Harris Beach Murtha cannabis attorneys F.L. Gorman, Jason W. Klimek and William M.X. Wolfe co-authored the article “How 2nd Circ. Cannabis Ruling Upends NY Licensing,” recently published by Law360.
The article discusses a pivotal August 12, 2025, U.S. Court of Appeals for the Second Circuit 2-1 decision that New York’s adult-use cannabis licensing scheme, which gives “extra priority” to applicants (or certain relatives) with New York State marijuana convictions, is unconstitutional under the Dormant Commerce Clause.
“The ruling represents one of the most significant constitutional challenges to a state cannabis licensing scheme since legalization efforts began in earnest over a decade ago,” the attorneys wrote. “It underscores that, despite the federal prohibition under the Controlled Substances Act, state-legal cannabis markets remain subject to the same constitutional constraints as other economic markets — including the long-standing prohibition against state economic protectionism.”
The ruling could ultimately affect thousands of licenses under consideration in New York, as well as licensing around the country in states that have adopted similar licensing guidelines.
Notwithstanding, the cogent dissent acutely noted the irony of the decision, drawing on “The Federalist No. 11,” Justice Livingston posited that if Congress’ intent is to abolish the national cannabis market, it cannot logically intend for that market to be preserved by finding residency requirements unconstitutional under the Dormant Commerce Clause.
For New York, the Second Circuit’s decision in Variscite NY Four “demands a rethinking of how to structure social equity without violating the dormant commerce clause. For the national cannabis industry, it signals that federal courts will not overlook protectionist licensing measures, even in a market that remains federally illegal,” the attorneys added.
