West Virginia: Federal Court Ruling Vindicated Hemp Industry

We have written extensively about federalism, meaning the interaction between state and federal law, when it comes to regulating and transporting hemp and hemp products. Last week, the US District Court for the Southern District of West Virginia handed down a major victory for several hemp cultivators (Defendants), vindicating the lawful status of hemp cultivated in the state, regardless of the source of the seeds from which the hemp was grown. You can (and should) read the court’s opinion here.

The practical result of the case is that the Defendants, Matthew Mallory, Commonwealth Alternative Medicinal Options LLC,  Gary Kale, and  Grassy Run Farms LLC, will be allowed to have their hemp processed into CBD extract in Pennsylvania.

The hemp in question was grown and seized in West Virginia. It was seized based on the Department of Justice’s contention that the Defendants conspired together to violate the law with respect to their cultivation project, and they failed to follow the project description that they submitted to the WV Department of Agriculture. Specifically, the United States argued that the Defendants violated the Controlled Substances Act (CSA) when they obtained cannabis seeds from Kentucky.

The Court initially allowed Defendants to harvest, dry, and process their hemp, but prohibited them from transporting or selling it after it was processed. A subsequent ruling, in which the Court asserted that it “had become increasingly doubtful as to the merits of the United States’ case“, allowed the Defendants to transport their hemp to Pennsylvania to be processed. The final ruling, entered on March 6, 2019, dismissed the case. This result allows the Defendants to sell the CBD that was extracted from their hemp.

In all, the decision is a huge win for the Defendants. The Court’s language includes a wholesale endorsement of the current legal status of hemp grown under state pilot programs, validating the 2018 Farm Bill’s broad expansion of the legal status of hemp. This case represents one of the first instances of a court expressly stating that hemp is not a controlled substance and that it may be transported across state lines. To that point, the Court stated:

On December 20, 2018, the President also signed the 2018 Farm Bill that makes this conclusion unmistakably clear. Agricultural Improvement Act of 2018, Public Law No. 115- 334, 132 Stat 4490 (“2018 Farm Bill”). The 2018 Farm Bill expressly allows hemp, its seeds, and hemp-derived products to be transported across State lines. See § 10114 of the 2018 Farm Bill… Additionally, to further clarify the law, Congress finally statutorily removed hemp from the definition of “marihuana” under the CSA and amended 21 U.S.C. § 812(c)(17) to exclude tetrahydrocannabinols in hemp from Schedule I. See § 12619 of the 2018 Farm Bill… Despite being enacted after the issues in this case arose, the 2018 Farm Bill provides further evidence that Congress did not intend for industrial hemp to be classified as a Schedule I drug. (emphasisadded)

While the plain language of the 2018 Farm Bill clearly authorizes interstate transportation of hemp, we now have judicial precedent confirming this interpretation. The Court did an excellent job of tracking the recent history of hemp legislation and congressional intent. It reviewed the 2014 Farm Act, the congressional appropriations acts that followed, and the 2018 Farm Bill and its hemp provisions. The Court found that Congress intended to create a lawful hemp cultivation program and for the hemp harvested under that plan to be eligible for interstate commerce.

Importantly, the Court did not agree with the United States’ contention that since the Defendants were not fully compliant with the WV Department of Agriculture pilot program the hemp cultivated was not compliant with federal law. The Court indicated that it was up to individual state Departments of Agriculture to set the parameters of their pilot programs and to determine what violation of their programs would result in revocation of a hemp registration. The WV Department of Agriculture indicated that the growers amended their registration and took no actions that would have resulted in revocation of their registration.

While this decision is undoubtedly a big victory for the growers, it also represents a larger victory for the hemp industry in the United States. We now have federal court precedent properly interpreting the 2018 Farm Bill and confirming that hemp grown under the 2014 Farm Act pilot programs meets the definition of “hemp” as contemplated under the 2018 Farm Bill. Many of the legal theories we have advanced here at Kight Law Office were vindicated by this decision. I think it is an appropriate moment to recognize and celebrate this major victory for our industry.

On a related note, West Virginia passed House Bill 2694 on March 9, 2019. This new law provides strong legal support and protection or hemp derived cannabidiol (CBD).

March 14, 2019

This post was written by Kight on Cannabis attorney Kamran Aryah. Kamran works closely with clients in the hemp and CBD industry to develop compliance strategies. Kight on Cannabis is a law firm founded by attorney Rod Kight that represents legal cannabis businesses. You can contact us by clicking here.

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