Rhode Island's fledgling social-equity cannabis law may be thrown into "chaos" because of a lawsuit filed by a California woman, an industry analyst says.
The lawsuit, filed by Justyna Jensen , contends that the law, which was written specifically to diversify the marijuana industry and help minority groups hurt by the war on drugs, is unconstitutional because it favors one group of prospective business participants over another.
The law “deprives individuals, including plaintiff, of equal protection by preventing her from qualifying as a social equity applicant based on her area of residence,” Jensen says in her lawsuit, filed last week against the state Cannabis Control Commission in U.S. District Court, Providence.
Background on RI's social equity law
Rhode Island lawmakers legalized recreational use of marijuana in 2022 – and the future expansion of its sale – while applauding the Cannabis Act’s focused goal of “social equity.”
That law reserves some future retail marijuana licenses for applicants who meet certain qualifications.
Among them:
- The majority owner of the business must be a Rhode Island resident.
- Must live in areas “disproportionately impacted” by drug prosecution.
- Must belong to a family that includes someone who has been charged with marijuana possession.
Zoom out: RI the latest target of Jensen's lawsuits
Jensen says she has plans to be a majority owner of a social-equity marijuana business, but the state's criteria are illegal exclusions that violate the so-called “Dormant Commerce Clause” in the U.S. Constitution.
Jensen has filed similar lawsuits in at least five states , including California and New York, and “one of the consequences of this is it has thrown these programs into chaos,” said Hirsh Jain, a Los Angeles-based lawyer and founder of the cannabis consulting firm Ananda Strategy.
How are these lawsuits disrupting cannabis sales?
The lawsuits “have certainly caused states to stop and pause,” said Jain. “I can’t think of a state [that] has figured out the right way in light of these lawsuits – figuring out a way to evade these constitutional questions.”
In New York, a state that Rhode Island social-equity advocates often point to as an example, "huge swaths of their programs" have been invalidated and delayed because of a similar lawsuit, Jain said.
A central factor in all the lawsuits, said Jain, is the in-state residency requirement included in many social-equity programs – Rhode Island’s Cannabis Act among them – a restriction designed to protect small, local entrepreneurs from big, rich cannabis companies swooping in and grabbing up all the retail licenses.
“That is kind of at odds with just a lot of legal norms in this country where we don’t allow commerce to discriminate based on residency,” said Jain.
“I think there are many of these state laws that have been passed to achieve what many of us think are important social goals,” said Jain. “But as the years go on ... we will see the courts weigh in, and my prediction is you will see the courts weigh in negatively on these programs.”
The consequences could be severe, he said.
“All of these applicants who have spent all of this money trying to participate in these programs are left high and dry, the illicit cannabis market just explodes because we have legalized it but we haven't set up the legal infrastructure ... and we’re stuck in lawsuits. So, a lot of people end up losing out as a result of these delays.”
What does the lawsuit seek?
Matthew Touchette, spokesman for the Cannabis Control Commission, declined comment about the lawsuit, saying the commission doesn’t discuss pending litigation.
The Cannabis Act of 2022 calls for 24 more retail marijuana stores geographically spaced around the state, with a quarter of those new licenses saved for so-called “social-equity” applicants and another quarter for worker-owned cooperatives.
But the commission is still writing the rules and regulations for how those licenses will be awarded and how social-equity criteria are defined.
In her lawsuit against the commission, Jensen is asking the federal court to block the commission from promulgating cannabis regulations or moving forward with the license-application programs that it alleges violates the Equal Protection Clause of the Constitution.
Jensen’s lawyer, her husband Jeffrey M. Jensen of Beverly Hills, California, did not return an email or phone call seeking comment.
Who are Justyna and Jeffrey Jensen?
Industry publications have been tracking the progress of Justyna and Jeffrey Jensen as they challenge cannabis-business qualifications across the country.
The Green Market Report noted in January that two California cases brought by Jeffrey Jensen were both stayed pending a ruling by the Ninth Circuit Court of Appeals, but that the lawyer had lost cases in Washington state and Maine after judges ruled that the Dormant Commerce Clause doesn’t apply to the marijuana businesses because the plant remains federally illegal.
The MJBizDaily reported in February that the couple had applied unsuccessfully in 2019 for a retail marijuana license in Pasadena, California.
In their public-license application , the couple said their company, Emerald Pharms Pasadena, “is proud to stand for diversity, inclusion, experience and the highest quality and selection of tested and safe cannabis and cannabis products for the wide customer base that experts expect to turn to cannabis in the near future.”
Justyna Jensen said in the application that she grew up in a farming village in Poland when the country was controlled by the Soviet Union. She came to the United States in 2001 as part of a student exchange program. She returned to the U.S. permanently the next year and cleaned houses to pay for a master’s degree in finance before becoming a U.S. citizen in 2014.
Their business application said Jeffrey Jensen “cares deeply about social justice.” It described him as leaving a career in engineering to teach public school in Los Angeles for three years during which time “he observed firsthand the disproportionate enforcement of drug laws against minority communities.”
He later became a lawyer.
Contact Tom Mooney at: tmooney@providencejournal.com
This article originally appeared on The Providence Journal: A California woman's lawsuit may throw RI's retail pot industry into 'chaos.' Here's how.
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