Jensen v. Rhode Island Cannabis Control Commission et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
JUSTYNA JENSEN,
Plaintiff,
v.
RHODE ISLAND CANNABIS
CONTROL COMMISSION and
KIMBERLY AHEARN IN HER
OFFICIAL CAPACITY,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
C.A. No. 24-cv-191-MRD-AEM
JOHN KENNEY,
Plaintiff,
v.
RHODE ISLAND CANNABIS
CONTROL COMMISSION and
KIMBERLY AHEARN IN HER
OFFICIAL CAPACITY,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
C.A. No. 24-cv-252-MRD-AEM
JUSTIN PALMORE,
Plaintiff,
v.
RHODE ISLAND CANNABIS
CONTROL COMMISSION and LAYI
ODUYINGBO IN HIS OFFICIAL
CAPACITY,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
C.A. No. 25-cv-622-MRD-AEM
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MEMORANDUM AND ORDER
Melissa R. DuBose, United States District Judge.
The cases before this Court implicate the hazy area between the United States’
federal prohibition on marijuana and the State of Rhode Island’s emerging
recreational marijuana market. In 2025, the Rhode Island General Assembly passed
the Rhode Island Cannabis Act1 (“Act”), which, among other things, enables the
Cannabis Control Commission (“CCC”) to issue twenty-four licenses for recreational
marijuana dispensaries. After the Act became law, the CCC promulgated rules and
regulations detailing how to qualify for one of the licenses. Three individuals
challenge the constitutionality of the Act, alleging it violates the Dormant Commerce
Clause and the Equal Protection Clause. Each of these Plaintiffs contend that the
Act excludes them from the Rhode Island recreational cannabis market and that the
Act is unconstitutional because it expressly favors in-state residents over out-of-state
residents. The CCC disagrees, arguing that the Plaintiffs lack standing and that the
Act does not run afoul of either the Dormant Commerce Clause or Equal Protection
Clause. The Court held a joint hearing on Plaintiffs’ motions for preliminary
injunction and the Defendants’ motion to dismiss.2 For the reasons discussed below,
1 R.I. Gen. Laws § 21-28.11-1 to -32.
2 At this joint hearing, the Court heard argument on the following ripe motions and
resolves all of them in this Memorandum & Order: (1)
Justyna Jensen v. Rhode
Island Cannabis Control Commission, et al., 24-cv-191, Plaintiff’s motion for
preliminary injunction (ECF No. 9) and Defendants’ motion to dismiss (ECF No. 13);
(2)
John Kenney v. Rhode Island Cannabis Control Commission, et al., 24-cv-252,
Plaintiff’s motion for preliminary injunction (ECF No. 34) and Defendants’ motion to
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the Court GRANTS the Plaintiffs’ motions for preliminary injunction and DENIES
the Defendants’ motions to dismiss.
I. BACKGROUND
A. Rhode Island Cannabis Act
The Rhode Island General Assembly passed the Act on May 25, 2022, which
established the CCC “to oversee the regulation, licensing and control of adult use and
medical cannabis and [eventually] to exercise primary responsibility to oversee the
regulation, licensing and control of all cannabis and marijuana use to include medical
marijuana.” R.I. Gen. Laws § 21-28.11-4(a). The CCC’s powers and duties include
“(1) [a]dopt[ing], amend[ing] or repeal[ing] rules and regulations for the
implementation, administration and enforcement of [the Act] [and] (2)
[d]etermin[ing] which applicants shall be awarded licenses[.]” Section 21.28.11-
5(a)(1), (2). The Act gives the CCC the authority to “grant twenty-four (24) retail
licenses … after issuance of the final rules and regulations,” which the CCC
promulgated on May 1, 2025. Section 21-28.11-10.2(a). “Of the four (4) retail licenses
in each [of the six] geographic zone[s] … [o]ne shall be reserved for a social equity
applicant.” Section 21-28.11-10.2(a)(3)(ii).
To qualify for a license under the Act, “an applicant shall satisfy all
qualifications established by the commission” including being a Rhode Island
resident. Section 21-28.11-10.2(b)(2). The Act defines an applicant as “a Rhode
dismiss (ECF No. 19); and (3)
Justin Palmore v. Rhode Island Cannabis Control
Commission et al., 25-cv-622, Defendants’ motion to dismiss (ECF No. 10).
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Island resident or a business entity with a principal place of business located in Rhode
Island to include, but not limited to, a corporation, limited liability company, limited
liability partnership or partnership, and in which fifty-one percent (51%) of the equity
in the business entity is owned by residents of Rhode Island.” Section 21-28.11-3(3).
In addition to defining applicant, the Act specifically defines “social equity applicant”
as
[A]n applicant that has been disproportionately impacted by criminal
enforcement of marijuana laws, including individuals convicted of
nonviolent marijuana offenses, immediate family members of
individuals convicted of nonviolent marijuana offenses and individuals
who have resided in disproportionately impacted areas for at least five
(5) of the last ten (10) years.
Section 21-28.11-3(39). Social equity applicants must meet at least one of the
following criteria:
(i) An applicant with at least fifty-one percent (51%) ownership and
control by one or more individuals who have resided for at least five (5)
of the preceding ten (10) years in a disproportionately impacted area.
(ii) An applicant with at least fifty-one percent (51%) ownership and
control by one or more individuals who:
(A) Have been arrested for, convicted of, or adjudicated
delinquent for any offense that is eligible for expungement under
this chapter; or
(B) Is a member of an impacted family.
(iii) For applicants with a minimum of ten (10) full-time employees, an
applicant with at least fifty-one percent (51%) of current employees who:
(A) Currently reside in a disproportionately impacted area; or
(B) Have been arrested for, convicted of, or adjudicated
delinquent for any offense that is eligible for expungement under
this chapter or is a member of an impacted family.
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(iv) Can demonstrate significant past experience in or business practices
that promote economic empowerment in disproportionally impacted
areas.
(v) Had income which does not exceed four hundred percent (400%) of
the median income, as defined by the commission, in a disproportionally
impacted area for at least five (5) of the past ten (10) years.
Id. Embedded within the social equity applicant definition and criteria are references
to “disproportionately impacted area” and “member of an impacted family.” The Act
defines disproportionately impacted area as “a census tract or comparable geographic
area that satisfies at least one of the following criteria as determined by the
commission, that”:
(i) The area has a poverty rate of at least twenty percent (20%) according
to the latest federal decennial census;
(ii) Seventy-five percent (75%) or more of the children in the area
participate in the federal free lunch program according to reported
statistics from the Rhode Island board of education;
(iii) At least twenty percent (20%) of the households in the area receive
assistance under the Supplemental Nutrition Assistance Program
(SNAP);
(iv) The area has an average unemployment rate, as determined by the
Rhode Island department of labor and training, that is more than one
hundred twenty percent (120%) of the national unemployment average,
as determined by the United States Department of Labor, for a period
of at least two (2) consecutive calendar years preceding the date of the
application; or
(v)
(A) The area has disproportionately high rates of arrest,
conviction, and incarceration related to the sale, possession, use,
cultivation, manufacture, or transportation of cannabis in
comparison to other communities and localities in the state; or
(B) The area has a history of arrests, convictions, and other law
enforcement practices in a certain geographic area, such as, but
not limited to, precincts, zip codes, neighborhoods, and political
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subdivisions, reflecting a disparate enforcement of cannabis
prohibition during a certain time period, when compared to the
remainder of the state.
(vi) The commission shall, with recommendations from the cannabis
advisory board and the chief equity officer, issue guidelines to determine
how to assess which communities have been disproportionately
impacted and how to assess if someone is a member of a community
disproportionately impacted.
Section 21-28.11-3(23). Under the Act, “[m]ember of an impacted family” is defined
as
[A]n individual who has a parent, legal guardian, child, spouse, or
dependent, or was a dependent of an individual who, prior to the
effective date of this chapter, was arrested for, charged with, convicted
of, or adjudicated delinquent for any offense that is eligible for
expungement under this chapter.
Section 21-28.11-3(34).
The definitions of “disproportionately impacted area” and “member of an
impacted area” also refer to “any offense that is eligible for expungement under this
chapter.” Expungement of marijuana records is governed by R.I. Gen. Laws § 12-1.3-
5, which provides that “[a]ny person with a prior civil violation, misdemeanor or
felony conviction for possession only of a marijuana offense that has been
decriminalized subsequent to the date of conviction shall be entitled to have the civil
violation or criminal conviction automatically expunged.” As Plaintiff Jensen points
out, “Rhode Island does not have authority to expunge convictions from other states,
nor do the statutes purport to do so. Thus, only persons with Rhode Island convictions
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can qualify for Social Equity Applicant status under the conviction prong of the
qualifications.”3 Dkt. 191, ECF No. 1 ¶ 23.
B. The Three Prospective Applicants
With the relevant portions of the Act explained, the Court now moves on to
discuss each of the three Plaintiffs and why they purport to be excluded from applying
for one of the twenty-four recreational cannabis licenses that the CCC may issue later
this year.
First is Justyna Jensen, a citizen of California who intends to apply for a
recreational cannabis license “through a company in which she will own at least 51%.”
Dkt. 191, ECF No. 1 ¶¶ 26–27. Ms. Jensen has never lived in Rhode Island or a
disproportionately impacted area, is not a member of an impacted family, and “has
never been arrested for, convicted of, or adjudicated delinquent for any offense that
is eligible for expungement under Rhode Island law.”	
Id. ¶ 28. She argues that she
is excluded from obtaining a general license or a social equity license because under
the statute, she does not qualify.	
Id. ¶¶ 27–28. Based on these allegations, Ms.
Jensen brings two claims pursuant to 42 U.S.C. § 1983: (1) violation of the Dormant
Commerce Clause and (2) violation of the Equal Protection Clause. She seeks
declaratory relief pursuant to 28 U.S.C. § 2201.
Id. ¶¶ 29–46.
3 Collectively, R.I. Gen. Laws § 21-28.11-10.2(b)(2), § 21-28.11-11-3(3), § 21-
28.11-11-3(23), § 21-28.11-11-3(34), § 21-28.11-11-3(39) and Regulations 560-RICR-
10-10-1.11(b)(1)(e)(1) and 560 RICR-10-10-1.11(b)(1)(e)(2) will be referred to as the
“Challenged Provisions.”
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Second is John Kenney, a citizen of Florida who has applied for a recreational
cannabis license. Dkt. 252, ECF Nos. 1 ¶ 1, 36-1 ¶ 23. Mr. Kenney has never lived
in Rhode Island, nor does he have any interest in a “business entity with a principal
place of business located in Rhode Island.” Dkt. 252, ECF No. 1 ¶¶ 16–17. He claims
to be harmed by the residency requirement “because such provisions target [him] as
a non-resident, preventing [him] from owning or having a majority interest in any
License, and, thus, severely limits Plaintiff’s economic opportunities in Rhode
Island’s cannabis industry.”	
