Author: Susan Burns
The Agricultural Act of 2014 a/k/a “The Farm Bill” defined industrial hemp as “the plant Cannabis sativa L. or any part of such plant, whether growing or not with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” [The confusion caused by the use of “dry weight basis” is a topic for another time.] Four years later, hemp was removed from the definition of marijuana in the Controlled Substances Act (CSA) and the definition was amended to add …” including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers …” via the 2018 Farm Bill. The Farm Bill also provided parameters for seeking approval of a regulatory plan by State and Tribal governments.
Following the federal lead, Minnesota submitted a hemp plan that received federal approval. The legislature subsequently adopted laws that expressly legalized the sale of processed hemp, the definition of which mirrored federal law,[1] by adopting the Minnesota Industrial Hemp Development Act, which expressly authorized the cultivation, processing, possession and sale of hemp and hemp-derived products.[2]
On the basis of this newly-enacted regulatory framework, a lawful and vibrant cannabinoid industry began in Minnesota, the majority of these businesses founded by women and people of color. The businesses range from hemp farming to cannabinoid extraction to product manufacture to retail establishments and a variety of other peripherally associated businesses. The creativity in this industry is evidenced by the development of products containing cannabinoids. Cannabidiol, or CBD, is one of more than 100 cannabinoids, as are Delta 8[3] and 9, as well as CBN, CBG, and others. Against odds and overcoming multiple additional hurdles unique to the cannabis industry, these businesses were starting to turn a profit and thrive.
Thrive until September 2021, when along came Loveless.[4] In the Loveless case, the Minnesota Court of Appeals incorrectly held that prosecutors need not determine the quantity of tetrahydrocannabinol (THC) that is present in a liquid (vape in this case) to secure a criminal drug conviction. Rather, prosecutors merely needed to prove that THC was present. This brought every Minnesota business in the hemp industry to its knees as they began to decipher this decision and determine how to operate in an environment in which meant that they could be criminally prosecuted for operating a business that followed the very specific regulations established by state and federal law.
Many lawyers in the cannabis space opined in media outlets that the MN Court of Appeals decision was based upon what came to be called the “Loveless Loophole.” This is also incorrect. It is not a loophole, it is a “Loveless Error” in all the meanings of the word “error.” This irresponsible error has cost Minnesota businesses hundreds of thousands of dollars (but has provided a boon to out of state businesses). It has also cost the state and local governments because many businesses opted to relocate operations due to legal uncertainties created by the Loveless Error.
In its sui generis interpretation, and (a) ignoring the longstanding rule of construction that newer and more specific statutes take precedence over older and more general statutes, and (b) the general rule that courts steer clear of any interpretation that would create an absurd result that the legislature did not intend, the Minnesota Court of Appeals focused on one section of the Minnesota Controlled Substances Act (MNCSA), stating that the legislature failed to amend a portion of that act to include liquid mixtures. It completely ignored the very specific legislation that was created for the purpose of providing regulatory certainty for business owners and protection for consumers.
The case is on appeal to the Minnesota Supreme Court, with oral argument scheduled for June 8, 2022. How long a decision will take is anyone’s guess. Meanwhile, the court’s error provided a platform for the Minnesota Board of Pharmacy to issue a report stating that the sale of products containing cannabinoids or tetrahydrocannabinols were illegal and opine about the illegality of Delta 8, based on what remains a mystery.[5] And, retailers were subject to ad hoc action by overzealous administrators and officers of the law.
Cease-and-desist letters were issued by the Minnesota Department of Agriculture; a business in northern Minnesota received a visit from local law enforcement, with a copy of the Loveless decision in hand, and was advised to remove all products from its shelves or they would be confiscated and a criminal charge would issue. Estimates were that 85% of products (primarily tinctures and edibles) would have to be pulled from retail shelves. Not to mention that this left hemp farmers that grow for extraction without a market. Ditto extractors and others along the manufacturing chain. It is difficult to quantify the economic impact of this decision.
Ultimately, due to a massive lobbying effort by many in the industry, the Minnesota legislature—against all partisan-bickering odds—passed legislation that amends the MNCSA and specifically addresses the court’s mistake.[6] It also passed legislation that allows for cannabinoids in food and beverage, which is a silver lining in this big, ugly cloud. The only hurdle left is the signature of Governor Walz on the legislation. In normal times, I would have bet the farm on that signature. If anything, Loveless taught us that these ain’t normal times.
Susan Burns is a cannabis business lawyer in St. Paul, Minnesota and is listed among the Top 200 Cannabis Lawyers. She may be reached at susan@sburnslegal.com.
[1] “Industrial hemp” means the plant Cannabis sativa L. and any part of the plant, whether growing or not, including the plant’s seeds, and all the plant’s 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. Industrial hemp is not marijuana as defined in section 152.01, subdivision 9. Minnesota Statutes § 18K.02, Subd 3
“Marijuana” means all parts of the plant of any species of the genus Cannabis, including all agronomical varieties, whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin, but shall not include the mature stalks of such plant, fiber from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks, except the resin extracted therefrom, fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination. Marijuana does not include hemp as defined in section 152.22, subdivision 5a. Minnesota Statutes § 152.01, Subd 9
“Hemp” has the meaning given to industrial hemp in section 18K.02, subdivision 3. Minnesota Statutes § 152.22 Subd. 5a
[2] Minnesota Statutes § 18K.
[3] Legality of Delta 8 also a topic for another time.
[4] State v. Loveless, 425 N.W.2d 602, MN Ct App, September 13, 2021
[5] See, e.g., AK Futures LLC v. Boyd Street Distro, LLC, 9th Cir. Ct. App, May 19, 2022, in which the court opined that Delta 8 THC products are lawful.
[6] Minnesota Statutes 2020, section 152.02, subdivision 2, is amended to read:
Subd. 2.Schedule I.(a) Schedule I consists of the substances listed in this subdivision.
(h) (2) excepted – tetrahydrocannabinols naturally contained in a plant of the genus Cannabis, except that tetrahydrocannabinols do not include any material, compound, mixture, or preparation that qualifies as industrial hemp as defined in section 18K.02, subdivision 3;
