner, Kirsten Figueroa—knowingly misapplied the dormant Commerce Clause of the United States Constitution.¹ The Defendants (and several Parties-in-Interest) have moved to dismiss the Complaint (ECF Nos. 24, 29, 30). After those motions were filed, the Plaintiffs filed a motion for leave to file a second amended complaint (ECF No. 36). For the reasons stated below, the motion to amend the Complaint is GRANTED , and the motions to dismiss are GRANTED .

I. MOTION TO AMEND THE COMPLAINT

A plaintiff who has already amended his or her complaint may further amend only with the written consent of the opposing party or with leave of court. United States ex rel. Poteet v. Bahler Med., Inc. , 619 F.3d 104, 116 (1st Cir. 2010) ; see Fed. R. Civ. P. 15(a)(1), (2). Generally, a court "should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). But while the Federal Rules of Civil Procedure "reflect[ ] a liberal amendment policy ... the district court enjoys significant latitude in deciding whether to grant leave to amend." Kader v. Sarepta Therapeutics, Inc. , 887 F.3d 48, 60–61 (1st Cir. 2018) (alterations in original) (quoting ACA Fin. Guar. Corp. v. Advest, Inc. , 512 F.3d 46, 55 (1st Cir. 2008) ).

The Plaintiffs filed a motion for leave to file a Second Amended Complaint ("SAC ") on January 5, 2021, after the motions to dismiss had been filed. Pls.’ Mot. for Leave to File Second Am. Compl. ("Pls.’ Mot. ") (ECF No. 36). They state that they seek to file the SAC "to cure identified defects and omissions in the [First Amended Complaint ("FAC ")] relevant to the pending motions to dismiss for lack of federal jurisdiction and failure to state a claim." Pls.’ Mot. 1–2. They maintain that the SAC "does not substantively change the nature of the claims" and that the "proposed amendments are wholly consistent with the summary and discussion of their action set forth throughout the opposition to the motions to dismiss." Pls.’ Mot. 3 (quotations omitted). In their oppositions to the motion (ECF Nos. 38 and 40), the Parties-in-Interest assert that amendment will be futile because the SAC fails to cure the deficiencies identified in the motions to dismiss. The Defendants have not responded to the motion.

I conclude that judicial efficiency and clarity will be aided by granting the Plaintiffs’ motion. Moreover, because the amendments that the Plaintiffs seek do not substantively alter the operative complaint and because the same standard of review applies to assessing futility and the motions to dismiss, I find that granting the Plaintiffs’ motion will not unduly prejudice the Defendants or the Parties-in-Interest. See Charette v. St. John Valley Soil & Water Conservation Dist. , Docket no. 1:17-cv-35-GZS, 2017 WL 2683951, at *1 (D. Me. June 20, 2017).

II. MOTIONS TO DISMISS

BACKGROUND

A. Adult-Use Marijuana Licensing Scheme

In 2018, the Maine Legislature amended the Marijuana Legalization Act (the "Act ") and created the regulatory framework for the sale of adult-use recreational marijuana in the state. SAC ¶ 23 (ECF No. 36-1). The Act states that applicants "for a license to operate a marijuana establishment must meet each of the" specified licensing criteria. 28-B M.R.S.A. § 202. One of those criteria, the "Residency Requirement," reads as follows:

Resident . If the applicant is a natural person, the applicant must be a resident. If the applicant is a business entity:

A. Every officer, director, manager and general partner of the business entity must be a natural person who is a resident; and

B. A majority of the shares, membership interests, partnership interests or other equity ownership interests as applicable to the business entity must be held or owned by natural persons who are residents or business entities whose owners are all natural persons who are residents.

28-B M.R.S.A. § 202(2). "Resident" is defined as a "natural person who ... [i]s domiciled in this State; and ... [m]aintains a permanent place of abode in this State and spends in the aggregate more than 183 days of the taxable year in this State." Id. § 102(48). The Department is tasked with implementing, administering, and enforcing the Act and adopting rules necessary to achieve that purpose. It has the "sole authority" to grant or deny applications and impose any penalty authorized under the Act. Id. § 104(1). Since the Act's passage, the Department has promulgated rules for the implementation of the Act, including a rule that incorporated the Residency Requirement. SAC ¶ 28.

