Cocroft v. Graham

1

CLARENCE COCROFT and TRU SOURCE MEDICAL CANNABIS, LLC PLAINTIFFS v. CHRIS GRAHAM, in his official capacity as the Commissioner of the Mississippi Department of Revenue, RILEY NELSON, in his official capacity as Chief of Enforcement of the Mississippi Alcoholic Beverage Control Bureau and DR. DANIEL P. EDNEY, in his official capacity as State Health Officer for State of Mississippi Department of Health DEFENDANTS

No. 23-cv-00431

United States District Court, N.D. Mississippi, Oxford Division

January 22, 2024

ORDER

MICHAEL P. MILLS UNITED STATES DISTRICT JUDGE.

This cause comes before the court on the motion of defendants Mississippi Department of Revenue (“MDOR”) Commissioner Christopher Graham, Chief of Enforcement of MDOR's Alcohol Beverage Control Bureau of Enforcement Riley Nelson, and the State Health Officer for the Mississippi Department of Health (“MDOH”) Dr Daniel Edney, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss this action filed against them in their official capacities. Plaintiffs Tru Source Medical Cannabis, LLC (“Tru Source”) and its owner Clarence Cocroft have responded in opposition to the motion, and the court, having considered the memoranda and submissions of the parties, is prepared to rule.

This is a First Amendment action arising from what the plaintiffs allege to be violations of their free speech rights by state laws and regulations which, while legalizing medical marijuana in Mississippi, prevent them from advertising on behalf of their medical cannabis dispensary. The plaintiffs are precluded by Eleventh Amendment immunity from seeking monetary damages against the State of Mississippi in federal court, and they have accordingly limited their requested relief to declaratory and injunctive relief against state officers based on alleged violations of federal law, as authorized by Ex parte Young, 209 U.S. 123 (1908).

In their complaint, plaintiffs assert that, were it not for the State's restrictions on medical cannabis advertising they would engage in a variety of advertisements for their business, including billboards, “print advertising” and “broadcast advertising, including television and radio.” [Complaint at 22]. Plaintiffs further allege that, in the absence of the right to engage in such advertising like other businesses, they are severely hampered in their ability to grow and profit from their enterprise. [Id.] In their complaint, plaintiffs seek a declaratory judgment that, “facially and as applied to” them and “all those similarly situated,” the “ban violates the First Amendment.” [Id. at 27]. Plaintiffs also request that this Court issue a permanent injunction prohibiting the enforcement of the advertising ban by defendants and their agents. Id.

Legislative and Regulatory History

Before addressing plaintiffs' constitutional arguments and requests for relief, this court will briefly review the recent legislative enactments which have given rise to this lawsuit. In 2022, the Mississippi Legislature passed the Mississippi Medical Cannabis Act (the “Act”), which authorized the production, sale, and use of cannabis for medicinal purposes. See Miss. Code Ann. § 41-137-1, et seq. In so doing, the Legislature granted the Mississippi Department of Health (“MDOH”) the “ultimate authority for oversight of the administration of the medical cannabis program,” including the authority to, among other things, license and regulate facilities and entities responsible for growing, processing, transporting, testing, and disposing of medical cannabis. Miss. Code Ann. § 41-137-7(1), (3)(a)-(b); Miss. Code Ann. § 41-137-35(1). The Act assigned another state agency, the Mississippi Department of Revenue (“MDOR”), the duty of “licensing, inspection and oversight of medical cannabis dispensaries.” Miss. Code Ann. § 41137-7(4); Miss. Code Ann. § 41-137-35(1). The Act requires both MDOH and MDOR to promulgate certain rules and regulations “where relevant to the role” of each agency in administering the medical cannabis program. Miss. Code Ann. § 41-137-41(1).

Of particular relevance to this case, the Act specifically mandates the issuance of rules and regulations which provide “[r]estrictions on the advertising, signage, and display of medical cannabis[.]” Miss. Code Ann. § 41-137-41(1)(d)(x). But the Act does not bar all forms of marketing and branding. To the contrary, the rules and regulations adopted under the statute “may not prevent appropriate signs on the property of a dispensary, listings in business directories, including phone books, [or] listings in cannabis-related or medical publications[.]” Id. Nor may the regulations prohibit medical cannabis dispensaries (and other licensed entities) from displaying cannabis in their “company logos and other branding activities,” operating a website with pictures of the products they sell, or sponsoring “health or not-for-profit charity or advocacy events[.]” Id.

