U.S. Law Week Jan. 2026 Circuit Split Review: Cannabis Licensing

The mixed legal status of cannabis has divided circuit courts over whether state and local regulation of dispensary licenses violates the dormant Commerce Clause.

The circuit split touches on the underlying question of whether there is—or even could be—a national cannabis market regulated by the federal government. Twenty-four states and the District of Columbia have legalized the use of recreational marijuana by adults, and President Donald Trump hopes to reschedule cannabis, which remains illegal under federal law despite the moves by nearly half the states, under the Controlled Substances Act.

The dormant Commerce Clause limits a state’s ability to burden interstate commerce that Congress has yet to regulate—effectively preserving regulatory space for Congress to operate in at a later date should it choose to act.

The US Court of Appeals for the Ninth Circuit broke from the First and Second circuits and held the dormant Commerce Clause doesn’t apply to state and local cannabis licensing restrictions. In a consolidated case, the Ninth Circuit affirmed two district court rulings rejecting a Michigan man’s challenges to residency requirements to apply for a cannabis dispensary license imposed by Washington state and Sacramento, Calif.

“A doctrine of constitutional law that catapults a state’s legalization of an illicit drug into dormant Commerce Clause protection would have courts facilitating, if not creating, the very national marketplaces that Congress has disallowed,” Judge Daniel A. Bress said in the Ninth Circuit’s Jan. 2 opinion. “This is a far cry from what the dormant Commerce Clause set out to do.”

The Ninth Circuit relied on a 2022 dissent from Judge Gustavo A. Gelpí of the First Circuit, who said the dormant Commerce Clause “does not provide the right to engage on equal footing in a federally illegal market, regardless of the evolving political and legal landscape of marijuana at the state level.” Bress said the dormant Commerce Clause doesn’t require courts to “leapfrog the political process” and uphold free trade in the market for marijuana dispensary licenses.

The Ninth Circuit’s decision doesn’t come as a surprise to Vanderbilt University Law School Professor Robert A. Mikos, who told Bloomberg Law he disagrees with the court’s conclusion.

“The Ninth Circuit was basically toying with the fiction that Congress is allowed to suspend the dormant Commerce Clause or it’s allowed to authorize states to engage in discrimination,” Mikos said. “But the Supreme Court historically said that authorization has to be really clear, and I just don’t see any signs that Congress would want to tolerate this.”

A split panel of the First Circuit, with Gelpí dissenting, held in Northeast Patients Group v. United Cannabis Patients & Caregivers of Maine in 2022 that Maine’s residency requirement to operate a medical marijuana dispensary is a facially protectionist state regulation of an interstate market, in violation of the dormant Commerce Clause. The Second Circuit held in Variscite NY Four LLC v. N.Y. State Cannabis Control Board in 2025 that New York’s prioritization of dispensary license applicants with marijuana-related convictions under New York law is a protectionist measure that likewise doesn’t pass constitutional muster.

Muddled Market

The Ninth Circuit acknowledged the federal government’s “mixed signals” on marijuana legalization but said that shouldn’t change the court’s calculus in determining whether the dormant Commerce Clause is implicated.

“Here, extending the dormant Commerce Clause to cannabis dispensary licensing regimes would override the democratic process twice over, first by potentially invalidating state and local laws governing marijuana dispensaries, and then by countermanding Congress’s own judgment about the harmfulness of the controlled substance in question,” Bress wrote.

Amid this muddle, Mikos thinks the US Supreme Court is in “no rush” to take up the issue. Mikos pointed out there isn’t a comparable market where states are arguably discriminating against one another involving a federally banned product. That means this circuit split lacks the sort of “value” and “precedential force” the high court looks for in the legal questions it aims to resolve.

There also isn’t an “obvious right answer,” he added, pointing to previous Supreme Court dormant Commerce Clause rulings that have ended with mixed, multidirectional conclusions from the nine justices.

“If you don’t have a consensus on the court” then that “probably would give the court additional pause” before taking up this split, Mikos said.

He also noted the entire issue could become moot with cannabis possibly being reclassified under the Controlled Substances Act from not having any accepted medical use to having accepted medical uses in treatment, thereby loosening federal restrictions. Mikos said such a move could change the dormant Commerce Clause analysis and “take away a lot of the force of the Ninth Circuit’s opinion.”

“I think part of the thinking here is this is all going to go away, maybe later, maybe sooner, but there’s no need to resolve this,” Mikos said.

The case is Peridot Tree WA Inc. v. Wash. State Liquor and Cannabis Control Bd., 2026 BL 122, 9th Cir., No. 24-3481, 1/2/26.

Below are other circuit splits reported by Bloomberg Law in January.

Civil Procedure

Case:

LJM Partners Ltd. v. Barclays Capital Inc. and Two Roads Shared Trust v. Barclays Capital Inc., 2026 BL 13343, Article

Issue:

Can a plaintiff lacking Article III standing substitute a real party in interest to avoid dismissal? The Seventh Circuit declined to weigh in on the question. The Fourth and Sixth circuits said no, while the Second Circuit held the Federal Rules of Civil Procedure allow such a substitution.

Constitutional Law

Case:

Baird v. Bonta, 2026 BL 114, Article

Issue:

Can a state impose an open-carry ban as long as there’s a shall-issue concealed carry licensing regime that is relevantly similar to historical laws? A split panel of the Ninth Circuit said no and that the historical analogues must be relevantly similar to open-carry laws and cases. The Second Circuit said yes.

Does the facial overbreadth doctrine apply to the Second Amendment? The same split Ninth Circuit panel said yes, breaking from rulings by the First, Second, Third, Seventh, and Eighth circuits.

Criminal

Case:

United States v. Schuster, 2026 BL 11417 Article

Issue:

Can a defendant undo a guilty plea by showing that, after finding plain error, the record fails to provide sufficient factual basis to support the plea? The Third Circuit declined to weigh in. The Tenth Circuit says yes. The Second, Fifth, and Ninth circuits say a defendant must show a reasonable probability that, but for the error, they wouldn’t have entered the plea.

Criminal

Case:

United States v. Aborisade, 2026 BL 5000, Article

Issue:

Must a person who knowingly submits false statements under the Violence Against Women Act also do so under oath in order for their conduct to be a crime? The Fourth Circuit said no, joining the Second Circuit. The Third Circuit conversely held the statute is “textually ambiguous” and the oath requirement did apply.

Criminal

Case:

United States v. Ruiz, 2026 BL 26401

Issue:

Must the federal government allege the non-Indian status of a criminal defendant charged with committing a crime against an Indian and does the government have the burden of going forward on the issue? The Ninth Circuit has said no, holding that once the defendant raises their Indian status, the ultimate burden of proof remains with the government. The Tenth Circuit affirmed its own precedent holding that non-Indian status is an element of the crime that must be proven at trial by the government, despite the difficulty of doing so.