In 2023, lawsuits were filed against state governments in Indiana, Arkansas, Virginia, and Alaska alleging that state hemp laws and regulations violate the U.S. Constitution. The state laws and regulations all attempt to restrict the growth, production, or sale of hemp. This article will discuss the four complaints and the similar arguments made in the lawsuits.
Background on Hemp
Congress defined hemp in the 2018 Farm Bill as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Agriculture Improvement Act of 2018, Pub. L. No. 115-334. The 2018 Farm Bill distinguished hemp from marijuana, made hemp production federally legal, and removed hemp as a schedule I controlled substance under the Controlled Substances Act. Additionally, the 2018 Farm Bill allowed states, territories, or tribal authorities to oversee hemp production programs with approval by USDA, but prevented states, territories, or tribal authorities from prohibiting the interstate transportation or shipment of hemp that was produced consistent with the 2018 Farm Bill. To learn more about industrial hemp, click here for the National Agricultural Law Center industrial hemp reading room.
Lawsuits
Indiana – On June 26, 2023, the plaintiffs filed 3C, LLC v. Rokita, 1:23-cv-1115, S.D. Ind., challenging the enforcement of Attorney General Rokita’s Official Opinion 2023-1. The Official Opinion interpreted Indiana criminal law related to controlled substances. Attorney General Rokita concluded that “Indiana law schedules the extracts of all cannabis species, making only limited exceptions for substances with concentrations below 0.3% delta-9 THC.” Therefore, low THC hemp extracts such as delta-8 THC and delta-10 THC would be considered controlled substances under Indiana law.
Arkansas – On July 31, 2023, the plaintiffs filed Bio Gen, LLC v. Arkansas, 4:23-cv-718, E.D. Ark., challenging Act 629. Act 629 includes four sections, sections 2-5, that went into effect on April 11, 2023. These five sections provide clarifications in Arkansas law that the industrial hemp definition and related provisions apply to products that contain less than 0.3% delta-9 THC. Act 629 includes an additional nine sections, sections 6-14, that go into effect if the Arkansas Attorney General certifies that the five sections previously discussed became enjoined by a court. The additional sections, if they go into effect, clarify that under Arkansas law, synthetic deta-8 and delta-9 THC, among others, are schedule VI controlled substances no matter the concentration. The additional sections add a section into Arkansas law allowing transportation of cannabis sativa L. with less than 0.3% delta-9 THC and a subchapter related to hemp-derived products. Lastly, the additional sections of the act would allow the Director of Arkansas Tobacco Control to seize hemp-derived products that violate Arkansas law.
Virginia – On September 1, 2023, the plaintiffs filed N. Va. Hemp and Agric., LLC v. Virginia, 1:23-cv-01177, E.D. Va., challenging SB 903. SB 903 revised the definition of “hemp product” to include that hemp products for retail sale must contain less than 0.3% total THC content, which includes delta-9 THC and any natural or synthetic isomers. SB 903 also prohibits “any person who manufactures, sells, or offers for sale” an industrial hemp extract or food that contains more than 0.3% total THC content.
Alaska – On November 2, 2023, the plaintiffs filed AK Indus. Hemp Ass’n, Inc. v. Alaska Dep’t of Nat. Res., 3:23-cv-00253, D. Alaska, challenging new Alaska regulations related to hemp that went into effect on November 3, 2023. The regulations prohibit the AK DNR from endorsing or renewing an endorsement of industrial hemp products intended for human or animal consumption that contain delta-9 THC. The regulations also give the AK DNR the authority to “issue a notice of violation and a stop order for any processed hemp product intended for human or animal consumption from a registered retailer if the hemp product…contains any delta-9 THC.” Lastly, the new regulations give the AK DNR the authority to “direct the movement, reconditioning, or destruction of any industrial hemp, industrial hemp product, cannabis with delta-9 THC over 0.3 percent, or cannabis products for human consumption containing delta-9-THC declared to be a public nuisance.”
While each lawsuit is distinct, they make similar arguments against the state laws and regulations that are being challenged. All four allege that the state law or regulation is preempted by the 2018 Farm Bill and violates the Commerce Clause and/or dormant Commerce Clause of the U.S. Constitution. Additionally, the Arkansas and Alaska lawsuits allege the state law or regulation constitutes a regulatory taking and is void for vagueness. A regulatory taking occurs when a regulation deprives someone’s property of all or substantially all economic value. Lastly, the Indiana lawsuit alleges the Official Opinion violates an Indiana law providing access to low THC hemp extracts, which will not be discussed further in this article.
Arguments
Federal Preemption
All four lawsuits allege that the state laws and regulations are preempted by the 2018 Farm Bill. The Constitution of the United States includes a Supremacy Clause in Article VI that states that federal law is the “supreme Law of the Land.” This means that when conflicts exist between state and federal law, the federal law preempts the state law. There are two types of federal preemption – express and implied, and both are alleged in the lawsuits. Implied preemption can be further divided into field and conflict preemption. Express preemption occurs when the federal law or regulation explicitly states that it preempts state laws or regulations. Implied preemption occurs when Congress’s intent was to preempt state laws either by wholly occupying the field or when there is a conflict between state and federal law. A prior NALC article provides a more in-depth discussion of federal preemption.