Id. ¶ 26. Based on these facts, Mr. Kenney asserts a
claim pursuant to 42 U.S.C. § 1983 that the Act violates the Dormant Commerce
Clause, and he also seeks declaratory relief pursuant to 28 U.S.C. § 2201.
Id. ¶¶ 21–
35.
Lastly, Justin Palmore is a citizen of California who has never lived in Rhode
Island. Dkt. 622, ECF No. 1 ¶ 34. He claims that the “unconstitutional Rhode Island
requirements” exclude him from meeting the requirements for a social equity license.
Id. ¶ 35. Mr. Palmore states that “he lived in a disproportionately impacted area for
at least five of the ten years before Rhode Island opened the social equity status
verification period,” but that his disproportionately impacted area was in Los
Angeles, California.4	
Id. ¶ 36. He also states that he was arrested and convicted of
a cannabis crime in California, but that the California conviction would be eligible for
expungement if it occurred in Rhode Island.	
Id. ¶ 37. Lastly, Mr. Palmore explains
4 Mr. Palmore notes that he “lived in an area of Los Angeles that was
designated as a disproportionately impacted area for the Los Angeles cannabis
licensing program.”
Id. ¶ 36.
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that he has a low income and that “[f]or at least five of the last ten years, he earned
less than 400% of the median income of the zip code where he lives[,]” which is
another reason he may qualify for a social equity license.	
Id. ¶ 38. Mr. Palmore
requested social equity status verification on September 23, 2025, and the
Defendants rejected that application on November 14, 2025.
Id. ¶ 39. Based on these
allegations, Mr. Palmore brings two claims pursuant to 42 U.S.C. § 1983: (1) violation
of the Dormant Commerce Clause and (2) violation of the Equal Protection Clause.
He seeks declaratory relief pursuant to 28 U.S.C. § 2201.
Id. ¶¶ 40–56.
II. LEGAL STANDARDS
A. Motion for Preliminary Injunction
“To be granted a preliminary injunction, a plaintiff ‘must establish’ that: (1) it
is ‘likely to succeed on the merits;’ (2) it is ‘likely to suffer irreparable harm in the
absence of preliminary relief;’ (3) ‘the balance of equities tips in [its] favor;’ and (4)
‘an injunction is in the public interest.’”	
Doe v. Trump, 157 F.4th 36, 46 (1st Cir.
2025) (quoting
Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The third
and fourth factors merge when the Government is the opposing party.	
Does 1-6 v.
Mills, 16 F.4th 20, 37 (1st Cir. 2021).
B. Motion to Dismiss
“When a court is confronted with motions to dismiss under both [Federal] Rules
[of Civil Procedure] 12(b)(1) and 12(b)(6), it ordinarily ought to decide the former
before broaching the latter.”
Deniz v. Mun. of Guaynabo, 285 F.3d 142, 149 (1st Cir.
2002) (citations omitted). Rule 12(b)(1) governs dismissal for lack of subject matter
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jurisdiction. When considering a Rule 12(b)(1) motion, the Court “must construe the
complaint liberally, treating all well-pleaded facts as true and drawing all reasonable
inferences in favor of the plaintiffs.”
Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir.
1998). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
the complaint must state a plausible claim.
Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). A plaintiff’s “factual allegations must be enough to raise a right to relief
above the speculative level” and assert a cause of action with “enough facts to state a
claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 555, 570.
III. DISCUSSION
Before engaging with the parties’ arguments in the motions currently pending
before the Court, the Court notes that the First Circuit has already opined on the
jurisdictional challenges the Defendant raised in an earlier stage of Kenney and
Jensen’s cases.5 This Court dismissed both cases after concluding neither was ripe
for adjudication.
See Jensen v. R.I. Cannabis Control Comm’n, 160 F.4th 18, 21 (1st
Cir. 2025);
Kenney v. R.I. Cannabis Control Comm’n, 160 F.4th 211, 212 (1st Cir.
2025). The First Circuit disagreed with this conclusion, and “reverse[d] and
remand[ed] for prompt consideration and resolution of the merits of plaintiff’s claims
of unconstitutionality of the Act and the claims for declaratory and injunctive relief
against enforcement of the challenged provisions.”	
Jensen, 160 F.4th at 28;
see
Kenney, 160 F.4th at 212. Now back before this Court, the Defendants once again
5 Palmore commenced his action while Jensen and Kenney’s cases were on
appeal. Dkt. 622, ECF No. 1 (complaint filed November 24, 2025).
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urge this Court not to reach the merits since, in their view, each Plaintiff lacks
standing to pursue their claims.	
See Dkt. 191, ECF No. 37 at 5–23; Dkt. 252, ECF
No. 36 at 6–18; Dkt. 622, ECF No. 10-1 at 14–31. In addition to suggesting the
Plaintiffs lack standing, the Defendants argue that the challenged conditions do not
violate the Dormant Commerce Clause or Equal Protection Clause. The Court will
address the likelihood of success of each claim in turn and will then turn to the
remaining injunction factors—irreparable harm, balance of the equities, and public
interest.
A. Likelihood of Success
1. Standing
To establish standing, the Plaintiffs “must have (1) suffered an injury in fact,
(2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is
likely to be redressed by a favorable judicial decision.”	
Spokeo Inc. v. Robins, 136 S.
Ct. 1540, 1547 (2016) (citing
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)).
Beginning with Plaintiff Jensen, the Defendants argue she lacks standing
because she failed to apply for an Adult-Use License or Social Equity Applicant Status
Certification (“SEASC”) during the Commission’s current licensing process. Dkt. 191,
ECF No. 37 at 7–15. They also claim that Plaintiff Jensen cannot fulfill the
redressability prong,
id. at 15–20, and that “there is no imminent, non-speculative
risk that the Commission will apply the Challenged Provisions to Plaintiff in the
future because there are currently no plans for a future licensing cycle.”	
