Historically, hemp was not treated as a separate entity from the cannabis plant, but the new Farm Bill passed by Congress in 2018 changes this, bringing the legalization of the cannabis industry one step forward. This bill makes hemp federally legal in all 50 states, but there are still serious restrictions that can make any hemp-related business risky.
The recent cases of Big Sky Scientific LLC vs Idaho State Police and US vs Mallory, combined with a shift in post office regulations, show us exactly why it’s still an uphill battle for hemp growers and processors, despite massive legislative reform and the breaking down of taboos surrounding hemp.
Here’s what else you need to know about the hemp business to keep yourself in compliance with the law:
On January 4, 2019, hemp processor Big Sky Scientific (the Processor) was transporting a shipment of hemp from Oregon through Idaho to its Colorado-based processing plant. The driver was stopped and arrested by Idaho state police and the hemp was seized.
The processor provided the required copies licenses and testing laboratory certificates to the county prosecutor and the deputy attorney for the state police proving the hemp was grown by a licensed grower within Oregon’s industrial hemp program. The hemp met the .3% THC limitation on hemp, meaning it’s no longer a controlled substance under federal law and the state of Idaho cannot interfere with its transportation through the state, per the Farm Bill legislation of 2018.
The processor then sought a temporary restraining order and preliminary injunction against the state police and county prosecutor in violating both the 2018 Farm Bill and the Commerce Clause of the U.S. Constitution, as well as the return of its hemp. Given the perishable nature of hemp, the processor requested the court appoint an emergency receiver to safeguard the hemp.
The injunction was denied.
The court ruled that there were no state regulatory plans in place at the time of the seizure, regardless of whether the product fell under the “hemp” category. And even though the Farm Bill restricts states from prohibiting the transportation of hemp, there were no state hemp regulatory plans approved by the federal government, and no federal regulatory plan in place at the time of seizure. Therefore, the hemp in this case did not receive interstate commerce protections. The court decided the cost of granting the injunction was outweighed by the benefits of not doing so, and pointed at the risks the processor knew it was taking.
This creates many holes that growers and processors will need to fill as state and federal regulatory plans are being developed. As of yet, there is no specific timeline as to when these plans will be available.
On the country’s opposite coast, the Southern District of West Virginia just dissolved a preliminary injunction set forth in U.S. vs Mallory to give hemp growers and processors a little more legal support and protection.
Nearly a complete 180 from Big Sky Scientific vs Idaho State Police, hemp farmers can confidently transport hemp from West Virginia to Pennsylvania for processing. If drivers are stopped, law enforcement is not allowed to collect samples for testing.
The United States Postal Service is also getting on board with supporting the burgeoning hemp movement. They recently released a memo clarifying rules about mailing certain industrial hemp products, which could foreshadow a loosening of restrictions now that the Farm Bill 2018 has passed.
Right now, it’s legal to mail CBD products derived from hemp, provided the company mailing the product signs a statement verifying the hemp was purchased from a certified grower. Postal employees must now recognize that industrial hemp is no longer a controlled substance, but the USPS will wait until the new legislation is fully implemented before examining conditions for cannabis-related products.
The case of Big Sky Scientific vs Idaho State Police reveals myriad legal issues that growers and processors may face in their enterprises. In this case, the complications created a ripple effect beyond providing the appropriate licenses and documentation. Embroiled in red tape and new territory, the quality of the product may also suffer, delay shipments, and create issues in the supply chain.
The tangle of laws circulating through the previously taboo subject of hemp, CBD, and marijuana is nothing short of confusing. If you’re currently or considering pursuing business interests in hemp, your best chance for success isn’t just in the product itself, but also keeping yourself out of legal jeopardy.
Our team of legal experts specializes in marijuana law, helping businesses understand their rights so they can run successful, profitable, legal ventures. Reach out to us with your legal questions or needs to keep your business growing.
FDA Cannabis/CBD Q&A
Circuit Split (conflicting circuit court rulings)
As of 2019, the states with existing commercial hemp programs are: