Federal Court Temporarily Enjoins Missouri Medical Marijuana License Residency Requirement

Yesterday, June 21, 2021, the Federal District Court for the Western District of Missouri issued the attached order, which preliminarily enjoins the DHSS from enforcing the Missouri medical marijuana program’s 51% residency requirement. Essentially, the court reasoned that the plaintiff, who is challenging the residency requirement, is likely to succeed on the merits of his “dormant commerce clause” argument because the requirement that Missouri-licensed medical marijuana entities be 51% owned by Missouri residents requires differential treatment of in-state and out-of-state economic actors. The legal reasoning is somewhat more nuanced than that, but that is the key holding. Please click here to view the attached order.

A preliminary injunction is not a final judgment—this Order simply means that the DHSS cannot enforce the 51% residency requirement while the Toigo case is pending. Practically speaking, the DHSS could simply drag its feet on approving any transactions that would violate the 51% residency requirement pending final resolution of this case, so the immediate impact of this ruling might be limited. Nonetheless, this order is a strong signal as to the Court’s thinking, and it certainly appears that the Missouri 51% residency requirement is likely to be struck down sooner or later.

About Kennyhertz Perry’s Medical Marijuana Practice Group

Kennyhertz Perry advises clients on a wide range of medical marijuana compliance and regulatory matters. Kennyhertz Perry partner Braden Perry spent time as a Senior Trial Attorney with the Commodity Futures Trading Commission and is well equipped to assist with the banking and other financial issues related to the medical marijuana industry.

Kennyhertz Perry partner John Kennyhertz is former in-house counsel at a private equity firm, and has structured transactions for very small and very large clients alike. He has substantial experience in highly-regulated industries such as online lending, and industries with rapidly-evolving regulations, such as cryptocurrency. He provides medical marijuana operational and compliance counseling and offers advice on appropriate modifications of transaction structure and documentation.

Kennyhertz Perry attorney Ben Tompkins is a former federal prosecutor in Los Angeles as well as a former Trial Attorney for the U.S. Department of Justice Tax Division. He is well versed in providing advice regarding the ever-changing tax landscape in the medical marijuana industry.

Kennyhertz Perry attorney Arthur Chaykin is a former law school professor and head of litigation at Sprint. He is an expert on intellectual property law, and devises creative solutions to protect client’s IP in the medical marijuana industry, even when certain federal protections are unavailable.

Kennyhertz Perry attorney Jeff Donoho is an expert in small business formation and government compliance. His knowledge of the labyrinthine medical marijuana application process helps him provide detailed guidance to clients.

Kennyhertz Perry attorney Mit Winter is a former partner at an AmLaw 100 law firm. An expert litigator, his skill in anticipating issues before they become serious problems is valuable to all clients, and particularly those in the medical marijuana industry. In addition, his skill as a writer makes him a valuable asset to our application writing team.

Kennyhertz Perry attorney Jon Dedon previously worked in the appellate litigation division of an AmLaw 100 law firm. Jon has worked extensively on marijuana and hemp-related regulatory compliance for numerous financial institutions and payment processors. His contacts with executives in marijuana businesses in Washington, California, Michigan, New York, Illinois, Ohio, Oklahoma and California, as well as internationally in Germany, Canada, Colombia, and Australia prove valuable when advising clients regarding medical marijuana in Missouri.

Clients also benefit from Kennyhertz Perry’s experience in related areas of law, such as litigation, banking, securities, tax, intellectual property, employment, insurance, and its regular practice before the Missouri administrative agencies and courts. Medical marijuana clients choose Kennyhertz Perry because the firm’s lawyers tailor their advice to the unique issues presented by each matter they handle.

To learn more about Kennyhertz Perry, LLC, please visit kennyhertzperry.com.

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