Hemp Industry files lawsuit against DEA challenging interim rule

Sep 21, 2020

Despite a few blows over the past couple of months, including the announcement of the Drug Enforcement Agency’s Interim Rule that threatens to dismantle the CBD industry and House of Representatives' recent move to abandon a vote on cannabis legalization, marijuana activists aren’t ready to throw in the towel. On the contrary, a statement released by a national hemp trade association and a South Carolina-based hemp company shows the industry still has some fight left in it.

As per the statement released Monday, RE Botanicals, Inc. and the Hemp Industries Association have filed a federal lawsuit against the Drug Enforcement Administration. The two groups are challenging the agency’s interim rule that was announced last month, arguing that it could have “far-reaching consequences for the U.S. hemp industry.”

The petition was filed on Friday afternoon in the U.S. Court of Appeals for the District of Columbia. Plaintiffs have asked the court to look at the DEA’s “Implementation of the Agriculture Improvement Act of 2018,” which was released on August 21. The new rule argues, among other things, that unprocessed biomass containing more than 0.3 percent THC that is not meant for sale is still considered Schedule I, placing the industry in a tough and unnecessary position. Furthermore, the new rule also threatens the burgeoning Delta-8 market.

According to the statement released on Monday, the lawsuit argues that the new rule is unlawful because it violates the Farm Bill, which was signed into law in 2018. Acting DEA administrator Timothy Shea is also named as an individual in the lawsuit, as plaintiffs allege he issued the rule without following established procedures as outlined by the law.

RE Botanicals, Inc., a hemp company out of South Carolina, is known for acquiring Palmetto Synergistic Research LLC in 2019. According to a statement, the latter was founded “to provide lawful, reliable, and high-quality hemp products.”

“We are a small, woman-operated company,” said Janel Ralph, CEO of RE Botanicals, in a statement. “The DEA's new rule could put us out of business overnight."

The other party, the Hemp Industries Association, is one of the industry's largest trade associations. They represent “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.” This isn’t their first rodeo, as the HIA successfully challenged the DEA in 2003.

"When Congress passed the 2018 farm bill, it explicitly carved hemp and its derivatives out of the Controlled Substances Act so that hemp can be regulated as an agricultural commodity," said HIA President Rick Trojan in a statement. "The DEA’s interim final rule could create substantial barriers to the legal manufacturing of hemp-derived products, a critical component of the hemp supply chain, and devastate the entire hemp industry. Although the DEA states that is not its intention, the rule must be amended to ensure hemp remains an agricultural crop, as Congress intended."

Hemp industry attorneys at Vicente Sederberg LLP, Kight Law Office PC, and Hoban Law Group, along with appellate attorneys from Yetter Coleman LLP, are representing the parties in the lawsuit.

"The DEA implemented this rule without following proper rule-making procedures, such as providing the public with notice and the opportunity to comment," said Shawn Hauser, a partner at Vicente Sederberg LLP and chair of the firm's hemp and cannabinoids practice in a statement. "The petitioners believe legal action is necessary to protect the lawful U.S. hemp industry that Congress intended to establish when it enacted the 2018 farm bill.”

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