The Hemp Industry Sues The DEA Over Its Interim Final Rule

Only time will tell whether the U.S. Court of Appeals for the District of Columbia will be receptive to the petitioners’ arguments.

Last Friday, the Hemp Industries Association (HIA) and RE Botanicals, a South Carolina hemp CBD manufacturer, sued the Drug Enforcement Agency regarding its recently published interim final rule (the Rule).

The petitioners claim the Rule is unlawful because it exceeds the DEA’s authority and violates the Agriculture Improvement Act of 2018 (the 2018 Farm Bill).

If you follow this column or keep your finger on the pulse of the hemp industry, you may recall that the Rule suggests, in part, that intermediary hemp shall be treated as a Schedule I controlled substance during any point at which its THC concentration exceeds 0.3 percent on a dry weight basis — even fleetingly during the processing phase and before the percentage is brought back into legal compliance for the finished product. This, the petitioners argue, is contrary to the plain language and the intent of the 2018 Farm Bill, which legalized hemp, its derivatives, extracts, and cannabinoids so they could be regulated as agricultural commodities, and thus, fall outside the DEA’s jurisdiction.

In addition, HIA and RE Botanicals argue that Timothy Shea, the DEA’s acting administrator, failed to observe certain administrative procedures imposed under the Administrative Procedure Act (the APA) by implementing the Rule without providing the public with notice and the opportunity to comment before the Rule went into effect — According to the DEA, the Rule “merely conforms DEA’s regulations to the statutory amendments to the [Controlled Substances Act] that have already taken effect, and it does not add additional requirements to the regulations.” (Emphasis added).

While the Rule clearly suggests that the DEA is exceeding its authority and is attempting an illegal power grab over lawful hemp activities, only time will tell whether the U.S. Court of Appeals for the District of Columbia will be receptive to the petitioners’ arguments. Yet, one thing is certain, the hemp industry is determined to protect the lawful production of hemp that Congress established when it enacted the 2018 Farm Bill.

Indeed, this industry-wide effort is not limited to challenging the DEA Rule. For months, hemp stakeholders have challenged state regulations with far-reaching consequences for the industry.

For example, last month, four hemp companies sued the State of Texas for imposing a ban on the manufacture, processing, distribution, and retail sale of smokable hemp products.

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Although a 2019 state law tasked the Department of State Health Services (DSHS) with adopting rules prohibiting the manufacturing of smokable hemp products in the state, DSHS exceeded its authority by extending the ban to the distribution and retail sale of these products, despite thousands of comments objecting to the ban.

The Texas district court that heard the case first issued a temporary restraining order (TRO) that prevented the state from enforcing the ban for a few weeks. Then, last Thursday, the court granted a temporary injunction that voided the DSHS regulation prohibiting the production, distribution and retail sale of smokable hemp products until a trial is held in February 2021.

While the issuance of the TRO and the temporary injunction do not mean that the state overstepped its boundaries, these decisions by the Texas court are promising and encouraging for the industry.

Since the enactment of the 2018 Farm Bill, the hemp industry has had to continuously fight state and federal roadblocks to protect its interest and has had to overcome obstacles with which no other legal industry has been confronted. Yet, the industry’s tenacity along with these lawsuits should give federal and state regulators pause as they signal that these agencies cannot flat-out ignore the legality of hemp.


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Nathalie practices out of Harris Bricken’s Portland office and focuses on the regulatory framework of hemp-derived CBD (“hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She also advises domestic and international clients on the sale, distribution, marketing, labeling, importation and exportation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s Marketplace. For two consecutive years, Nathalie has been selected as a “Rising Star” by Super Lawyers Magazine, an honor bestowed on only 2.5% of eligible Oregon attorneys.  Nathalie is also a regular contributor to her firm’s Canna Law Blog.