By Ashley Mitchell, 3rd Year Law Student and Dispensary Manager
Social equity programs are well-intentioned and good-natured, but they’re also likely illegal.
Across the country, state legislatures and regulators have designed social equity programs intended to right the wrongs of the drug war. These programs, particularly those that reserve the first wave of marijuana licenses for applicants from communities disproportionately harmed by prohibition, are billed as a moral corrective. They are politically popular, frequently touted as essential, and in some cases already operational. But as a 3rd year law student watching the litigation landscape unfold, I believe these programs are on a collision course with constitutional law.
In the coming months, I expect federal courts to systematically strike down many of the most ambitious equity licensing schemes, with an eventual U.S. Supreme Court ruling making clear that preferential treatment based on race, residency, or criminal history cannot survive judicial scrutiny. If that happens, the implications for state programs will be enormous.
The problem lies in the constitutional doctrines of equal protection and the dormant Commerce Clause. Equal protection prohibits government programs that grant advantages explicitly on the basis of race, unless they can survive “strict scrutiny,” the highest standard of judicial review. While states often phrase their equity rules in race-neutral terms, the legislative record usually makes clear the true intent: to prioritize opportunities for racial minorities most impacted by prohibition. Courts have historically struck down even well-intentioned affirmative action programs, and cannabis licensing will not be an exception.
The dormant Commerce Clause poses another problem. Marijuana may remain federally illegal, but federal courts have repeatedly recognized that states cannot create protectionist barriers favoring in-state residents over out-of-state participants. Yet many equity programs explicitly give licensing preference to longtime state residents or people with past state convictions. Several district and appellate courts have already enjoined or invalidated such rules, finding that even within the peculiar status of cannabis, interstate commerce protections still apply.
This isn’t just a theoretical concern. This month the Second Circuit Court of Appeals ruled that a New York equity licensing program that gave priority to individuals with in-state cannabis convictions was likely unconstitutional. The court held that giving preference to in-state applicants over out-of-state participants violated the Dormant Commerce Clause. Judge Jacobs, writing for the court, made clear that “a prohibition intended to eradicate an interstate market is not a license for states to incubate intrastate markets in the same product.” The case was remanded to the lower court, but the ruling is a clear signal that federal courts will not tolerate protectionist state licensing schemes, even in the cannabis industry.
Recent cases hint at what’s coming. In New York, equity licensing tied to state criminal history has faced multiple lawsuits alleging unconstitutional discrimination. In Michigan and Missouri, challenges are pending that will test how far states can go in tilting the playing field toward equity applicants. Early rulings suggest courts are skeptical of anything resembling protectionist or race-based criteria.
The Supreme Court has been moving steadily toward limiting or eliminating race-conscious remedies across the legal landscape. Its decision in Students for Fair Admissions v. Harvard struck a major blow to affirmative action in education. It requires little imagination to see the Court applying the same reasoning to cannabis programs, concluding that even if the goals are laudable, the Constitution does not allow the government to favor some applicants based on racial or residency factors.
The consequences would be profound. Dozens of states have tied their legalization rollouts to equity programs. Some, like New York and New Jersey, required that equity outlets open first before larger corporate entities could enter the market, a move that is almost surely unconstitutional. Billions of dollars in investments and licensing rights hinge on these provisions. If courts invalidate them, states could face chaos—licensees caught in limbo, lawsuits for damages, and a scramble to rewrite rules that no longer pass constitutional muster.
None of this means equity in cannabis is doomed. States can still support disadvantaged entrepreneurs, but they must do so through constitutionally permissible means. That could include offering low-interest loans, technical assistance, or training programs open to all, rather than imposing hard quotas or residency preferences. They could focus on economic status instead of race or criminal record. They could create grant programs that encourage community reinvestment without tying them to the licensing process itself.
But the political will to pivot is uncertain. Equity was promised to voters as a guarantee that legalization would benefit those most harmed by prohibition, not simply as another small-business program. Rolling it back could trigger backlash from activists and community groups who fought to enshrine equity into law.
As a law student preparing to enter the profession, I sympathize deeply with the goals of social equity. The war on drugs devastated minority communities, and legalization should not simply enrich the corporations that once opposed reform. But the Constitution sets limits. If states ignore them, they risk wasting years of effort on programs destined to collapse under judicial review.
The prudent path forward is for lawmakers and regulators to begin redesigning equity programs now—before the courts do it for them. That means crafting initiatives that are open, inclusive, and legally durable, rather than hinging the future of legalization on licensing rules that cannot withstand constitutional challenge.
If states fail to act, the coming wave of court rulings will not just dismantle individual equity programs. It will reshape the entire landscape of marijuana legalization, creating uncertainty where stability is most needed. And when the Supreme Court finally weighs in, the ruling will reverberate far beyond cannabis, setting precedent for how America confronts the legacy of discrimination in every regulated industry.
For now, the writing is on the wall: the boldest social equity licensing programs may not survive the Constitution. The question is whether states will adapt—or wait until the courts leave them no choice.
