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Saturday, 10/28/2023 11:41:10 AM

Saturday, October 28, 2023 11:41:10 AM

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FYI- Cannabis companies hire Microsoft antitrust lawyer David Boies to sue U.S. government for federal pot prohibition
11:40 am ET October 27, 2023 (MarketWatch)
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By Steve Gelsi

A group of cannabis companies said late Thursday they hired law firm Boies Schiller Flexnor to file suit against U.S. Attorney General Merrick Garland in U.S. federal court in Massachusetts in an attempt to overturn federal prohibition of cannabis because it restricts state-legal commerce.

The group listed as plaintiffs in the federal suit include Verano Holdings Corp. (VRNOF), Canna Provisions, Wiseacre Farm, and Gyasi Sellers, who is the chief executive of Treevit.

Foundational supporters of the suit include Ascend Wellness Holdings (AAWH), TerrAscend Corp.. (TSNDF), Green Thumb Industries Inc. (GTBIF), Eminence Capital and Poseidon Investment Management.

"Federal criminalization of safe, regulated, intrastate cannabis legal in 38 states is unconstitutional and unfair to small business," according to a statement from the group.

The plaintiffs also said cannabis businesses are "unconstitutionally prevented" from obtaining loans and investments, which makes them unable to maintain normal banking relations. They're also subject to discriminatory taxes.

Boies Schiller Flexnor was the firm that won an antitrust case against Microsoft Corp. (MSFT) on behalf of the U.S. government. The firm also overturned California's same-sex marriage ban.

Jefferies analyst Owen Bennett said he'd take no view on the success of the suit, but added that the legal cannabis landscape is much different than it was when a similar case failed in 2005. At that time, far fewer states allowed medical cannabis and no states permitted adult use of cannabis.

"Circumstances have now materially changed, as even Supreme Court Justice Clarence Thomas, in 2021, argued national prohibition may be unconstitutional," Bennett said.

The suit argues that many cannabis businesses are suffering, people are losing their jobs and individual wealth is being destroyed.

Verano President Darren Weiss said the group is prepared to bring the case to the Supreme Court.

The lawsuit marks a third branch of the federal government considering cannabis reforms: Congress, the White House and now the federal courts.

The SAFE(R) Banking legislation to open up the financial system to legal cannabis companies has been winding its way through Congress for a decade, although its fate remains uncertain in the Republican-controlled U.S. House of Representatives.

The Drug Enforcement Administration, is considering a recommendation from the Department of Health and Human Services to re-schedule cannabis to Schedule III from Schedule I. Attorney General Merrick Garland is also working on an update of the Cole memo which instructs federal prosecutors to avoid going after legal cannabis companies.

The AdvisorShares Pure U.S. Cannabis ETF (MSOS) fell 0.6% on Friday. The index is down by 30.8% in 2023 compared to a 21.5% increase by the Nasdaq .
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