No longer can lawyers — or laymen — continue to overlook the dormant Commerce Clause, a doctrine of U.S. constitutional law that prevents states from favoring their own residents over others and/or from interfering with interstate commerce.
Not only was this doctrine at the heart of an important U.S. Supreme Court case decided this past term, it also has been the basis for multiple, recent legal challenges to laws regulating modern industries and innovations, such as the nascent U.S. cannabis industry.
As such, the dormant Commerce Clause — the discussion of which at one time was largely confined to law school classrooms — is now a popular topic in the courtroom and the boardroom as well.
The dormant Commerce Clause grows out of the U.S. Constitution’s “Commerce Clause,” which provides that “Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States ….”
The U.S. Supreme Court — as Justice Samuel Alito, Jr. explained in 2019 — has “long held that [the Commerce] Clause also prohibits state laws that unduly restrict interstate commerce.”
In Tennessee Wine & Spirits Retailers Association v. Thomas, Justice Alito also stated that “[t]his ‘negative’ aspect of the Commerce Clause prevents the States from adopting protectionist measures and thus preserves a national market for goods and services.” It is “[t]his interpretation,” he wrote, that is “generally known as ‘the dormant Commerce Clause.’”
“Traditionally, the dormant [C]ommerce [C]lause was considered an arcane aspect of American constitutional law,” wrote Northwestern University law professor Martin H. Redish in a 1987 Duke Law Journal article that he co-authored with Shane V. Nugent.
Although, as Professor Redish and his co-author observed 30-plus years ago, “the dormant commerce clause has been the subject of a resurgence in both scholarly and judicial concern,” it nonetheless largely still has remained — in the words of Ken Kozlowsi, director of the law library of the Supreme Court of Ohio — “a subject most lawyers have not heard mentioned since law school.”
Even when taught in law school, dormant Commerce Clause case law hardly seemed glamorous. A textbook example — literally — of this constitutional doctrine is Kassel v. Consolidated Freightways Corp., a 1981 Supreme Court case involving Iowa state law and different types of trucks/trailers used to ship cargo over the nation’s roads.
Recently, though, the dormant Commerce Clause seems to have gone a little more “mainstream.” Far from arcane, today one might even call dormant Commerce Clause jurisprudence not just relevant but — dare one say it? — “sexy.” It has been the focus of multiple cases deciding current “hot” topics.
For example, several courts have focused on this doctrine when addressing challenges to state laws that give preference to in-state applicants when awarding licenses for cannabis dispensaries and grow facilities. Although it ultimately came to a contrary conclusion, the U.S. District Court for the Western District of Washington observed just earlier this year: “Following Tennessee Wine, many federal courts have considered states’ cannabis licensing residency requirements. The majority of federal district courts to consider the issue have held that the dormant Commerce Clause applies and that their states’ respective residency requirements violate it or likely violate it.”
For example, the U.S. District Court for the Western District of Missouri concluded in 2021 that a Missouri law — which required an applicant for a license to operate a medical marijuana facility in that state to be “majority-owned by persons who have been Missouri residents for at least one year” — likely would succumb to a dormant Commerce Clause challenge because it was “facially discriminatory against out-of-state economic interests.”
The dormant Commerce Clause also has been applied to disputes involving modern technology and the law, such as ones involving “anti-spoofing” laws. “Spoofing,” according to the U.S. Federal Communications Commission, “is when a caller deliberately falsifies the information transmitted to [a] caller ID display to disguise their identity.”
Last year, the U.S. District Court for the District of South Carolina found, after considering another prong of the “dormant Commerce Clause analysis,” that South Carolina’s “Anti-Spoofing statute is in violation of the Commerce Clause via prohibited extraterritorial legislation because it may regulate commerce located entirely out of state.”
The Supreme Court’s opinion in National Pork Producers Council v. Ross — which was issued in May — is likely to limit the scope of this doctrine, at least under this additional, “extraterritorial” prong of the analysis. In National Pork Producers, the Court rejected any suggestion that there was an “‘almost per se’ rule forbidding enforcement of state laws that have the ‘practical effect of controlling commerce outside the State,’ even when those laws do not purposely discriminate against out-of-state economic interests.”
That said, the dormant Commerce Clause remains very much alive. Even Supreme Court Justice Neil M. Gorsuch wrote in National Pork Producers that “[a]ssuredly, under this Court’s dormant Commerce Clause decisions, no State may use its law to discriminate purposefully against out-of-state economic interests.”
Indeed — contrary to the U.S. Court of Appeals for the Ninth Circuit’s observation in 2021 that “[w]hile the dormant Commerce Clause is not yet a dead letter, it is moving in that direction” —any report of the doctrine’s demise has been greatly exaggerated. In fact, even after National Pork Producers, the potential for the dormant Commerce Clause to continue to have a significant effect on legal disputes involving the cannabis and other newer industries and issues remains great. PJC
Michael H. Sampson — a graduate of Taylor Allderdice High School, the School of Advanced Jewish Studies, and Community Day School — is a Pittsburgh-based attorney, who, in addition to other work, routinely advises plant-touching, non-plant-touching and ancillary business across the cannabis industry.