Id. at 20–
23. Meanwhile, as to Plaintiff Kenney, the Defendants state he lacks standing
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“because he cannot show that [the Commission’s] enforcement is likely to cause him
any future injury.” Dkt. 252, ECF No. 36 at 7–16. They argue that while Plaintiff
Kenney submitted a SEASC application, unlike Jensen, it was deficient in certain
respects, and so his application was denied.	
Id. at 12–14. Additionally, the
Defendants claim Plaintiff Kenney faces a redressability problem because “an
injunction would do nothing to remove the independent reasons [he] cannot obtain or
compete for a license.”	
Id. at 16–18. Lastly, as to Plaintiff Palmore, the Defendants
state that he lacks standing because his previously submitted SEASC application was
denied and because other, unchallenged provisions in the Act independently
disqualify him from being eligible for a license. Dkt. 622, ECF No. 10-1 at 15–25.
The First Circuit has already foreclosed most of these standing arguments and
clearly indicated that it, as Plaintiff Kenney writes in his brief, “wanted the actual
merits of the Dormant Commerce Clause claim to be [] adjudicated.” Dkt. 252, ECF
No. 38 at 2. In
Jensen, the Circuit explained:
We reject defendants’ argument that plaintiff lacks standing … Many of
the reasons articulated as to why this case is ripe also go to why Jensen
has standing … Jensen alleges she is ineligible to receive a Rhode Island
retail cannabis license under the text of the Act. All parties would face
needless burdens if the courts do not address the merits before licenses
issued … Defendants are incorrect that Jensen lacks standing to
challenge the constitutionality of the Act unless she has taken further
steps to be eligible to apply, such as the purchase or lease of real estate
with full zoning approval for the proposed cannabis establishment
license, background checks, business disclosures, and plans pertaining
to safety, security, and operations. Jensen is not required to incur these
concrete costs to prepare an allegedly doomed application … Contrary
to defendants’ arguments, the party challenging the scheme can show
[injury] only if he is able and ready to apply, but a plaintiff need not
translat[e] his or her desire ... into a formal application where that
application would be merely a futile gesture … We hold that Jensen has
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sufficiently alleged she is able and ready to apply for a Rhode Island
retail cannabis license. Jensen is a cannabis entrepreneur who has
applied for retail cannabis licenses in multiple other jurisdictions,
including in partnership with other applicants. She seeks to apply for a
license in Rhode Island, but the statute on its face allegedly makes her
ineligible to receive a license. She is not required to engage in ... futile
gesture[s] to establish standing.
160 F.4th at 26–27 (cleaned up);
see Kenney, 160 F.4th at 212. Acknowledging this
directive, this Court rejects Defendants’ standing arguments relating to Plaintiffs’
failure to submit applications for SEASC or Adult-Use licenses. Each Plaintiff has
demonstrated here, and through their cannabis industry endeavors in other
jurisdictions, that at this stage they are ready, willing, and able to apply.
Defendants’ redressability arguments are also unavailing because, by granting
the preliminary relief the Plaintiffs seek, the appropriate remedy will necessarily
include restarting the licensing process with revised regulations. This is of particular
note because the CCC has not indicated that it plans to conduct additional licensing
rounds in the future. Reddish Decl., Dkt. 252, ECF No. 36-1, ¶¶ 12, 19.6 With those
threads removed, Defendants’ standing arguments unravels.
2. Dormant Commerce Clause
Moving on, the Court must consider whether Plaintiffs have shown a likelihood
of success on their asserted Dormant Commerce Clause claims. Defendants argue
that the Dormant Commerce Clause does not apply to Rhode Island’s recreational
cannabis licensing laws (the Act) and suggest that even if the Dormant Commerce
Clause applies, the Challenged Provisions are narrowly tailored to advance valid
6 Michelle Reddish is employed by the CCC as Administrator of the Cannabis
Office. Reddish Decl, Dkt. 252, ECF No. 36-1, ¶ 2.
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state interests. They further claim that the constitutional challenge fails because the
CCC did not apply the Challenged Provisions “in a manner that discriminated against
[Plaintiffs’] state[s] of residence.”
See Dkt. 191, ECF No. 37 at 24–38; Dkt. 252, ECF
No. 36 at 19–32; Dkt. 622, ECF No. 10-1 at 28–44. Disagreeing, Plaintiffs appeal to
the First Circuit’s opinion in
Northeast Patient Group v. United Cannabis Patients
and Caregivers of Maine, 45 F.4th 542, 556 (1st Cir. 2022), which applied the
Dormant Commerce Clause to Maine’s medical marijuana licensing scheme and
invalidated a similar residency requirement. Dkt. 191, ECF No. 9 at 17–27; Dkt. 252,
ECF No. 38 at 8–10; Dkt. 622, ECF No. 12 at 23–24.
Plaintiffs are correct that
Northeast Patients Group controls and compels a
finding that the Dormant Commerce Clause applies to the Act. In that case, the
Circuit specifically addressed “whether the Maine Medical Use of Marijuana
Act … violates what is known as the dormant Commerce Clause of the United States
Constitution by requiring officers and directors of medical marijuana
dispensar[ies], [] operating in Maine to be Maine residents.”	
