The U.S. Court of Appeals for the Ninth Circuit heard arguments on August 28, 2019 for the case of a Colorado CBD company, Big Sky Scientific (“Big Sky”), seeking the release of hemp that was seized in Idaho as it was being transported through the state on its way from Oregon to Colorado

BACKGROUND

Big Sky claims that the Idaho state police seized nearly 7,000 pounds of industrial hemp in January 2019.  The production of hemp is not legalized under Idaho state law, and while lab tests of the seized marijuana showed the cargo’s THC level were less than 0.3%, the federal threshold for defining hemp, Idaho law considers any product containing any amount of THC to be illegal marijuana.

The U.S. District Court for the District of Idaho refused to order the state to return the hemp. The court stated that while the 2018 Farm Bill made hemp a legal agricultural commodity, Big Sky’s shipment “could not have grown under either a federal or state plan implemented under the 2018 Farm Bill, because neither the federal government nor the state of Oregon (where the hemp was alleged to have been grown, harvested, and shipped from) has yet enacted such a plan.”

2018 FARM BILL AND INDUSTRIAL HEMP

The 2018 Farm Bill legalized the production of hemp as an agricultural commodity while removing it from the list of controlled substances. The Farm Bill also explicitly allowed for the transfer of hemp-derived products across state lines for commercial or other purposes. Stephen Vaden, USDA General Counsel, reiterated this provision in a nonbinding legal opinion released in May 2019, where he stated that states cannot block interstate shipment of hemp made legal in the 2018 Farm Bill.

The 2018 Farm Bill did place restrictions on the hemp industry. First, hemp cannot contain more than 0.3% THC.  Anything that contains more than 0.3% THC is considered marijuana, which is still a controlled substance under federal law. Second, there is shared state-federal regulatory power over hemp cultivation and production. Under section 10113 of the 2018 Farm Bill, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a regulatory plan for hemp that must be submitted to  the Secretary of USDA for approval.

APPEAL TO THE NINTH CIRCUIT

The Ninth Circuit panel on Wednesday seemed conflicted over whether to wade into the debate over hemp in the 2018 Farm Bill.  The counsel for Big Sky argued that the seized hemp was legally grown under the provisions of the 2014 Farm Bill and shipped in accordance with provisions of the 2018 Farm Bill. The attorneys for the state argued that Big Sky Scientific should have waited for U.S. Department of Agriculture to issue new regulations for hemp production that are expected this Fall.

During oral arguments, the three judges pressed Big Sky Scientific to explain why Idaho’s state courts were not best suited to decide whether Big Sky should get the cargo back. Senior Judge Michael Daly Hawkins asked Big Sky “Why can’t you vigorously litigate your position in front of the state court and see what happens?…If you come out on the wrong end, you can always come back here.”

Currently, the questions of moving hemp across state lines finds the courts having to address this issue before the USDA has created a regulatory regime for industrial hemp. The decision on this case from the Ninth Circuit will send a clear signal to truckers and shippers on the legality of transporting industrial hemp across state lines pending the USDA’s announcement of regulations for industrial hemp.

 

The National Agricultural Law Center will host a webinar discussing industrial hemp developments on September 18. To register for the webinar, click here.

To watch the U.S Court of Appeals for the Ninth Circuit oral argument for Big Sky Scientific LLC v. Jan Bennetts, click here.

To read the U.S. District Court for the District of Idaho’s opinion, click here.

To read the hemp provisions of the 2014 Farm Bill, click here.

To read the hemp provisions of the 2018 Farm Bill, click here.

To read USDA General Counsel’s opinion on interstate shipments of hemp, click here.

For a state compilation of industrial hemp laws, click here.

For more information on industrial hemp laws in the U.S., click here.