It’s always unlikely that the Supreme Court will hear any case. But the marijuana industry’s strategy in this particular case ensures the opposite.
James B. Mann is a former U.S. Department of Justice Tax Division Assistant Attorney General.
The much-hyped case that was meant to challenge the federal marijuana law is now officially dead. Recently, the First Circuit Court of Appeals issued a unanimous decision rejecting Canna Provisions, v. Garland Also known as Canna Provisions V. BondiThis case is widely regarded as the best chance for the cannabis industry to challenge federal prohibition in the courtroom.
It was intended that the case would strike down the cannabis Schedule I classification in the Controlled Substances Act as well as the tax burden imposed under Section 280E. Instead, it ended in a resounding defeat—with precisely zero chance of being heard by the Supreme Court.
280E has been a burden on the cannabis industry since it was first introduced in the 1980s. Originally enacted in the 1980s to prevent drug traffickers from deducting business expenses, 280E blocks cannabis operators—even fully legal ones under state law—from writing off ordinary costs like rent, payroll or equipment. Cannabis businesses pay up to three times as much federal income tax compared with other companies that sell legal products.
Now, the cannabis industry is fighting against 280E in all three branches. Congress is urged to pass legislation. Pressure is put on the executive branch to reschedule marijuana so that it no longer falls under 280E. Legal challenges, such as Canna Provisions, have brought the judiciary into play.
The lawsuit was filed with much fanfare in October 2023—it was funded by many of the large cannabis companies and used a big-name law firm, Boies Schiller. It was meant to reverse a Supreme Court ruling from 2005. Gonzales v. Raich. In RaichThe court upheld Controlled Substances Act, as it applied to marijuana grown exclusively for personal use in one state.
Boies Schiller essentially made two arguments—first, that the realities of the cannabis market had changed so much since 2005 that Raich The First Circuit ruled that the legislation Congress passed proving cannabis’s removal from Schedule I was not outdated. First Circuit was not having it. In a 3-0 decision, the court stated that although facts changed since Congress classified drugs as irrational (the test), they did not change enough.
The court rejected the argument that federal legislation had proven cannabis’s removal from Schedule I. In the opinion, it was noted that funding restrictions only applied to adult-use cannabis and not medical marijuana.
The opinion criticizes Canna Provisions for their “lack” of logic, even dismissing one of its most important arguments.
Supreme Court Justices must vote to decide what cases will be heard. It takes four votes for a matter to appear on the docket. The Supreme Court cannot resolve a split between circuit courts in a case like Canna Provisions. The only way to get a court hearing would be to convince the judges that this case raised an urgent legal issue.
One justice is still sitting on the bench. Raich—Justice Clarence Thomas. Clarence Thomas’ dissenting opinion in this case and in others involving the Commerce Clause, show his strong belief that federal powers have been expanded far beyond what Framers intended. Justice Sandra Day O’Connor’s opinion in dissent argued, too, that federal law interfered with core state rights.
Boies Schiller, in a bizarre move, never brought up the arguments of Thomas or O’Connor. The strategy used by Boies Schiller makes it unclear which of the two thought the other would choose to listen to the case.
Although oral argument doesn’t often play a major role in appellate decision-making, David Boies wasn’t helped by being slammed to pieces by the panel of three judges. First Circuit recordings of oral arguments are available for public viewing. Boies was once one of the most prominent litigators of his generation—there’s even a chapter in a Malcolm Gladwell book about his mind and how he overcame dyslexia. At 84 he wasn’t prepared for the most basic of questions, and was clearly not at his best.
Canna Provisions illustrates the complexity of using litigation to advance federal cannabis reform. Canna Provisions also highlights the difficulty of using lawsuits to promote federal cannabis reform. This case, while carefully crafted challenges to the law may have some role in the future, did not have the arguments or position that could have realistically attracted Supreme Court interest.
James B. Mann, a tax lawyer specializing in cannabis taxation as well as complex tax planning for businesses, is an expert on the subject. A Harvard Law and Columbia MBA graduate, he previously served as deputy assistant attorney general in the U.S. Department of Justice’s Tax Division, led tax-debt advisory at Société Générale, and represented major cannabis clients—including arguing the Harborside case in the Ninth Circuit.
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