Did the 2018 Farm Bill Open the Door to Importing Hemp?

15 Apr Did the 2018 Farm Bill Open the Door to Importing Hemp?

We get a ton of questions about whether it’s legal to import hemp into the U.S. It’s a complicated question without a clear answer. We do know that the Drug Enforcement Administration has confirmed that the importation of cannabis plant material that falls outside of the Controlled Substance Act’s definition of “marihuana” (e.g., the mature stalks and seeds incapable of germination) is not in violation of the CSA or related laws and regulations specific to importing goods. That limited exception doesn’t cover other parts of the cannabis plant, including hemp flower. The 2014 Farm Bill allows for the limited cultivation of industrial hemp, but that bill requires that hemp be grown pursuant to an agricultural pilot program in compliance with state law. Hemp grown in another country can’t meet those inherently domestic requirements. The 2014 Farm Bill is still in effect as the U.S. Department of Agriculture (“USDA”) is preparing to regulate the commercial cultivation under the 2018 Farm Bill. However, the 2018 Farm Bill has already altered the CSA’s definition of marijuana to exclude hemp and that provision is not dependent on USDA regulation.

The complicated question was addressed in part in by a federal court in California. In November 2015, Innovative Nutraceuticals, LLC placed an order for hemp from Spain to L&M Natural Hemp. L&M shipped the Spanish-grown hemp along with documentation showing that the material contained in each package was cultivated from seeds certified from hemp in Spain and test results showing that the plant material contained 0.2% THC. On December 6, 2015, the Department of Homeland Security (“DHS”) seized the hemp shipment at the Los Angeles International Airport. The U.S. Customs and Border Protection (“CBP”) tested the shipment and found that it contained CBD.

Innovative Nutraceuticals filed a petition with CBP, seeking administrative review of the seizure. CBP denied the petition because CBD is a compound that naturally occurs in marijuana and therefore the shipment met the definition of marijuana in the Controlled Substances Act (“CSA”). CBP also stated that “hemp flowers” are not excluded from the CSA definition.

Despite this, Innovative Nutraceuticals continued to import hemp from Spain and CBP seized shipments in January and November of 2017. On March 14, 2018, CBP again seized an Innovative Nutraceuticals hemp shipment, this time at the Louisville, Kentucky airport. However, CBP informed Innovative Nutraceuticals that the shipment may be released if the company executed a “Hold Harmless Agreement” agreeing not to sue CBP for damages related to the seizure and requiring Innovative Nutraceuticals to pay costs for delivery or retrieval.

On July 2, 2018, Innovative Nutraceuticals filed a complaint against the United States of America in the U.S. District Court for the Central District of California, seeking the following claims for relief:

(1) an injunction and/or declaratory relief ordering the United States government [(the “Defendant”)] not to detain, seize, summarily forfeit, or destroy any future shipments of hemp plant materials containing [CBD] and/or 0.3% or less of [THC];

(2) an injunction and/or declaratory relief ordering Defendant to provide timely notice and a hearing to owners and shippers of detained or seized hemp materials;

(3) declaratory and injunctive relief ordering Defendant not to destroy and to return all seized hemp materials; and

(4) monetary reimbursement for all hemp materials seized and destroyed by Defendant.

In response, the government filed a motion to dismiss all of Innovative Nutraceuticals’ claims.

On March 28, 2019, the Court issued an order (available here, courtesy of Hemp Industry Daily) granting the government’s motion to dismiss Innovative Nutraceuticals’ first and second claim for mootness and granting dismissal of the fourth claim due to Innovative Nutraceuticals failure to identify the government’s waiver of sovereign immunity. Sovereign immunity is a legal doctrine saying you can’t sue the government for damages unless the government says you can.

In denying Innovative Nutraceuticals’ first and second claims, the Court determined the issue was moot. Under Article III of the U.S. Constitution, federal courts can only rule on actual, ongoing cases or controversies. The parties have to have some skin in the game in order for a federal court to have jurisdiction. Mootness occurs when one or more circumstances change making the controversy moot. This can happen due to a change in law, which is exactly why the Court denied Innovative Nutraceuticals first and second claims:

Section 12619 of the 2018 Farm Bill amended the CSA definition of marijuana so that it now includes an exemption for hemp, defined as “any part” of the Cannabis sativa L. plant “with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Id. Under this new exemption, any future shipments of industrial hemp product containing less than 0.3% THC by dry weight will clearly fall outside the CSA definition of marijuana and will not be subject to seizure.

[. . .]

Any uncertainty as to the legal status of Plaintiff’s shipments under the pre-2018 Farm Bill regime has since been eliminated by the Bill’s amendment of the CSA’s definition of marijuana.

The Court seems to indicate that future importers of hemp will no longer face the seizures that plagued Innovative Nutraceuticals. While makes sense given that hemp is excluded from the CSA’s definition of marijuana, it does not mean that CBP’s days of seizing hemp are over. The difference between hemp and marijuana is not obvious. It is determined based on the presence of a certain compound, THC. Hemp shipments may contain documentation showing that a product is hemp and not marijuana, but that doesn’t mean that the inquiry stops there. CBP will need a way to determine the difference between marijuana and hemp. This could be a problem in practice because hemp, especially in raw form, has a limited shelf life.

The takeaway from the Innovative Nutraceuticals order seems to be that because hemp is no longer a controlled substance under the CSA, that importing hemp does not violate the CSA. In practice, importing hemp still presents significant risk because CBP may still seize hemp on suspicion of it being marijuana. Anyone looking to import hemp into this country should plan accordingly.