In exercising the authority granted to it by the Legislature, MDOH has adopted regulations governing the advertising and marketing of medical cannabis. See 15 Miss. Admin. Code Pt. 22, Subpt. 3, R. 3.1.1, et seq. These regulations prohibit all medical cannabis licensees, including dispensaries, from “advertising and marketing in any media[.]” 15 Miss. Admin. Code Pt. 22, Subpt. 3, R. 3.2.1. This prohibition applies to all forms of broadcast, electronic, and print media. Id. It also applies to “[m]ass text/messaging communications,” “[m]ass email communications,” and advertising “in any manner that can be viewable . . . [in] a public space[.]” Id. Finally, MDOH's advertising and marketing regulations bar licensees from displaying their products in windows or places open to public view, as well as soliciting reviews, testimonies, or endorsements from patients, caregivers, and healthcare practitioners. Id. However, the regulations do permit dispensaries and other licensees to “participate in branding activities . . . in order to publicize their businesses[.]” 15 Miss. Admin. Code Pt. 22, Subpt. 3, R. 3.3.1. More specifically, dispensaries are allowed to create “a website and/or social media presence that provides” their “contact information, retail dispensing locations, and a list of products available”; to be listed in phone books and “cannabis-related or medical publications”; and to sponsor “health or not-for-profit charity or advocacy events.” 15 Miss. Admin. Code Pt. 22, Subpt. 3, R. 3.3.2.

Analysis

Having discussed the nature of the statutes and regulations at issue in this case, this court will now address plaintiffs' arguments that they infringe upon their First Amendment rights. In doing so, this court notes at the outset that while the parties strongly disagree regarding the proper interpretation of the law in this context, they do appear to agree that this case turns upon the proper interpretation and application of the U.S. Supreme Court's decision in Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of New York, 447 U.S. 557, 100 S.Ct. 2343 (1980). In Central Hudson, the Supreme Court established a four-part test for assessing the constitutionality of limitations upon commercial speech, as follows:

In commercial speech cases, then, a four-part analysis has developed. At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

Central Hudson, 447 U.S. at 566.

The parties further appear to agree that Central Hudson's applicability to this case turns upon the proper interpretation of its initial requirement that the speech in question “concern lawful activity.” Id. In seeking dismissal of this case, the State argues that, since the possession of marijuana remains illegal under federal law, it does not constitute “lawful activity” in Mississippi and that the State was accordingly within its rights in greatly limiting cannabis advertising. Specifically, the State argues that:

The proposed medical cannabis advertising Plaintiffs intend to undertake does not concern a lawful activity. Cannabis (i.e., marijuana) is classified as a Schedule I controlled substance. 21 U.S.C. §§ 802(6), 812 (Schedule I)(c)(10). Under the Controlled Substances Act, it is a crime to manufacture, distribute, dispense, or possess any controlled substance, including cannabis. 21 U.S.C. §§ 841(a)(1), 844(a). Moreover, the Controlled Substances Act criminalizes the advertising of cannabis or any other Schedule I drug. 21 U.S.C.A. § 843(c)(1) (prohibiting advertising that “attempt[s] to propose or facilitate an actual transaction in a Schedule I controlled substance”); see id. at (c)(2)(A) (prohibiting internet advertising) & (d)(1) (making any violation of advertising prohibitions a crime punishable by up to four years' imprisonment). Given that dispensing, distributing, and possessing cannabis is a crime under federal law, Plaintiffs' proposed commercial speech does not concern “lawful activity,” and is therefore not protected by the First Amendment.

[Brief at 7]. In its brief, the State insists that its decision to legalize medical cannabis under state law does not alter its illegality under federal law, writing that:

Plaintiffs may argue that medical cannabis advertising concerns lawful activity in Mississippi because the State has legalized medical cannabis. However, the Controlled Substances Act prevails over state law by virtue of the Supremacy Clause. See U.S. Const.

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