Another Lawsuit Targets DEA Hemp Rule

By Willis Jacobson
Oct 14, 2020

A hemp trade organization and a CBD company have filed a lawsuit that seeks to remove the U.S. Drug Enforcement Administration from involvement in any rules having to do with hemp. The same organizations previously sought intervention from the courts to scrap the DEA’s latest ruling on hemp which they said threatened the newly legal industry.

The Hemp Industries Association and South Carolina-based hemp manufacturer RE Botanicals filed suit against the DEA and its acting director Timothy Shea on Monday in U.S. District court in Washington, D.C. (Read the complaint here)

The suit alleges the DEA has improperly interpreted the 2018 Farm Bill, which legalized hemp nationwide, and has overstepped its legal authority. At particular issue is an interim DEA rule that took effect in August that says the agency can prosecute manufacturers working with extracts exceeding the legal limit of 0.3% THC, even if that violation occurs in the production stages before a product goes to market.

The suit says the DEA’s “jurisdictional overstep” threatens “the entire hemp industry.”

“If allowed to stand, DEA’s intrusion will undermine a lynchpin of the new hemp economy that has created tens of thousands of new jobs and provided a lucrative new crop for America’s struggling farmers,” the suit reads.

The plaintiffs argue that Congress, in approving the 2018 Farm Bill, drew clear regulatory lines by carving “hemp” out from the definition of marijuana in the Controlled Substances Act and by delegating “exclusive authority” over hemp production to the U.S. Department of Agriculture, with one narrow exception for the U.S. Food and Drug Administration.

“Contrary to the plain language and intent of the 2018 Farm Bill, DEA through the [interim final rule], now claims that the statutory amendments in the 2018 Farm Bill do not remove essential steps of hemp production from DEA’s purview,” the suit states.

The plaintiffs ask the court to declare a judgment that intermediate and waste hemp material – “two necessary and inevitable byproducts of hemp processing,” according to the suit – are included in the definition of hemp, and not marijuana, and that the DEA lacks independent authority to regulate any aspects of hemp.

The Hemp Industries Association and RE Botanicals had initially filed a petition in the U.S. Court of Appeals for the D.C. Circuit on Sept. 18 that called for the court to review the DEA’s interim final rule, which at that time was open for public comment, and argued that the rule exceeded the DEA’s authority.

The DEA’s interpretation was taken by many to mean the agency could deem products illegal during the preparation stages. This is problematic, the industry argued, because many hemp-based products surpass that 0.3% threshold during manufacture before the THC level is reduced ahead of going to market.

That September lawsuit is still pending, while the DEA’s interim final rule is still in place.

RE Botanicals CEO Janel Ralph said in September the new rule “could put us out of business overnight.”

The complaint filed Monday delves into hemp’s long history in the U.S., noting that several Founding Fathers cultivated and spoke highly of the plant. The historical review also served to highlight the DEA’s own history of allegedly unlawful attempts to regulate hemp. 

Hemp production in the U.S. largely went dormant from 1937 to 2014, the suit notes, due in large part to efforts to stamp out production of marijuana.

The suit notes that hemp is making “an American comeback” that could be derailed by the DEA. In 2017, about 41,000 acres of land were licensed for hemp production in the U.S., according to the suit. That figured ballooned to 512,000 acres in 2019.

The suit notes that the rise in hemp cultivation has created an estimated 5,400 jobs.

“Thus, in a time of declining employment, the hemp industry has created a new economy resulting in many new jobs and significant tax revenue,” the suit states. “If permitted to blossom — as Congress intended through the enactment of the 2018 Farm Bill — the hemp economy will only continue to flourish.”

The plaintiffs are represented by hemp industry attorneys at Vicente Sederberg LLPKight Law Office PC, and Hoban Law Group.

It was not immediately clear Wednesday who was representing the DEA. The agency has maintained that it does not comment on ongoing litigation.

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