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Opinion: Residency requirements for marijuana licenses at odds with US Constitution

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As states navigate the distribution of marijuana business licenses, a number of markets have implemented state residency as a condition to apply for or receive a license.

However, as three recent court cases have addressed, residency requirements might be in conflict with the implicit dormant commerce clause of the U.S. Constitution, which generally prohibits states from passing legislation that discriminates against or excessively burdens out-of-state citizens compared to in-state citizens.

The clause expressly grants Congress the right to regulate commerce among states, although courts have interpreted it conversely to limit states’ ability to regulate in certain circumstances.

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Caroline Lambert

The clause restrains individual states’ ability to regulate commerce within their own borders if that regulation infringes upon congressional regulation of interstate commerce.

Judicial approach

When evaluating whether a state regulation violates the dormant commerce clause, courts often frown upon “protectionist” state policies that marginally favor in-state residents or businesses and excessively burden nonresidents conducting business within the state.

While the clause is a default “check” upon states’ abilities to burden commerce, Congress itself may approve state regulations that burden or discriminate against interstate commerce, overriding the default dormant commerce clause prohibition, as long as it very clearly authorizes such an override.

A number of states that have regulated marijuana – such as Maine, New York and Washington – will grant business licenses only to individuals or entities that meet certain “in-state residency” requirements.

But regulators have seen pushback to such requirements, and the pushback has made its way through courts across the country.

An initial case addressing this issue began in Maine, challenging the state medical marijuana law that requires officers and directors of dispensaries operating in the state to be residents.

Plaintiffs in this first case to tackle the implications of the dormant commerce clause included a Maine business that is wholly owned by three residents and operates three of seven state-licensed dispensaries as well as a Delaware company that is owned exclusively by nonresidents.

The Delaware company sought to acquire – and be the surviving owner of – the Maine business; however, the new owners would be ineligible for dispensary licenses because of the state’s residency requirement that all directors and officers must be residents.

The plaintiffs brought suit, alleging that Maine’s residency requirement violated the dormant commerce clause.

The U.S. District Court in Maine held, and 1st Circuit Court of Appeals agreed, that the residency requirement violated the dormant commerce clause, as it explicitly discriminates against out-of-state residents for no legitimate local purpose.

Notably, the 1st Circuit dismissed the state’s argument that because marijuana is still illegal federally – and thus not regulated by Congress – the dormant commerce clause could not apply.

Next, in September 2022, a challenge arose to New York’s cannabis regulation law, which requires that a business applicant have presence in the state or ownership by residents.

Regulations also require that 51% or more of the company be owned by an “eligible applicant.”

In a legal challenge, plaintiff Variscite NY One, a New York corporation, was denied a license by the state regulator because it did not meet the “significant presence” requirement.

The U.S. District Court for the Northern District of New York issued a preliminary injunction blocking state cannabis regulators from issuing marijuana retail licenses while the challenge winds through the court system.

Though this is not a final ruling on the dormant commerce clause issue, the judge granting the preliminary injunction found enough credence in the argument – he opined that the law would have a discriminatory effect on out-of-state residents and that he believed New York would lose the argument.

Lastly, in Washington, the dormant commerce clause issue arose in connection with the state’s law that regulators will not grant marijuana business licenses to individuals or entities that do not meet residency requirements.

Plaintiff Todd Brinkmeyer, an Idaho resident, provided debt financing to a friend’s Washington state cannabis businesses but remains unable to hold ownership in the businesses because he does not meet residency requirements.

A recent decision by the U.S. District Court for the Western District of Washington found that Brinkmeyer’s dormant commerce clause claims were inapplicable because cannabis remains federally illegal and, thus, the clause does not apply to a federally illegal market.

Brinkmeyer has dropped his appeal in this case, leaving in place the Washington state courts’ approach of avoiding a decision on whether the residency requirement is unconstitutional.

Future impact of decisions

The aforementioned three cases highlight a key issue: Is a state residency requirement at odds when the market in question is still federally illegal?

Does Congress’ refusal to federally legalize marijuana constitute an express “override” that renders dormant commerce clause arguments void?

Courts in Maine and New York, at least, have concluded that the dormant commerce clause does apply, rendering states’ residency requirements invalid as currently written.

Those interested in applying for a business license in any state should first be cognizant of that state’s residency requirements, if any, in order to properly prepare.

Further, the unsettled nature and seemingly undecided future of residency requirements provides an opportunity to challenge those requirements under the dormant commerce clause in the right scenarios.

Joseph Segilia is a New York-based partner in the Sullivan & Worcester law firm.  He can be reached at jsegilia@sullivanlaw.com.

Source: https://mjbizdaily.com/residency-requirements-for-cannabis-licenses-at-odds-with-us-constitution/

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Jio’s 1,600-Satellite LEO Constellation Gets Technical Green Light

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Reliance Jio has crossed a significant milestone in its space connectivity ambitions after its proposal to deploy a Low Earth Orbit (LEO) satellite constellation of around 1,600 satellites received a positive technical assessment from the Indian National Space Promotion and Authorisation Centre (IN-SPACe).

The evaluation, conducted jointly by IN-SPACe, the Indian Space Research Organisation (ISRO), and the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications, reportedly concluded that Jio’s proposed system meets the required technical standards and is comparable to leading global satellite broadband networks.

India’s Indigenous LEO Satellite Vision

Under the proposal, Reliance Jio plans to deploy between 1,600 and 1,650 satellites in Low Earth Orbit at an altitude of around 650 kilometres.