Id. at 544 (internal
quotes and citations omitted). In affirming the district court’s grant of a preliminary
injunction, the Circuit explained “that nothing in the record in this case indicates
that, due to the [Controlled Substances Act], there is no interstate market in medical
marijuana.”	
Id. at 547. The Court went on to explain that “further undermin[ing]
the notion that no such market exists” is the Rohrabacher-Farr Amendment.	
Id. at
547–48. That Amendment bars the Department of Justice from interfering with state
laws on medical marijuana.
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However, that the case dealt with medical marijuana rather than recreational
marijuana, and discussed the Rohrabacher-Farr Amendment, are far from compelling
reasons to reject the Circuit’s clear conclusion as binding precedent, as the
Defendants implore of this Court.
See generally id. The following discussion from
Northeast Patients Group about the medical marijuana market is equally true if
replaced with “recreational marijuana market” and applied to the Challenged
Provisions in the Act:
[N]othing in the record in this case indicates that, due to the CSA, there
is no interstate market in medical marijuana. The prohibition that
Maine’s Medical Marijuana Act seeks to impose on out-of-state actors
entering that very market reflects the reality that the market continues
to operate. That prohibition even indicates that the market is so robust
that, absent the Medical Marijuana Act’s residency requirement, it
would be likely to attract entrants far and wide. And, while the Medical
Marijuana Act does attempt to restrict out-of-staters from selling
marijuana, it affirmatively encourages out-of-staters to participate in
the medical marijuana market as customers.
Id. at 547. The Circuit’s focus on the
market aligns with the purpose of the Dormant
Commerce Clause which is to prevent state economic protectionism.	
See id. at 546
(stating the Dormant Commerce Clause “in and of itself protects interstate commerce
from ‘the evils of economic isolation and protectionism’ that state regulation
otherwise could bring about”) (quoting
City of Phila. v. New Jersey, 437 U.S. 617, 624
(1978)). Considering that the CCC “received multiple SEASC applications submitted
by out-of-state individuals and entities” and has “certified multiple out-of-state
residents … as approved social equity applicants[,]” the existence of an interstate
market in recreational cannabis is clear. Reddish Decl., Dkt. 191, ECF No. 37-1
¶¶ 15–16.
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Rather than rely on binding First Circuit precedent, the Defendants urge this
Court to follow the Ninth Circuit’s decision in
Peridot Tree WA, Inc. v. Wash. State
Liquor and Cannabis Control Bd., which held that the Dormant Commerce Clause
did not apply to state restrictions on interstate market for marijuana. 162 F.4th 1179,
1190 (9th Cir. 2026). While respecting that Circuit’s differing approach, that
discussion is largely based on the dissents penned in
Northeast Patients Group and
Variscite N.Y. Four, LLC v. N.Y. State Cannabis Bd., 152 F.4th 47 (2d Cir. 2025). As
the Ninth Circuit explained,
There is force to the argument that through the CSA, Congress
expressed an intent to permit protectionist state regimes that restrict
interstate commerce in marijuana, and that the usual test for assessing
this congressional intent should be relaxed when Congress has made the
good in question illegal.
See Variscite N.Y. Four, 152 F.4th at 67–
70 (Livingston, C.J., dissenting);
Northeast Patients Grp., 45 F.4th at
559 (Gelpí, J., dissenting)). But we conclude as an antecedent matter
that the dormant Commerce Clause need not be extended to facilitate
interstate commerce that is illegal under federal law.
Peridot Tree WA, Inc., 162 F.4th at 1188. This Court is not persuaded that the case
before it is sufficiently dissimilar to the issue considered in the First Circuit’s
Northeast Patients Group such that it can disregard the majority opinion, which
clearly concluded the Dormant Commerce Clause applies. Therefore, the Court
concludes the Dormant Commerce Clause applies to the recreational cannabis
market.
Defendants’ next argument is that the Challenged Provisions do not violate the
Dormant Commerce Clause because they are narrowly tailored to advance valid state
interests. Dkt. 191, ECF No. 37 at 30–35; Dkt. 252, ECF No. 36 at 25–30; Dkt. 622,
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ECF No. 10-1 at 38–44;
see Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 338 (2008)
(“A discriminatory law is virtually	
per se invalid … and will survive only if it
advances a legitimate local purpose that cannot be adequately served by reasonable
nondiscriminatory alternatives.”) (internal quotations and citations omitted). The
specific valid state interests advanced by the Defendants in support of the Act are (1)
health and safety, (2) that requiring a bare majority of ownership and control of
cannabis retail licenses by in-state residents ensures that the Commission will
possess meaningful authority, jurisdiction, and oversight over all retail license
holders, and that (3) a partial residency requirement also advances R.I.’s legitimate
interest in minimizing conflict with federal law and law enforcement priorities. Each
asserted interest is rejected.
Relating to health and safety, Defendants argue that since cannabis is illegal,
the state achieves a safe and healthy regulation of the cannabis industry by
monitoring cultivation and the subsequent distribution to dispensaries.	
See, e.g.,
Dkt. 191, ECF No. 14-1 at 11–12. A partial residency requirement has no impact on
the State’s ability to continue tracking marijuana cultivation and distribution,
especially considering Plaintiffs do not challenge any restriction on cannabis products
crossing state lines.	
See, e.g., Dkt. 191, ECF No. 38 at 19. The same is true for
Defendants’ argument that it has an interest in requiring each licensee to undergo a
national criminal background check. Dkt. 191, ECF No. 14-1 at 13.
Next, the Defendants contend that the residency requirement is necessary to
make sure the CCC has “meaningful authority, jurisdiction, and oversight over all
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retail license holders.”
