Business
Arkansas Hemp Firms File Suit Against Delta-8 THC Ban
A group of hemp businesses is challenging a new Arkansas law that bans hemp-derived psychoactive cannabinoids such as delta-8 THC.
A group of hemp businesses has filed a legal action challenging a new Arkansas law that bans hemp-derived psychoactive cannabinoids including delta-8 THC, arguing the statute violates the 2018 Farm Bill’s provisions that legalized hemp agriculture. The lawsuit, which was filed in federal court in Little Rock on Monday by four hemp businesses, seeks an injunction blocking Act 629, a law banning hemp-derived psychoactive cannabinoids that went into effect on August 1.
Act 629 bans the production and sale of products containing delta-8, delta-9 and delta-10 THC and other variations of the cannabinoids inside the state of Arkansas. Such products have been legal under federal law since 2018, when that year’s Farm Bill legalized hemp with less than 0.3% delta-9 THC. Despite their low delta-9 THC content, other psychoactive cannabinoids can be extracted from hemp, and hemp-derived CBD can be processed into psychoactive cannabinoids in a laboratory.
The four plaintiffs in the case include a manufacturer, wholesaler, distributor and retailer of hemp products that would be affected by the ban. They are asking the court to block Act 629, arguing that the statute does not comply with the U.S. Constitution’s commerce and supremacy clauses and is a violation of the 2018 Farm Bill.
“Plaintiffs have been, and will be, harmed by Act 629,” the complaint reads, according to a report from the Northwest Arkansas Democrat-Gazette, “as they are unable to transport in and through Arkansas hemp-derived cannabinoid products that have been declared legal under federal law.”
Federal Court Ruled Delta-8 Is Legal In 2022
Last year, the federal Ninth Circuit Court of Appeals issued a ruling in a trademark case in which the legality of delta-8 THC was a key factor. The court confirmed that delta-8 THC is legal under the 2018 Farm Bill.
“Regardless of the wisdom of legalizing delta-8 THC products, this Court will not substitute its own policy judgment for that of Congress,” the appellate court wrote in its ruling. “If … Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.”
The plaintiffs in the case are Bio Gen, LLC of Fayetteville; Drippers Vape Shop, LLC of Greenbrier; The Cigarette Store LLC of Colorado, doing business as Smoker Friendly; and Sky Marketing Corporation of Texas doing business as Hometown Hero. Drippers is a retailer of hemp products, including non-psychoactive CBD as well as hemp-derived psychoactive substances Delta-8 and Delta-9 THC, and has stores in the communities of Greenbrier, Cabot, Hot Springs, El Dorado and Benton, according to a report from the Arkansas Times.
The named defendants in the lawsuit are the state of Arkansas, Governor Sarah Huckabee Sanders, Attorney General Tim Griffin, the Arkansas Department of Finance and Administration, the Arkansas Tobacco Control Board, the Arkansas Department of Agriculture, the State Plant Board and the prosecuting attorneys of the state’s 28 judicial circuits.
Abtin Mehdizadegan, the lead attorney for the plaintiffs, says that his clients tried to avoid legal action before Act 629 was signed into law.
“Our suit asks the federal court in the Eastern District of Arkansas to enjoin the entirety of Act 629 because it unconstitutionally narrowed the definition of hemp-derived products in violation of the 2018 Farm Bill and impermissibly restricted the transportation and shipment of these products,” Mehdizadegan wrote in an email. “Before the bill was signed into law, we had lengthy dialogues with the defendants during the 2023 legislative session as the bill was making its way through the legislative process.”
“We also testified before a House Subcommittee to explain the constitutional infirmities in the initial draft of Act 629,” Mehdizadegan continued. “At the same time, we remain ready and willing to continue those discussions and would invite the State to meet us at the table to arrive at a sensible resolution. We do not oppose all forms of regulation and would support sensible policies that appropriately treat hemp-derived products for what they are: as an agricultural commodity.”
Cynthia Cabrera, chief strategy officer at Hometown Hero CBD, one of the plaintiffs in the case, said that Arkansas’ ban on hemp-derived cannabinoids would harm small businesses and hamper the growth of the state’s hemp industry.
“Mom-and-pop farmers, manufacturers, and retailers have put their life blood into building legacy businesses around a federally legal product,” Cabrera said in a statement to High Times. “Businesses like Hometown Hero invested in Arkansas in part relying on the state’s declared public policy to position itself at ‘the forefront of industrial hemp production, development, and commercialization.’ And overnight, Act 629 turned farmers into felons and retailers into drug dealers—all in violation of federal law. Ultimately, we would like to see reasonable regulation that allows businesses to grow and thrive while allowing adult consumers access to safe, legal hemp-derived products.”
Act 629 also includes provisions to regulate psychoactive hemp-derived cannabinoids in the event that the ban is struck down by the courts. Under the regulatory plan, wholesalers, distributors and retailers of the products would be required to obtain a permit from Arkansas Tobacco Control at a cost of $5,000 per year. Psychoactive cannabinoids derived from hemp would be legal, but the statute would prohibit mixing the compounds with additives such as liquids, sweeteners or other non-hemp products. The plaintiffs of the lawsuit are also challenging the regulatory plan, arguing that the rules put unreasonable burdens on them and amount to a “regulatory taking” of their legal property that makes it unusable.
Source: https://hightimes.com/news/arkansas-hemp-firms-file-suit-against-delta-8-thc-ban/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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