A split decision on state cannabis license residency rules between two separate federal appellate courts has set the stage for a possible challenge before the U.S. Supreme Court. But so far, the lead plaintiff in both cases is keeping his mouth shut.
On Jan. 2, the Ninth Circuit Court of Appeals upheld rulings from lower courts in California and Washington, which found that the Constitution’s dormant commerce clause (DCC) does not apply to the cannabis industry as long as it remains federally illegal. This comes months after the Second Circuit Court of Appeals ruled in favor of California-based cannabis stakeholder and attorney Jeffrey Jensen, declaring the DCC does apply to cannabis.
“I don’t do media,” said Jensen when reached for comment following his loss before the Ninth Circuit Court.
9th Circuit’s panel ruling could be appealed for a full court hearing
Jensen, a partial stakeholder and attorney for Peridot Tree in Beverly Hills, Calif., and other cannabis companies nationwide, has been battling state residency and social equity requirements for licensed operators over the last few years.
Following the Ninth Circuit’s ruling, Peridot Tree was granted an extension of time from the court and now has until March 16 to file a motion for rehearing en banc. If granted, this means that arguments would be presented before the entire Ninth Circuit Court of Appeals, as opposed to a panel of three circuit judges.
“There’s a decent chance that this, if not successful, at least leads to additional dissenting opinions,” said Attorney Kieran Ringgenberg, partner at Feuerstein Kulick LLP in an email. “If plaintiffs are not successful en banc, I do expect they will seek review in the Supreme Court.”
While there is never a guarantee that the Supreme Court would take it up, the Peridot case has a lot going for it in terms of the likelihood that it reaches the highest court in the land, according to Ringgenberg.
“There is a clear circuit split with a number of dissenting opinions, and that makes Supreme Court review more likely than cases where a party is just arguing that the lower court got it wrong,” he said. “In addition, the Dormant Commerce Clause is an interesting issue where the positions of the Justices do not necessarily cohere to their typical ideological groupings. Based on that, it may be easier to find four justices willing to take the case.”
The first constitutional challenge against cannabis licensing rules occurred in Maine, when a multi-state operator sued so that it could acquire an in-state chain of medical dispensaries. Ultimately, the case would make it to the First Circuit Court of Appeals, which found in August 2022 that the DCC applied to the cannabis market, despite cannabis being federally illegal.
Following that case, Jensen began filing lawsuits against residency rules in numerous states, including California, New York, Washington, Maryland and Rhode Island.
Jensen again found success in the Second Circuit Court of Appeals on Aug. 12, 2025, when it ruled that New York’s requirement violated the DCC.
A month later, on Sept. 2, 2025, the Fourth Circuit ruled against Jensen in his attempt to upend Maryland’s social equity requirement. In that case, the court found the requirements did not restrict applicants from out of state. The court also avoided splitting with the First and Second Circuits by not ruling on the DCC’s implications in the case.
Shay Gilmore, an independent attorney in the San Francisco Bay Area, said that ongoing efforts to reschedule cannabis at the federal level could complicate any petition to the Supreme Court.
“The split is cert-worthy on its face, but federal rescheduling and the Court’s historical reluctance to engage cannabis issues create genuine uncertainty. If rescheduling stalls, cert [writ of certiorari] likelihood increases substantially. If rescheduling proceeds, the Court will likely deny cert and allow the issue to develop further under the new regulatory framework,” said Gilmore.
With 2 favorable rulings, other entrepreneurs try to test state regs
Justyna Jensen, with her attorney Jeffrey Jensen, sued Rhode Island over its plan to include residency requirements in licenses prioritized for social equity applicants. In February 2025, a federal judge dismissed the case as unripe due to the lack of finalized cannabis licensing rules. The ruling came one day before the state issued its proposed licensing regulations, which included the social equity qualifications.
A Florida entrepreneur named John Kenney sued Rhode Island with a similar lawsuit. His case was also originally dismissed in federal court.
Jensen and Kenney appealed to the First Circuit Court of Appeals, which revived both of their cases in a Nov. 25, 2025, ruling. The cases remain ongoing in the U.S. District Court of Rhode Island. Kenney filed a motion for a preliminary injunction on Jan. 6, seeking to block the Rhode Island Cannabis Control Commission from issuing any retail licenses.
Last October, a hemp farmer in Connecticut sued the state over its social equity rules, which prevented most of the state’s hemp farmers from becoming cannabis cultivators. That case, which was filed in the U.S. District Court of Connecticut, cited the Second Circuit’s ruling in the Jensen case from earlier in the year.
The Connecticut case also remains pending.