See, e.g., Dkt. 191, ECF No. 37 at 31. Similar to the asserted
health and safety state interest, whether an out-of-state person owns—individually
or through a company—49%, 51%, or 100% of a dispensary has no relation to the
CCC’s ability to exercise its authority and oversight over the dispensary. The CCC
can exercise its lawful authority over the dispensary, and the license holder will be
required to comply with all State laws and all of the CCC’s rules and regulations.
The last asserted State interest that the Defendants put forward in support of
the residency requirement is that it advances Rhode Island’s interest in minimizing
conflict with federal law and law enforcement priorities.
See, e.g., Dkt. 191, ECF No.
37 at 32. In support of this argument, Defendants point to the Department of
Justice’s Cole Memo which identified preventing “the diversion of marijuana from
states where it is legal under state law in some form to other states” as a DOJ
enforcement priority.7 This Memo is of no consequence relative to this justification
for two reasons. First, Attorney General Sessions repealed the Memo in 2018.
Second, the residency restrictions are unrelated to enforcing laws against trafficking
marijuana across state lines which is still prohibited under the Controlled Substances
Act and can still be prosecuted by DOJ. The Court finds the residency requirement
is not narrowly tailored to advance valid state interests and Defendants’ arguments
fail.
7 The Cole memo was issued by Deputy Attorney General James Cole in 2013.
https://perma.cc/SS5Z-Q8YL. It instructed the Department of Justice to not enforce
federal marijuana prohibition in states that enacted laws legalizing marijuana. The
memo was rescinded in 2018 by Attorney General Jeff Sessions.
https://perma.cc/6LQD-NBF3.
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Defendants’ last attempt at convincing this Court that the Challenged
Provisions do not violate the Dormant Commerce Clause is that the CCC did not
apply the challenged social equity criteria in a discriminatory fashion. This argument
can be summarily dismissed because, as the First Circuit made clear in
Jensen, “[t]he
Commission’s licensing rules and regulations had to conform to the same restrictions
in the statute[.]” 160 F.4th at 25 (citing
In re Advisory Op. to Governor, 627 A.2d
1246, 1248 (R.I. 1993)). Here, the CCC’s Rules and Regulations, 560-RICR-10-10,
conform with, and are identical to, the statutory language in R.I. Gen. Laws § 21-
28.11,
et seq. Those regulations and statutes require the CCC to apply and enforce
the residency requirement and social equity provisions as written. This means, for
example, that for social equity applicants, out-of-state convictions cannot be
considered in place of in-state convictions because the regulations and statutory
language explicitly require the conviction to be “eligible for expungement under this
chapter.”	
See, e.g., R.I. Gen Laws § 21-28.11-3(39)(ii)(A), (iii)(B). The CCC will not
be free to disregard the clear language of the statute and regulations, and therefore
this argument is rejected.
* * *
Given the above, the Court finds that all Plaintiffs have shown a likelihood of
success on the merits of their Dormant Commerce Clause claims. The Court will now
turn to whether Plaintiffs Kenney and Palmore have sufficiently pled a violation of
the Equal Protection Clause or if that claim should be dismissed pursuant to Federal
Rule of Civil Procedure 12(b)(6).
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3. Equal Protection Clause
Defendants argue that Plaintiffs’ equal protection claim fails on the merits
because Certification Criterion 1—references to disproportionately impacted areas
(“DIAs”)—passes constitutional muster under rational basis review. Dkt. 191, ECF
No. 37 at 38. Defendants explain that the State’s decision to include residence in a
DIA as one of the criteria for social equity status is a plausible means the State could
adopt to advance the legitimate goal of “reduc[ing] barriers to ownership and/or
participation in the cannabis industry for individuals and communities most
adversely impacted by the enforcement of cannabis-related laws[.]”	
Id. at 38. They
argue this is especially true considering the General Assembly’s legislative findings
on the relationship between the adverse impact of the enforcement and financial
barriers to participation in the State’s cannabis industry. R.I. Gen. Laws § 21-28.11-
31(a). In response, Plaintiffs point out that 4 of the 5 criteria for a DIA have nothing
to do with cannabis, and the fifth requires the
area where the applicant lived to have
a high rate of cannabis arrests compared to other areas.	
See R.I. Gen. Laws § 21-
28.11-3(23)(i)–(iv) (relying on the following criteria to define DIAs: (1) federal
decennial census, (2) children in the free lunch program as determined by the Rhode
Island board of education, (3) SNAP, and (4) unemployment rate as determined by
Rhode Island department of labor and training).
As Plaintiff Jensen explains in her brief, “a person who has suffered no harms
from the illegality of cannabis can qualify for the social equity program if the person
lives in an area where the individual’s neighbors have a poverty rate of 20%.
Similarly, a person who suffered no harms from the illegality of cannabis can qualify
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for the social equity program if 75% of school children qualify for free lunches.” Dkt.
191, ECF No. 38 at 24. This, according to Plaintiffs, shows that these statutes are
overinclusive, underinclusive, arbitrary and capricious, not related to the
legislature’s goals, and cannot survive rational basis review. A district court in
Michigan examined this issue and explained:
[D]efendant has failed to show that its stated goal of assisting those who
have been harmed by the War on Drugs is advanced by reserving fifty
percent or more of the recreational marijuana licenses for those who
have lived in Detroit for at least ten years. Certainly, many people who
have lived in Detroit for this period of time, or longer, have not been
burdened with a marijuana-related arrest or conviction. And just as
certainly, many people who have lived in Detroit for fewer than ten
years have been significantly burdened by such an arrest or conviction.
