Marijuana

Hemp Industry Hits DEA With Another Lawsuit

Given that a trial may not take place for a year, the injunctive relief would give the hemp industry the ability to continue its activities without running the risk of triggering DEA enforcement actions.

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A few weeks ago, I reported on a petition filed by the Hemp Industries Association (HIA) and RE Botanicals, a South Carolina hemp CBD manufacturer, against the Drug Enforcement Agency regarding its recently published interim final rule (the Rule).

Last week, HIA and RE Botanicals opened a new front against the DEA and the Rule. Specifically, on October 12, the hemp stakeholders filed a separate lawsuit against the DEA in the United States District Court for the District of Columbia (the lawsuit). The United States District Court for the District of Columbia is the equivalent of Washington D.C.’s trial court.

In the lawsuit, HIA and RE Botanicals seek relief that is different from the petition and request:

  • A declaration that the definition of hemp in Section 1639o, includes “intermediate hemp material” (IHM) and “waste hemp material” (WHM).

Here, HIA and RE Botanicals allege that the DEA is attempting to regulate products derived from lawful hemp by misinterpreting the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) and by classifying IHM and WHM — two necessary and inevitable byproducts of hemp processing — as Schedule I controlled substances.

Moreover, the lawsuit addresses the complex “dry weight basis” concept and explains that given the wet nature of IHM and WHM, the hemp materials cannot be measured nor violate the “dry weight basis” threshold, and thus, are excluded from the CSA.

“By defining hemp, inclusive of derivatives and extracts, based on its Δ9-THC concentration on a dry weight basis, and by removing THC in hemp from control, Congress removed hemp-derived materials from the CSA that do not contain more than 0.3% Δ9-THC at points when Δ9-THC can be measured on a dry weight basis.” (Emphasis added).

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  • A declaration that the THC in IHM and WHM is not a controlled substance.

In their next argument, HIA and RE Botanicals explain that the 2018 Farm Bill amended the CSA’s Schedule I to read “Tetrahydrocannabinols, except for tetrahydrocannabinols in hemp (as defined under [Section 1639o]).” Therefore, HIA and RE Botanicals argue, Congress removed all THC in hemp from the CSA, including THC found in IHM and WHM.

  • A declaration that the DEA lacks independent authority to regulate any aspect of hemp production, including that of IHM and WHM.

The lawsuit states that:

“The explanatory language accompanying the text of the [Rule] … reveals that DEA has an understanding of the definition of ‘hemp’ that is contrary to the 2018 Farm Bill’s plain language (and Congress’ intent) and effectively sweeps hemp into DEA’s purview.”

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Indeed, while the 2018 Farm Bill expressly tasked the U.S. Department of Agriculture and the Food and Drug Administration with regulating hemp and hemp finished products intended for human consumption, respectively, it does not mention once the DEA. This, HIA and RE Botanicals claim, reveals that the DEA has no authority regulating hemp production, including IHM and WHM.

  • Preliminary and permanent injunctive relief in the form of an order that prevents the DEA from (a) enforcing the CSA as it relates to IHM and WHM; (b) classifying IHM or WHM as Schedule I substances; and (c) promulgating any rules relating to the production of hemp. 

The claim for injunctive relief is important because if the court were to find the Rule to be problematic, it would immediately block the DEA from enforcing and revising it until a trial occurs. Given that a trial may not take place for a year, the injunctive relief would give the hemp industry the ability to continue its activities without running the risk of triggering DEA enforcement actions.

This is crucial to the existence of the industry because since the release of the Rule, hemp processors and manufacturers who handle IHM and/or WHM have had to choose between (1) ceasing to process, manufacture and/or store hemp; (2) obtaining a Schedule I license from the DEA; or (3) risking criminal prosecution for handling a Schedule I controlled substance under the CSA.

In sum, the lawsuit reveals, once again, that the hemp industry is determined to stop the DEA’s wrongful attempt to tighten its grip over hemp production but also to fiercely protect its lawful activities and maintain the new, flourishing economy it has created since the enactment of the 2018 Farm Bill.

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.

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