Intoxicating Hemp Product Laws are More Complicated Than They Seem

29 Sep Intoxicating Hemp Product Laws are More Complicated Than They Seem

When Congress passed the 2018 Farm Bill, did it intend to legalize intoxicating hemp products? If it did, why didn’t it just legalize marijuana? And why didn’t it address the manufacture or sale of intoxicating hemp products?

I think the answer to all of these questions is clearly “no.” Congress did not intend to open Pandora’s Box to any form of legal intoxicating hemp product. But does what I think – or what Congress intended – even matter? Not to some courts, who think that the 2018 Farm Bill is so patently clear that it really doesn’t even matter what Congress intended.

These issues are admittedly very complicated. There are plenty of folks out there who claim that intoxicating hemp products are completely legal with no caveats. That in my view, is wrong. The law is not settled, the text of the 2018 Farm Bill is anything but clear, and whole lot can (and probably will) change with the upcoming Farm Bill. Let’s take a look at some of the issues below.

The Ninth Circuit didn’t legalize delta-8 nationally

A few years back, a three-judge panel of the Ninth Circuit held as much in AK Futures v. Boyd Street Distro (we wrote about that case here). That case is widely misquoted as having declared delta-8 THC legal nationwide. It did not. The Ninth Circuit is the appellate court for a group of western states and its rulings have no binding precedential value elsewhere.

What AK Futures actually did was affirm a preliminary ruling in a trademark dispute where legality of delta-8 products was one of a number of issues at play. In order to have a protectible trademark, the good or service must be lawful in commerce. The infringer argued that delta-8 products were not lawful. As part of the preliminary injunction, the Ninth Circuit agreed that the plaintiff was “likely” to succeed in establishing that the products were lawful, if they came from hemp and if they contained under 0.3% delta-9 THC. This was a preliminary ruling, but it’s likely that the court would rule similarly on some sort of final ruling. However, to claim that this case is the be-all-end-all for delta-8 is just, well, wrong. The case is not precedential anywhere outside of the Ninth Circuit.

An Arkansas District Court didn’t legalize intoxicating cannabinoids nationally, either

More recently, hemp attorney Rod Kight posted a blog post entitled “DID A FEDERAL COURT ORDER JUST LEGALIZE THCA AND DELTA-8 THC IN ALL 50 STATES?” Rod referred to Bio Gen LLC v. Sarah Huckabee Sanders, a district (lower) court decision out of the Eastern District of Arkansas that only ruled on a specific Arkansas law. So to answer the titular question, no, the court did not legalize anything in all 50 states. The court did, however, strike down a rather poorly drafted Arkansas law that restricted intoxicating cannabinoids on a number of grounds. (As an aside, I think Rod’s analysis is often right, but in this case we diverge.)

Most relevant to this post was the Bio Gen court’s “conflict preemption” analysis. Conflict preemption is a doctrine that finds a state law invalid if it contradicts federal law – i.e., when it is impossible to comply with both state and federal law. Imagine a state law that said you did not have to comply with a federal law. You get the idea.

Now in Bio Gen, the court took the position that the state and federal definitions of “hemp” were in conflict. The court recognized that “Clearly, under the 2018 Farm Bill, Arkansas can regulate hemp production and even ban it outright if it is so inclined.” But while the state could ban hemp production, the court thought that bans on intoxicating hemp products were legal. I don’t get it either. And for some reason, the court forgot to cite the following 2018 Farm Bill provision in its conflict preemption analysis, even though it cited it elsewhere in the opinion: “No preemption. Nothing in this subsection preempts or limits any law of a State or Indian Tribe that . . . regulates the production of hemp . . . and is more stringent than this subtitle.”

While I think the Bio Gen court still had ample reasons to strike down the Arkansas law on different grounds, I just don’t get the conflict preemption argument, and I don’t think an appellate court would agree that states could not enact more stringent laws or prohibit intoxicating cannabinoids. Taking this case to its logical end point would likely result in massive re-writes of hemp laws in all states.

So are intoxicating hemp products legal?

This is not an easy thing to answer and depends on many factors. What intoxicating hemp cannabinoid are we talking about? How is it produced? Is it “synthetic” (and what does “synthetic” even mean)? And what state are we talking about?

Let’s take delta-8 as an example. Delta-8 is generally not expressed in high quantities naturally and is created by converting CBD via a chemical or similar process. The Controlled Substance Act prohibits synthetic THCs, and DEA’s 2020 interim final rule stated that any quantity of synthetic THC is controlled. So according to DEA, delta-8 is illegal. On the other hand, I’ve long argued that under the text of the 2018 Farm Bill, there’s a good argument that delta-8 is legal – even in spite of what seems like clear Congressional intent to the contrary. That’s because the 2018 Farm Bill defines “hemp” as follows:

The term “hemp” means 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.

In other words, if you take hemp and make something with it, that thing is legal. This is not the position of DEA, but is evidently the opinion of the aforementioned three-judge Ninth Circuit panel. I tend to think that court was right, but at the end of the day, this is by no means a conclusive ruling. Other courts of appeal or the Supreme Court may disagree.

Let’s take another common intoxicating hemp product: THCA flower. I wrote a longer post about that recently here. In a nutshell, people argue that because THCA flower has less than 0.3% delta-9 THC, it is “hemp” even if it has 5% or 20% THCA – even though THCA converts into delta-9 THC. DEA has pretty vocally disagreed with this. In this case, I think the THCA advocates are wrong. I outlined my position in the prior post and we’re well over 1,000 words by now so I won’t recite it again.

Moreover, for any intoxicating cannabinoid or intoxicating hemp product, we also need to look at state law. A number of states outright ban smokable hemp or delta-8 products. Other states (like California) have total THC limits that de facto ban many intoxicating hemp products. No matter what you may think about federal law, those states have their own laws. And unless and until courts in those states start issuing conflict preemption rulings, those laws will be upheld.

Even if someone has what they believe are airtight legal arguments why their intoxicating hemp product is legal, they often fail to consider how costly it would be to get a court to agree. And how long it would take. And how hard it would be to explain to a court or jury. Thinking about the law is not sufficient. You have to consider reality. And reality isn’t cheap or easy.

Indeed, this kind of thing seems to keep happening. Take this example, where a South Carolina man was reportedly arrested for allegedly selling THCA flower that tested over 0.3%. Or this similar example out of Texas. These are just a few reported examples. The point is that being on the right side of the law doesn’t mean you won’t have to pay a boatload of money to be proven right.

When it comes to intoxicating cannabinoids, nothing is easy. Be very skeptical of folks who say that X is legal in all 50 states or that there is no risk with Y. Stay tuned to the Canna Law Blog for more updates on intoxicating hemp products.