The planned constellation is expected to provide high-speed satellite connectivity across India, with approximately 32 satellites visible from any location at a given time. The company aims to roll out the network within the next two to three years, subject to regulatory approvals.

According to industry estimates, the satellite system could deliver 4.5 to 5 terabits per second (Tbps) of total data capacity, making it one of the largest satellite broadband projects proposed in India.

The project is expected to require an investment of $10–15 billion (approximately ₹95,000 crore to ₹1.42 lakh crore), reflecting the scale of infrastructure needed for satellite manufacturing, launches, ground stations, and user terminals.

Regulatory Process Moves Forward

Following the successful technical review, the proposal is expected to move into the next phase of regulatory approvals.

The government may now assist Jio in securing orbital slots, coordinating spectrum usage, and filing applications with the International Telecommunication Union (ITU), the global body responsible for managing satellite orbit and frequency allocations.

Obtaining orbital rights remains a critical step, as Low Earth Orbit has become increasingly competitive due to the growing number of satellite broadband projects being planned worldwide.

Officials also indicated that the proposed satellite architecture has been designed to coexist with future Indian LEO constellations, allowing multiple domestic operators to share orbital resources efficiently.

Broadband, Mobile Connectivity, and Strategic Applications

Jio plans to use the satellite network to provide a range of communication services, including satellite broadband, mobile backhaul, enterprise connectivity, and direct-to-device (D2D) satellite communication, particularly in remote and underserved regions where conventional telecom infrastructure is limited.

The company also intends to establish 20 to 22 ground stations across India to support network operations.

Apart from commercial telecommunications, officials have highlighted the project’s potential strategic importance. A domestically developed satellite constellation could strengthen India’s communication infrastructure, reduce dependence on foreign satellite operators, and support national security requirements.

Reports suggest preliminary discussions are underway regarding the possibility of integrating defence-related payloads into some satellites, enabling both civilian and strategic use.

Major Step for India’s Space and Telecom Sectors

Industry analysts view the technical clearance as an important milestone in India’s expanding private space ecosystem. If Jio secures the remaining regulatory approvals and international orbital clearances, the project could become the country’s first large-scale indigenous LEO satellite broadband network.

The initiative also aligns with India’s broader efforts to expand digital connectivity while strengthening its presence in the global satellite communications market.

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Alleged Crores Pharma Scam Mastermind Arrested from Surat

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After evading law enforcement for nearly 13 years, an accused linked to a large-scale pharmaceutical fraud case has been arrested by Delhi Police from Surat, Gujarat. The suspect is alleged to have orchestrated a series of financial scams involving fake identities, forged documents, and dishonoured cheques used to procure high-value pharmaceutical raw materials.

Authorities say the accused, identified as Himmat Singh Lodha, is believed to have defrauded multiple pharmaceutical companies in Delhi of goods worth approximately ₹98 lakh before disappearing and remaining underground for years.

Fake Business Deals and Dishonoured Cheques Used in Fraud

Investigators claim the accused posed as a legitimate pharmaceutical trader and placed bulk orders for expensive drug ingredients, offering post-dated cheques as payment security.

In one documented case from 2013, he allegedly obtained around 550 kilograms of Gliclazide, a diabetes-related pharmaceutical ingredient, valued at over ₹26 lakh. When suppliers attempted to encash the cheques, they were reportedly returned with the remark “account closed.”

Following the transaction, the accused allegedly vacated his office and rented residence and disappeared without settling payments. He was later declared a proclaimed offender in 2016 after repeatedly failing to appear before court proceedings. Authorities had also issued a reward for information leading to his arrest.

Multiple Identities and Repeated Fraud Pattern

Police investigations further link the accused to another cheating case dating back to 2012, where he allegedly used a fake identity, “Kailash Jain,” to obtain a large consignment of Ambroxol HCL, a pharmaceutical compound used in cough medications. The value of that consignment was estimated at around ₹72 lakh.

Officials believe the accused followed a consistent modus operandi—posing as a credible businessman, securing high-value goods on deferred payment terms, and then disappearing after delivery while shutting down business operations.

Investigators suspect that forged business records, fake company credentials, and fabricated financial histories were used to build trust with suppliers and gain access to expensive raw materials.

Multi-State Surveillance Leads to Arrest in Surat

A special Crime Branch team tracked the accused through coordinated surveillance efforts across multiple cities, including Mumbai, Ahmedabad, and Surat. After nearly a month of technical monitoring and intelligence gathering, officials located and arrested him from a residential area in Surat.

Authorities also revealed that the accused had been involved in property-related activities while staying under the radar to avoid detection.

Growing Threat of Corporate Identity Fraud

The case highlights a rising trend of organised financial fraud targeting industries that rely heavily on trust-based transactions and deferred payments. Experts note that criminals increasingly exploit gaps in corporate verification systems by using fake GST registrations, temporary offices, and forged documentation to appear legitimate.

Cybercrime and financial fraud specialists warn that such schemes are becoming more complex with the widespread availability of digital business tools, making it easier to create convincing but fraudulent corporate identities.

Experts Urge Stronger Due Diligence in High-Value Transactions

Experts, including former IPS officer and cybercrime specialist Prof. Triveni Singh, emphasize the need for stricter verification procedures in commercial dealings. He noted that relying solely on paperwork or digital business profiles can expose companies to significant financial risk.

Authorities and industry experts recommend physical verification of business operations, bank account validation, and detailed background checks before engaging in high-value or deferred-payment transactions—particularly in sectors like pharmaceuticals, where single consignments can involve transactions worth crores.

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EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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