Hemp Industry Members File New Federal Action Challenging DEA's Regulatory Overreach

This article was originally published on Hoban Law Group, and appears here with permission.

The detailed complaint asks a U.S. District Court to block the DEA from unlawfully criminalizing hemp production 

The lawsuit also highlights the DEA’s history of unlawful attempts to regulate legal hemp products and asks the court to enjoin the agency from promulgating any rules related to hemp production

WASHINGTON — The Hemp Industries Association and a South Carolina-based hemp company, RE Botanicals, filed a new federal action today aimed at clarifying the scope of the 2018 U.S. Farm Bill. This is the second federal action taken by the plaintiffs, who last month filed a petition for review of the DEA’s August 21 interim final rule (IFR) in a federal appeals court.

The complaint for declaratory and injunctive relief filed Monday afternoon in the U.S. District Court for the District of Columbia alleges the DEA is unlawfully attempting to regulate certain products derived from lawful hemp by misinterpreting the Agriculture Improvement Act of 2018, also known as the 2018 Farm Bill. Specifically, the DEA classifies intermediary hemp material (IHM) and waste hemp material (WHM), two necessary and inevitable byproducts of hemp processing, as Schedule I controlled substances. The plaintiffs argue that Congress deliberately removed such commercial hemp activity from the DEA’s jurisdiction when it legalized hemp production, including hemp processing, via the 2018 Farm Bill.

The DEA’s interpretation of the 2018 Farm Bill “has serious, immediate, and irreparable consequences,” the complaint states. “[A]ll hemp processors and manufacturers who work with and/or store IHM and/or WHM must now choose between ceasing to process, manufacture and/or store hemp; obtaining a Schedule I license from DEA; or risking criminal prosecution under the [Controlled Substances Act]. Given the centrality of hemp processing to the hemp industry’s supply chain, forcing processors to choose between the foregoing options would effectively destroy the entire hemp industry.”

The plaintiffs ask the court for a judicial determination that (1) the definitions of hemp and THC in hemp in the 2018 Farm Bill includes IHM and WHM, and that such materials are therefore not controlled substances; and (2) the DEA lacks any independent authority to regulate any aspect of hemp production, including IHM and WHM.

“The explanatory language accompanying the text of the IFR…reveals that DEA has an understanding of the definition of ‘hemp’ that is contrary to the 2018 Farm Bill’s plain language (and Congress’ intent) and effectively sweeps hemp into DEA’s purview,” the complaint states.

The plaintiffs are also seeking an injunction (1) enjoining the DEA from enforcing the CSA as to IHM and WHM and from classifying such materials as Schedule I substances, and (2) preventing the DEA from promulgating any rules relating to the production of hemp.

The complaint highlights the DEA’s nearly two-decade history of unlawful attempts to improperly assert regulatory authority over legal hemp products outside its jurisdiction.

“DEA’s latest jurisdictional overstep threatens every stage of the hemp production supply chain and jeopardizes the entire hemp industry,” according to the complaint. “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 Hemp Industries Association is a trade association that represents approximately 1,050-member hemp businesses, including approximately 300 hemp processors and individuals involved in, or impacted by, the manufacture, distribution and/or sale of hemp extract and other products lawfully derived from hemp.

RE Botanicals, Inc. is a hemp manufacturer and retailer based in South Carolina. In 2019, it acquired Palmetto Synergistic Research LLC (dba Palmetto Harmony), which was founded to provide lawful, reliable, and high-quality hemp products.

The plaintiffs are represented in the district court action by leading hemp industry attorneys at Vicente Sederberg LLP, Kight Law Office PC, and Hoban Law Group.

Read the original Article on Hoban Law Group.

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