In all four lawsuits, the plaintiffs allege federal preemption because the challenged laws and regulations create a narrower definition of hemp than the definition in the 2018 Farm Bill. The plaintiffs in the Indiana, Arkansas, and Alaska lawsuits rely on a joint letter sent by U.S. Representatives David Scott and Sanford Bishop to the U.S. Department of Justice and U.S. Department of Agriculture. The plaintiffs claim that in this letter, Representatives Scott and Bishop pronounce that it was Congress’s intent to restrict states from creating their own or modifying the federal definitions of hemp.
Additionally, in all four lawsuits, the plaintiffs claim that because Section 10114 of the 2018 Farm Bill explicitly states that “no state or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 through the State or the territory of the Indian Tribe”, the state is preempted from enacting or enforcing laws that affect the interstate transportation of hemp.
Lastly, the plaintiffs in the Virginia lawsuit allege that Congress wholly occupied the field of hemp regulation by “specifically defining hemp as it is to be traded as a legal commodity throughout the United States in interstate commerce,” so the Commonwealth of Virginia may not adopt a stricter definition of hemp than the federal government.
Commerce Clause Violations
All four lawsuits allege that the state laws and regulations violate either the Commerce Clause, Dormant Commerce Clause, or both. Article one Section eight of the U.S. Constitution gives Congress the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is known as the Commerce Clause. The Supreme Court of the United States, in United States v. Lopez, 514 U.S. 549 (1995), limited what falls under Congress’s Commerce Clause power to channels of commerce, instrumentalities of commerce, and activities that substantially affect interstate commerce. Additionally, courts have established that the Commerce Clause also imposes a limitation on the states, called the Dormant Commerce Clause. The Dormant Commerce Clause prohibits states from passing legislation that is significantly burdensome on interstate commerce. In May 2023, the Supreme Court of the United States issued a ruling in National Pork Producers Council v. Ross, 598 U.S. 356, which limited the application of the dormant Commerce Clause. The effect of this ruling is largely unknown, but to learn more, click here for a National Agricultural Law Center article discussing the ruling.
The four lawsuits allege that the state laws and regulations on hemp impermissibly interfere with interstate commerce in violation of the Commerce Clause and dormant Commerce Clause. In the Indiana lawsuit, the plaintiffs allege that the Official Opinion criminalizes hemp derivatives like delta-8 THC which affects someone’s ability to transport products containing the hemp derivatives through the state. Similar to the Indiana lawsuit, the Arkansas lawsuit also alleges that Act 629 specifically criminalizes “transportation of all [hemp-derived cannabinoids] unless from a licensed producer to a licensed handler,” which imposes a substantial burden on interstate commerce.
In the Virginia lawsuit, the plaintiffs allege that Virginia’s “total THC” measure violates the Commerce Clause because it provides a measurement different than the 2018 Farm Bill. The plaintiffs claim that the Commerce Clause “protects the manufacture, purchase, sale, trade, transport, and consumption of hemp in interstate commerce as set forth in the [2018 Farm Bill] and in federal regulations,” and utilizing a different measurement than the 2018 Farm Bill restricts these practices for the plaintiffs. The plaintiffs in the Virginia lawsuit further allege that the Commonwealth is regulating activity outside its borders by prohibiting registered processors from selling industrial hemp or a substance containing an industrial hemp extract if the processor “knows or has reason to know” that the buyer will use the product(s) in a substance that violates the total THC standard. This provision would apply even if the buyer was in a state that allowed the final product.
The plaintiffs in the Alaska case allege that the AK DNR regulations prohibit the department from endorsing any hemp product that contains delta-9 THC or any “non-naturally occurring cannabinoid modified beyond its original form,” which the plaintiffs claim prevents the department from endorsing any hemp product. The plaintiffs claim this provision was adopted to protect the Alaska cannabis industry by allowing AK DNR to declare hemp products a public nuisance and discriminate against federally legal hemp products.
Current Status
In all four lawsuits, the plaintiffs filed a motion for a preliminary injunction to prevent enforcement of the challenged laws or regulations. In the Indiana and Alaska cases, the courts have not ruled on this motion. In the Arkansas case, the court granted the plaintiff’s motion for preliminary injunction and the defendants appealed this ruling to the 8th Circuit Court of Appeals. The 8th Circuit has not ruled on the appeal. In the Virginia case, the court denied the plaintiff’s motion for preliminary injunction. Lastly, Congress is currently negotiating the next farm bill. Because hemp law was amended in both the 2014 and 2018 Farm Bills, additional changes to hemp law may be seen in the next farm bill.
To read a Congressional Research Service overview of hemp, click here.
For a state compilation of industrial hemp laws, click here.
For more NALC resources on industrial hemp, click here.