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A federal court in Arkansas just issued a landmark ruling enjoining enforcement of a recently enacted hemp law. Due to its broad findings, the ruling arguably makes this the single most important hemp case to date and one that every participant in the hemp industry should read. The order itself only applies to the Arkansas law. However, the court’s findings have sweeping implications for hemp laws in states across the country. It is not an overstatement to say that every state law that defines hemp differently from federal law or that restricts downstream hemp products based on anything other than their delta-9 THC concentrations is now in jeopardy of being struck down as unconstitutional. This is an incredible victory for the hemp industry, a powerful vindication of the lawful status of hemp products, and an enormous step forward in the overall progress of cannabis legalization.
In this blog post, I will summarize and discuss the Court’s key findings. You can read the entire order below. Kudos and thanks to the plaintiffs, Bio Gen LLC, Drippers Vape Shop LLC, The Cigarette Store LLC, and Sky Marketing Corporation dba Hometown Hero, and to the legal team led by Abtin Mehdizadegan of Hall Booth Smith PC for their hard work and success. It is difficult to understate the importance of this ruling.
Background and Summary:
Several hemp companies in Arkansas (the “Plaintiffs”) filed a lawsuit against the state seeking an injunction prohibiting enforcement of Senate Bill 358, enacted on April 11, 2023 as “Act 629” (the “Act”), which criminalized all hemp products “produced as a result of a synthetic chemical process” and “[a]ny other psychoactive substance derived therein.” The Plaintiffs contend that the Act is preempted (ie, superseded) by the federal 2018 Farm Bill and also that its provisions are unconstitutionally vague and thus void. The Court agreed and entered an injunction barring enforcement of the Act.
Ruling:
In its ruling, the Court made three important findings: (1) that the Act is preempted by federal law under the principle of “conflict preemption”, (2) that the Act is preempted by federal law under the principle of “express preemption”, and (3) that the Act is unconstitutionally vague and thus void. I should note that I am being somewhat general about the ruling since this article is not intended to get bogged down in technical legal issues and explanations. To be clear, the court’s order is specific to the Plaintiff’s request for an injunction, and as such the Court found that “there is a substantial probability [the Plaintiffs] will succeed at trial” on the above issues, which is the legal standard for receiving an injunction. The case has not concluded. Additionally, the court made some additional findings about standing and a private right to sue under the 2018 Farm Bill that are important but are technical and of interest mostly to lawyers. I will not discuss them in this article so that I can focus on the main points.
The Court’s first two findings are based on the legal doctrine of preemption. As the court states, “the federal preemption doctrine stems from the Constitution’s Supremacy Clause, which states that laws of the United States made under the Constitution are the supreme law of the land. State laws that interfere with, or are contrary to the laws of congress, made in pursuance of the constitution are invalid or preempted.” There are several types of preemption. The court found that two are applicable to this case, “conflict preemption” and “express preemption”. Although similar in their effect, they are based on different premises. The court’s third finding is based on a separate legal doctrine referred to as “void for vagueness” under the due process clause of the Constitution. I will address each of these findings by first letting the court speak for itself and then providing follow-up commentary.
1. Conflict Preemption. The Court found that the 2018 Farm Bill controls the definition of “hemp” and removes it from the list of controlled substances. Because the Act does precisely the opposite, federal law preempts it. The Court states: “The 2018 Farm Bill removes “hemp” from the definition of marijuana in the Controlled Substances Act. Under the 2018 Farm Bill’s standard, the only way to distinguish controlled marijuana from legal hemp is the delta-9 THC concentration level. Additionally, the definition extends beyond just the plant to “all derivatives, extracts, [and] cannabinoids. The definition covers downstream products and substances, if their delta-9 THC concentration does not exceed the statutory threshold.” The Court went on to state: “Defendants contend that the products at issue here are Schedule I substances because they are “synthetic.” However, the 2018 Farm Bill’s definition of hemp does not limit its application to [the] method “derivatives, extracts, [and] cannabinoids” are produced. Instead, the definition covers all downstream products if they do not cross the 0.3 percent delta-9 THC threshold…. Under the 2018 Farm Bill, Arkansas can regulate hemp production and even ban it outright if it is so inclined. The legislature seems to have tried to keep the parts of the program it likes (purely industrial uses) and eliminate the parts it doesn’t (human consumption). That may very well be an acceptable distinction as it applies to the state’s criminal code, but changing definitions in a federal program, which it has already fully joined, is not a constitutionally valid way to do it.” (emphasis added)
My Commentary: This finding is important not only because it reiterates that the delta-9 THC concentration is the sole metric for distinguishing lawful hemp from unlawful marijuana, including a so-called but clearly erroneous distinction based on so-called “synthetic” cannabinoids (something we have stated repeatedly for a long time), but also because it applies equally to “downstream products”. This means that the delta-9 THC metric does not only apply to hemp biomass or floral material, but also to “all downstream products” made with hemp. In other words, not only is the legal status of hemp biomass and floral material based on solely on its delta-9 THC levels but this metric also applies to all products made from it, specifically including products that contain intoxicating and synthetic cannabinoids other than delta-9 THC (ie, delta-8, delta-10, HHC, THCP, etc.) Additionally, attempts by states (not to mention the DEA) to impose a “post-decarboxylation” testing method to post-production hemp and hemp-products is also presumably unconstitutional as an impermissible redefining of hemp beyond the 2018 Farm Bill definition. If applied to other state laws, this finding could dramatically open the market for THCa hemp into states where it is currently deemed unlawful.
2. Express Preemption. The Court states: “The anti-preemption language Defendants cite specifically references more stringent in-state regulation only as to the production of hemp, which means that Arkansas may continue to enforce laws regarding the growing of hemp within its borders, but not its interstate transportation…. The 2018 Farm Bill clearly provides that states may not pass laws that interfere with the right to transport hemp in interstate commerce—including hemp derivatives like Plaintiffs’ products at issue here—that have been lawfully produced under a state or Tribal plan or under a license issued under the USDA plan.”
My Commentary: The court made the often overlooked point that Arkansas, and any state, can regulate the “production” (ie, “growing” or “cultivation”) of hemp more stringently than federal law; however, a state may not pass laws that restrict interstate commerce in hemp products, including hemp derivatives, from lawfully produced hemp. Combined with the conflict preemption findings discussed above, it is clear that a state may impose restrictions on hemp production, but not on any other aspect of the hemp supply chain, including downstream products made from hemp, regardless of whether or not they are “synthetic”, “intoxicating”, or otherwise do not meet the state’s hemp laws or regulations.
3. Void for Vagueness. The Court states: “The Due Process Clause dooms certain laws that are too vague. A law crosses that threshold when it “either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application. Act 629 contains terms that would confuse even an exceptionally intelligent reader. Specifically, “continuous transportation”, “synthetic substance”, and “psychoactive substances” are vague, and are not defined in the statute. Additionally, Section 10 of Act 629 provides that a hemp-derived product “shall not be combined with or contain any of the following: . . . Any amount of tetrahydrocannabinol as to create a danger of misuse, overdose, accidental overconsumption, inaccurate dosage, or other risk to the public.” What is a “danger of misuse” or “other risk to the public”? How do you quantify an “overdose” or “inaccurate dosage?” These terms are paired with, at best, fuzzy standards—and record no explicit statutory definition– making it next to impossible for the typical person to know what to do. If the person guesses wrong, the consequences are potential criminal punishment.”
My Commentary: This finding undercuts the recent practice by Arkansas and a large number of state legislatures of restricting and regulating hemp and hemp products based on vague and confusing terms like “synthetic” and “psychoactive”. I have called the regulation of hemp products based on their “psychoactivity” a “fool’s errand” for precisely this reason and am especially happy that the court made this finding. Under the Court’s rationale these terms may not be employed by state legislatures and regulators to restrict hemp and hemp products.
Key Takeaways:
For the hemp industry in Arkansas, this is an unqualified grand slam. The court enjoined enforcement of the Act in its entirety, reopening the state’s previously flourishing hemp market. Additionally, and perhaps more importantly, the court’s findings have significant implications for the hemp laws of every state. Although the court’s ruling does not directly affect the laws of other states, it creates a roadmap for attacking state laws that restrict hemp, hemp derivatives, and hemp products, including THCa, D8, D10, HHC, THCP, and THCa hemp flower on a number of legal grounds. This is welcome news, particularly in the wake of many states enacting laws that unconstitutionally restrict and prohibit hemp products that are clearly lawful under the 2018 Farm Bill. It will be exciting to watch this play out, particularly as we look forward to enactment of the next Farm Bill.
Here is a copy of the court order:
Contact us if you have questions about this ruling, its implications, or hemp and cannabis generally.
September 8, 2023
Rod Kight is an international cannabis lawyer. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the cannabis industry. You can contact him by clicking here.
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