Judge throws out lawsuit challenging Oklahoma’s residency rules

A lawsuit challenging Oklahoma’s residency requirements for its medical marijuana license holders was thrown out Wednesday by an Oklahoma Federal Judge.

Residency requirements are here to stay—for now—as U.S. District Judge Stephen Friot threw out a lawsuit filed by Washington State cannabis company Original Investments, citing that Oklahoma is protected by the 11th amendment which bars suits against states.

As originally reported by Law360, the complaint could still be restructured to be in compliance with the Constitution, and Judge Friot has given Original Investments two weeks to accomplish that, writing:

"As this case is in its infancy and it appears that plaintiff may be able to amend its complaint to avoid the Eleventh Amendment immunity prohibition with respect to its claims against one or both of the state officials in their official capacities, the court, in its discretion, will allow plaintiff to file an amended complaint within 14 days of the date of this order."

-U.S. District Judge Stephen Friot

The Original Investments suit sought to block the OMMA and State Department of Health from enforcing Oklahoma’s residency requirement using the dormant commerce clause, which is used to prohibit state legislation that discriminates against interstate or international commerce.

In Oklahoma, marijuana business applicants have to prove two years residency preceding the date of application or five continuous years of the last 25 in order to establish that 75% of the owners are Oklahoma residents as required by SQ 788.

Similar laws have been successfully challenged in Maine, and are becoming more common across the country as new state industries emerge.

Oklahoma challenged the suits’ reliance on the dormant commerce clause as being in conflict with the current federal legality of interstate cannabis commerce.

"The dormant commerce clause doctrine relied upon by plaintiff, which presumes a national market, cannot be applied to state marijuana laws because Congress has exercised its commerce power to make illegal the interstate market for marijuana — that is, the commerce power is not 'dormant,'"

-State of Oklahoma

Oklahoma also filed its own motion for judgment, arguing the OMMA and Health Department are immune from suit. While that motion was granted by Judge Friot, Law360 reports he did not address the commerce clause arguments.

Nonresidents can still have a stake in Oklahoma’s budding medical marijuana market; for now, they will just be required to have resident partnerships in place that open them to the opportunity.

If you have questions about residency requirements or need to ensure your OMMA application has the required representation, contact us today.