Giving “social equity” preference to the former group while denying it to
the latter is irrational. It is also irrational to grant the preference to
residents of Detroit but deny it to those of other communities, such as
neighboring River Rouge, when residents of both cities presumably
suffered from the War on Drugs to the same extent.
Lowe v. City of Detroit, 544 F. Supp. 3d 804, 816 (E.D. Mich. 2021). This Court
agrees, especially for purposes of satisfying the Rule 12(b)(6) standard. Applied to
the cases before this Court, allowing an individual to be eligible for the social equity
licensing program if they suffered no harm from cannabis criminal laws but lived in
a certain area, yet making another individual ineligible if they suffered harm from
cannabis criminal laws but lived in a different area, would likely fail to survive
rational basis scrutiny. At this stage in the litigation, Plaintiffs Kenney and Palmore
have established a likelihood of success on the merits of their equal protection claims.
* * *
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Therefore, the Defendants’ motions to dismiss are denied as to each of the three
Plaintiffs because the Plaintiffs have established plausible claims that the Act
violates the Dormant Commerce and Equal Protection Clauses. The Court will
proceed to examine the remaining preliminary injunction factors.
B. Irreparable Harm
“[T]he measure of irreparable harm is not a rigid one; it has been referred to
as a sliding scale, working in conjunction with a moving party’s likelihood of success
on the merits.”	
Vaqueria Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464, 485 (1st Cir.
2009). Much of the Defendants’ arguments against irreparable harm stem from
Plaintiff Jensen’s failure to apply for an Adult-Use license or SEASC certification,
and Plaintiffs Kenney and Palmore’s purported deficient and rejected applications—
arguments the Court rejected above when discussing standing.	
See Dkt. 191, ECF
No. 38 at 39–32. Meanwhile, Plaintiffs assert several irreparable harms that would
occur unless the Court enjoins Defendants from issuing Licenses under the
application program and orders the CCC to restart the process.
Plaintiffs suggest that “a constitutional violation causing monetary loss that is
not easy to quantify is an irreparable harm.”
See, e.g., Dkt. 191, ECF No. 9 at 32–33.
The First Circuit has “recognized that some economic losses can be deemed
irreparable. For instance, ‘an exception exists where the potential economic loss is
so great as to threaten the existence of the movant’s business.”	
Vaqueria Tres
Monjitas, Inc., 587 F.3d at 485 (quoting
Performance Unlimited, Inc. v. Questar
Publishers, Inc., 52 F.3d 1373, 1382 (6th Cir. 1995)). This coincides with Plaintiffs’
claims that delay in entering the market causes irreparable harm because all
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advantages to early entrants in the market, such as access to customers who have
not developed loyalty to other businesses, will have been claimed. The Maine District
Court acknowledged this harm with the following thoughtful explanation:
I agree that the unique context of this new market suggests that the
timing of a ruling in the Plaintiffs’ favor is particularly important. The
Plaintiffs are not seeking to enter an established [cannabis] market,
where the significance of any further delay in their participation is likely
diminished. Rather, the Plaintiffs are seeking to be in the first wave of
[cannabis] licensees as a new market launches and are hoping to attract
customers who have not yet developed allegiances.
Northeast Patients Group, LLC v. City of Portland, Me., No. 2:20-cv-00208-NT, 2020
WL 4741913, at *11 (D. Me. Aug. 14, 2020). This Court agrees that Plaintiffs face
irreparable harm through delay in entering a market where only 24 new licenses will
be issued statewide. Because there are a finite number of licenses and dispensaries,
Plaintiffs will suffer the same harms as the plaintiff in
Northeast Patients Group if
they are not given the opportunity to enter the market at the same time as other
applicants.
See 2020 WL 4741913, at *11.
Moreover, Plaintiffs’ concern that they will be excluded from the R.I. Adult-
Use recreational cannabis market absent injunctive relief because the CCC intends
to issue only 24 licenses is well-founded, especially because the Defendants admit
that the CCC has no plans for future Adult-Use or social equity license application
rounds.
See, e.g., Dkt. 191, ECF No. 37 at 41.
In sum, considering the Plaintiffs’ strong likelihood of success on the merits,
the Court finds Plaintiffs have shown that they will suffer irreparable injury absent
injunctive relief.
See Vaqueria Tres Monjitas, Inc., 587 F.3d at 485.
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C. Balance of Equities & Public Interest
When the Government is the opposing party, the balance of the equities and
weighing the public interest factors are considered together.	
Mills, 16 F.4th at 37.
The combined consideration requires the Court to weigh “the competing claims of
injury and must consider the effect on each party of the granting or withholding of
the requested relief,”
Winter, 555 U.S. at 24 (quoting
Amoco Prod. Co. v. Gambell,
480 U.S. 531, 542 (1987)), “pay[ing] particular regard for the public consequences in
employing the extraordinary remedy of injunction,”	
id. (quoting	
Weinberger v.
Romero-Barcelo, 456 U.S. 305, 312 (1982)).
Relying on a case out of the Seventh Circuit Court of Appeals, the Defendants
argue that “any interest Plaintiff[s] could conceivably have in disrupting the current
licensing process at the eleventh hour would still be ‘vastly outweighed by the severe
harm to the reliance interests’ of third-party applicants ‘and to the public’s interest
in the orderly completion of the [current] licensing process.’”
See, e.g., Dkt. 191, ECF
No. 37 at 43–46 (quoting	
Finch v. Treto, 82 F.4th 572, 579 (7th Cir. 2023)).