B. Enforcement of the Residency Requirement and Legal Challenges

On March 20, 2020, a non-resident corporation hoping to enter Maine's adult-use marijuana market, as well as NPG, LLC ("NPG ")—one of the Parties-in-Interest here—filed suit in this Court, seeking a preliminary injunction against enforcement of the Residency Requirement and a declaration that the requirement violated the dormant Commerce Clause. See NPG, LLC v. Me. Dep't of Admin. & Fin'l Servs. , Dkt. No. 1:20-cv-00107-NT (ECF Nos. 1, 3). After reviewing relevant precedent, the Attorney General advised that the Residency Requirement was subject to significant constitutional challenges. Defs.’ Mot. to Dismiss ("Defs.’ Mot. ") 4 (ECF No. 30). The Department subsequently decided that it would not enforce the requirement, and on May 11, 2020, the parties in that case agreed to a stipulation of dismissal without prejudice. Defs.’ Mot. 4. The Department also issued a public notice announcing that it would cease enforcement of the Residency Requirement. SAC ¶ 33. The Maine Legislature has not amended the Act or modified the Residency Requirement. SAC ¶ 37.

The Department subsequently revised its licensure application process and has stopped collecting certain data from applicants. SAC ¶¶ 34–35. For example, the Department eliminated forms used to ensure that applicants provided enough information to determine their residency status. SAC ¶ 35. The Department issued the first set of final, active licenses on September 8, 2020. SAC ¶ 42.

Shortly after the Department announced it was not enforcing the Residency Requirement, Plaintiffs United Cannabis Patients and Caregivers of Maine, Dawson Julia, and Christian J. Roney filed suit in Maine Superior Court. Compl. for Declaratory J. (ECF No. 24-2). They sought a declaratory judgment and an order compelling the Department to enforce the Residency Requirement and barring the Department from issuing licenses to non-residents. See Compl. for Declaratory J. NPG intervened to oppose the lawsuit. United Cannabis Patients & Caregivers of Me. v. Me. Dep't of Admin. & Fin. Servs. , No. CV-2020-73 (Me. Super. Ct. Aug. 21, 2020) (ECF No. 24-1). The Superior Court dismissed the case, concluding that the Plaintiffs lacked standing and failed to state a claim and that separation-of-powers concerns cautioned against judicial involvement. United Cannabis Patients & Caregivers of Me. v. Me. Dep't of Admin. & Fin. Servs. , No. CV-2020-73, at 6–10. On the last point, the Superior Court emphasized that the Legislature had directed the executive branch to enforce the law and that "[a] proper respect for the roles of the three great departments of State Government counsels the court that it should not direct the Executive to enforce a law it believes cannot withstand constitutional scrutiny." Id. at 9. The Plaintiffs’ appeal of that decision is currently pending before the Law Court. See Defs.’ Mot. 4.

In the most recent iteration of this litigation, the Plaintiffs here—three of whom were Plaintiffs in the Superior Court case—ask me to weigh in. The Plaintiffs have also filed a parallel Complaint in Superior Court (ECF No. 24-3), which contains the same state law claims advanced here. According to NPG, that case is currently stayed. See NPG, LLC d/b/a Wellness Connection's Mot. to Dismiss Compl. 3 n.1 (ECF No. 24).

C. The Parties and the Claims

Plaintiff United Cannabis Patients and Caregivers of Maine is a marijuana business trade group that supports Maine adult-use and medical marijuana businesses through networking and advocacy. SAC ¶ 53. Plaintiffs Dawson Julia and Christian J. Roney, both Maine residents, cultivate medical marijuana and operate licensed medical marijuana storefronts as caregivers.² SAC ¶¶ 11–12, 55. Roney has also applied for an adult-use marijuana license from the Department. SAC ¶ 12. Plaintiff Green Cures, LLC, operates an actively licensed adult-use marijuana store in Auburn, Maine, in full compliance with the Residency Requirement. SAC ¶ 13.

In addition to suing the Department and the Commissioner, the Plaintiffs have named seven Parties-in-Interest, which are allegedly not in compliance with the Residency Requirement. SAC ¶¶ 16–22, 86–87, 94–95, 102–03, 110–11, 118–19, 126–27, 134–35.

The Plaintiffs assert nine counts. In Count I, the Plaintiffs seek a declaratory judgment holding "that the United States Constitution's Commerce Clause (together with its negative Dormant Commerce Clause) cannot apply to any aspect of Maine's intrastate...