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Legal Challenges to State Hemp Intoxicants Regulation

Passage of the amendments to the definition of “hemp” in the Agriculture Improvement Act of 2018 (the Farm Bill) inadvertently set conditions for a gray market in intoxicating products derived from hemp.  States sought to respond in a variety of ways including bans and a range of regulatory approaches. However, there has recently been an effort by hemp intoxicants producers and related businesses to contest regulatory limitations imposed by states on these products through actions both in federal and state courts. Here is a summary of actions around the country:

Indiana (federal)

  • 3C, LLC d/b/a 3Chi, et al., v. Attorney General Todd Rokita, et al., 1:23-CV-1115-JRS-MKK
  • In 2018, the state adopted a provision that allowed for the production and sale of products defined as “low THC hemp extract.” In 2022, Indiana State Attorney General Todd Rokita published an Official Opinion stating that such products were in fact controlled substances within the meaning of state law. An action was initiated by the plaintiff, a hemp-intoxicants manufacturer operating in the state called 3Chi, following publication of an Official Opinion. 
  • The basis of the claim is that the Official Opinion violates both the recently-enacted state law and is preempted by the Farm Bill. The plaintiff seeks to enjoin the state from acting on the Official Opinion.  Deadlines were recently pushed out and determinations are unlikely in October.

Arkansas (federal) 

  • Bio Gen, LLC et al., v Sarah Huckabee Sanders, et al., 4:23-CV-00718-BRW
  • In 2021, the state adopted a law, Act 629 of the 94th General Assembly of Arkansas, which sought to categorize hemp-derived intoxicating products as controlled substances. Petitioners were hemp intoxicants producers and retailers who had been producing and selling these products in the state, and which sought to enjoin the state from enforcing Act 629 in its entirety. Similarly to Indiana, the basis of the claim was that the state was preempted by federal law under the 2018 Farm Bill.
  • The court awarded the plaintiffs their request for a preliminary injunction, on the basis that proceeding with the law would cause irreparable harm to their businesses, on September 7, 2023. 

Virginia (Federal) 

  • Northern Virginia Hemp And Agriculture LLC, et al. v. Virginia, 
  • Case No. 1:23-cv-01177-LMB-IDD
  • Similar to the claim in Arkansas, petitioners in Virginia are seeking to enjoin the state from enforcing a law the governor signed into law on April 12, 2023. That measure, SB 903, was adopted and sought to define intoxicating derivatives of hemp as controlled substances under state law. The plaintiffs are bringing numerous Constitutional claims, including express and implied preemption, violation of the Commerce Clause and the Dormant Commerce Clause, and a §1983 claim. A decision is expected at any time. 

Texas (State) 

  • Texas Department of State Health Services v Sky Marketing et. al., 
  • 03-21-00571
  • The Department of STate Health Services attempted to define all forms of THC that could be derived from hemp other than the amount expressly allowed in the definition of hemp as controlled substances. Plaintiffs challenged that, claiming that the department exceeded its authority to make the determination, and the prohibition on their products were not allowed under state law.  

New York (State) 

  • North Fork Distribution, Inc., et al. v. New York State Cannabis Control Board 
  • Index no. 907325-23
  • The state’s regulatory authority, the New York State Cannabis Control Board, along with the State office of Cannabis Management are being sued by a company that produces intoxicating beverages derived from hemp. The state sought to impose regulations that restricted these products within the state regulatory program to a greater extent than other edible products. The petitioner is questioning the rulemaking process and seeks to enjoin the state from imposing a standard that is stricter than other similar products. A determination is expected at any time. 

Pennsylvania (Federal)

  • Smooth Vape, LLC, v. Lancaster County
  • Civil Case No. 23-3000
  • Civil action was brought against the County of Lancaster following the raid of plaintiff’s facility and the seizure of items the county considered to be Schedule I controlled substances. The plaintiff sought the return of the products, on the basis that the action was a violation of the 4th Amendment, and the county determination was unconstitutional in light of federal law related to hemp products. 

Maryland (State)

  • Maryland Hemp Coalition, Inc., et al. vs. Wes Moore et al.
  • CV-21-CV-23-000348
  • Following a legislative initiative that legalized cannabis for adults in the state, Maryland’s legislature adopted a regulatory system for cannabis products, called the Cannabis Reform Act, H.B. 556 and S.B. 516.. A portion of that law included regulations for hemp-synthesized intoxicants, and plaintiffs are seeking a declaratory judgment to enjoin the state from enforcing the hemp-related provisions. A request for a preliminary injunction was denied, but parties are continuing to argue the preliminary injunction issue. 

Florida (Federal)

  • Just Brands, LLC v. Florida Department of Agriculture and Consumer Services, et. al. 
  • 0:23-cv-62081-XXXX
  • The plaintiff, Just Brands, claims that Florida is interpreting its hemp law more broadly than its language permits, and that state law restricts enforcement only against products intended for sale within its own borders, excluding products sold in other states.  It also asserts that the “stop sales” orders issued by the state violate the company’s civil rights and unduly burdens interstate commerce. 

Alaska (Federal) 

  • AK Industrial Hemp Association, et al. vs. Alaska Department of Natural Resources, et al.
  • 3:23-cv-00253-SLG
  • The state regulatory agency imposed restrictions on hemp products containing psychoactive chemicals, which would have prohibited sales outside the regulated program. Hemp producers have initiated a lawsuit in the US District Court in Alaska. They are using the same set of arguments related to preemption, interference with interstate commerce, and the dormant commerce clause that are appearing in other cases.