A recent decision of the U.S. Court of Appeals for the Third Circuit serves as a stark reminder to companies and individuals in the state-legal cannabis industry that the federal illegality of cannabis can jeopardize their ability to enforce contracts in federal court.
In January, the U.S. Court of Appeals for the Ninth Circuit ruled 3-0 that the Dormant Commerce Clause does not prohibit states from imposing residency requirements for obtaining marijuana business licenses. The court found that the federal illegality of marijuana renders Dormant Commerce Clause protections inapplicable, cementing a circuit split on the constitutionality of state residency rules for marijuana licenses.
A federal judge in the U.S. District Court for the Southern District of Florida stayed discovery in a putative Telephone Consumer Protection Act (TCPA) class action while the court considers whether text messages qualify as “calls” under the statute’s do-not-call (DNC) provisions. In McGonigle v. Pure Green Franchise Corp., the court granted the defendant’s motion to stay, finding that the key issues can be resolved as questions of law without discovery. 2026 WL 111338 (S.D. Fla. Jan. 15, 2026).
In early December 2025, federally regulated derivatives exchange KalshiEX LLC filed suit in the U.S. District Court for the District of Connecticut challenging a cease-and-desist order issued by the Connecticut Department of Consumer Protection (DCP) directing Kalshi to halt operations in the state. The DCP contends that Kalshi, along with platforms such as Robinhood and Crypto.com, operates an unlicensed and illegal sports betting platform in violation of Connecticut law. According to the agency, Kalshi’s sports event contracts fall squarely within the state’s definition of sports wagering and expose consumers to risk because they operate outside Connecticut’s regulated gaming framework, lack required integrity controls, and are not subject to consumer protection oversight. Connecticut officials have emphasized that “a prediction market wager is not an investment,” and that Kalshi’s platform offers no recourse for consumers under state law if disputes arise.
Many prediction market firms have sought to avoid state regulation by emphasizing how their services differ from traditional sports betting. They characterize their offerings as “event contracts” or “swaps,” which are only subject to Commodity Futures Trading Commission (CFTC) oversight and note that they operate peer‑to‑peer exchanges, earning revenue from transaction fees rather than customer losses. Many state regulators have disagreed with this argument, however, asserting that event contracts cannot be distinguished from state-regulated gaming. Federal courts in various states have reached different conclusions on this issue. A Nevada federal court has now weighed in, ruling that some of these services fall under state gaming law.
We recently wrote about a federal case here and here involving key issues related to the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) authority to enforce the Prevent All Cigarette Trafficking Act (PACT Act) against federally recognized Indian tribes and ATF’s interpretation of key sections of the PACT Act. In addition to appealing the U.S. District Court for the Central District of California’s decision, we noted that the Twenty-Nine Palms Band of Mission Indians (the Tribe) asked the district court to require ATF to remove it from the agency’s PACT Act noncompliant list (NCL) and prevent ATF and the other defendant, the Department of Justice from taking action against it pending its appeal before the U.S. Court of Appeals for the Ninth Circuit. On July 30, the federal district court denied the Tribe’s request.
In 2023, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) placed Twenty-Nine Palms Band of Mission Indians (Twenty-Nine Palms), a federally recognized Indian tribe that sells cigarettes on sovereign reservations in California, on the Prevent All Cigarette Trafficking Act’s (PACT Act’s) noncompliant list (NCL). The PACT Act generally prohibits common carriers from shipping products to or from companies on the NCL. After ATF placed Twenty-Nine Palms on the NCL, the tribe sued ATF and its parent agency, the Department of Justice (DOJ), in federal court. This case is worth following because it involves key issues related to ATF’s authority to enforce the PACT Act against federally recognized Indian tribes and ATF’s interpretation of key sections of the PACT Act.
At the end of a blockbuster term, the Supreme Court sharply limited the power of federal courts to issue so-called universal injunctions against government actors. The decision in Trump v. CASA (and related cases) did not foreclose federal courts’ power to enjoin federal policies that are likely unconstitutional but curtailed the reach of those injunctions to the parties (or potentially the plaintiff class) in a suit. The result will require affected parties to litigate rather than wait on potential widespread relief from courts in distant corners of the U.S.
The U.S. Court of Appeals for the District of Columbia recently enjoined Texas Attorney General (AG) Ken Paxton from enforcing a pre-litigation subpoena issued to Media Matters for America (Media Matters). The subpoena is related to the Texas AG’s investigation into Media Matters arising out of allegations that the company fraudulently manipulated data after it reported about brand advertisement concerns on X.
We previously wrote about this case last January, here and here, when Iowans for Alternatives to Smoking & Tobacco, Inc., Global Source Distribution, LLC, and others filed a complaint and motion for a preliminary injunction in federal district court against the Iowa Department of Revenue (the Department), challenging Iowa House File 2677 (HF 2677), a law imposing certification and directory requirements on vapor products sold in Iowa. On May 2, the court granted plaintiffs’ motion for preliminary injunction and enjoined the Department from implementing and enforcing HF 2677’s vapor product directory provisions. The court held that the Department could, however, continue to enforce the provisions of HF 2677 requiring nonresident vapor product manufacturers not registered to do business in the state as a foreign corporation or business entity to appoint and continually engage an agent for service of process. The parties have a status conference before the court scheduled for May 29.