Detrimental to Defendants’ reliance on
Finch v. Treto is that the district judge in
that case denied the plaintiff’s request for a preliminary injunction, “conclud[ing] that
[plaintiffs] waited far too long to file their suit—more than two years after the
application deadline for the first batch of licenses and eight months after the lottery
results were announced.”8 82 F.4th at 577. “[T]he judge reasoned that halting and
8 The district court in
Finch considered whether provisions in the Illinois
Cannabis Act violated the dormant commerce clause. As explained by the Seventh
Circuit:
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unwinding the 2021 licensing process would cause undue harm to the holders of the
allocated conditional licenses … [T]he judge declined to enjoin the finalization of the
2021 licenses, finding the request for preliminary injunctive relief too ‘sweeping’ and
‘highly disruptive.’”
Id.
The Defendants’ contention that Plaintiffs are disrupting the current licensing
process at the eleventh hour carries no merit because Plaintiffs Jensen and Kenney
filed their cases in 2024, with Ms. Jensen requesting injunctive relief on June 10,
2024—months before the CCC adopted the Rules and Regulations. Dkt. 191, ECF
Nos. 1, 9; Dkt; Dkt. 252, ECF No. 1. Here, “the Commission expects to make final
determinations regarding which applications are qualified for the license lottery in
May 2026, and to hold the lottery shortly thereafter,” Dkt. 252, ECF No. 35 at 2, so
the comparison to
Finch is misplaced. Further, knowing the Act was facing legal
challenges in this Court, the CCC continued forward with its plan to implement the
Act and its licensing scheme. The resulting fall-out will be, to be blunt, self-inflicted.
In an exhaustive opinion, the judge concluded that the plaintiffs had
established a likelihood of success on their claim that the residency
provisions in the state’s licensing regime could not survive
constitutional scrutiny under the Supreme Court’s dormant Commerce
Clause jurisprudence. She acknowledged, however, that the issue was
murky and unsettled because federal law continues to prohibit cannabis
distribution. The judge also held that the plaintiffs had established, “at
least in theory,” that they would suffer irreparable harm in the absence
of preliminary injunctive relief.
82 F.4th at 577. That court also declined to enjoin a future licensing process
“[b]ecause the proposed administrative rule governing the 2022 licenses was not yet
final and the residency provisions might be modified or deleted [so] the judge
concluded that the plaintiffs’ constitutional challenge was unripe.”
Id.
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Finally, the Court is mindful that there are applicants who have paid
application fees, secured leases, and expended resources in support of their
applications. Indeed, Defendants have clearly argued that “each of the 98 third-party
applicants was required to expend significant investments in time, effort, and
financial resources. An order delaying the Commission from issuing Licenses
altogether would unfairly and materially prejudice those third-party applicants.”
See, e.g., Dkt. 191, ECF No. 37 at 44. These interests, however, are outweighed by
the Plaintiffs’ complete exclusion from the market, which is what would occur if the
CCC is allowed to proceed with the licensing program under the current Act and
regulations. The CCC can remedy or minimize some of the third-party harm by, for
example, refunding application fees or transferring current applications to the new
application period.
While the balance of the equities is a closer call for this Court than the
likelihood of success on the merits or the irreparable harm analyses, the Court
concludes that the equities and public interest weigh in favor of granting injunctive
relief.
IV. BOND
The Defendants suggest bond is appropriate to cover “the costs State
Defendants have expended in its journey to promulgate rules and regulations in
accordance with the Cannabis Act.”
See, e.g., Dkt. 191, ECF No. 14-1 at 21. Plaintiffs
argue against an injunction bond because they are individuals and are seeking to
vindicate constitutional rights.	
See, e.g., Dkt. 191, ECF No. 9 at 36. Under the
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Federal Rules of Civil Procedure Rule 65(c), “[t]he court may issue a preliminary
injunction … only if the movant gives security in an amount that the court considers
proper to pay the costs and damages sustained by any party found to have been
wrongfully enjoined or restrained.” Here, the Defendants have failed to explain with
any particularity the costs they expended to, essentially, do their job. Considering
this lack of evidence in the record, the Court will exercise its “substantial discretion”
and will not require Plaintiffs to post an injunction bond.
See Int’l Ass’n of Machinists
and Aerospace Workers v. E. Airlines, Inc., 925 F.2d 6, 9 (1st Cir. 1991) (explaining
that “there is ample authority for the proposition that the provisions of Rule 65(c) are
not mandatory and that a district court retains substantial discretion to dictate the
terms of an injunction bond”)
V. ORDER
The Plaintiffs’ motions for preliminary injunction (Dkt. 191, ECF No. 9; Dkt.
252, ECF No. 34) are GRANTED. The Defendants are Enjoined from enforcing R.I.
Gen Laws. § 21-28.11-3(3), § 21-28.11-3(23), § 21-28.11-3(34), § 21-28.11-3(39), and
§ 21-28.11-10.2(b)(2) and the corresponding Rules and Regulations adopted by the
Cannabis Control Commission. Further, the Defendants are Enjoined from
proceeding with the current application or licensing period, including (1) holding the
lottery to select applicants, and (2) processing any applications submitted under the
current licensing period, for both Adult-Use and Social Equity licenses.
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VI. CONCLUSION
Based on the reasons set forth above, the Plaintiffs’ motions for a preliminary
injunction are GRANTED and Defendants’ motions to dismiss (Dkt. 191, ECF No. 13;
Dkt. 252, ECF Nos. 12, 19; Dkt. 622, ECF No. 10) are all DENIED.
IT IS SO ORDERED.
_________________________________
Melissa R. DuBose
United States District Judge
04/08/2026
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