DEA Sued Over Hemp Classification and Production Rules

On Monday, a hemp producer and an industry trade association filed a lawsuit in the District of Columbia District Court against the Drug Enforcement Administration (DEA) arguing that guidelines it propounded relating to hemp production exceed its legal authority. The DEA’s regulatory efforts are both misguided and misunderstood hemp as a legal agricultural commodity, the plaintiffs argued.

Plaintiff Hemp Industries Association is a trade association “whose mission is to advance the hemp economy, educate the market about hemp, and maintain and defend the integrity of hemp products,” the complaint explained. It reportedly has about 1,050 member businesses who cultivate, manufacture, process, and sell hemp products. Plaintiff RE Botanicals, Inc. is a hemp producer based in South Carolina. The lawsuit named both the DEA, as the federal agency that administers the Controlled Substances Act (CSA), and Timothy Shea, the agency’s acting administrator, as defendants.

Chiefly, the plaintiffs took issue with the DEA’s “faulty interpretation of the 2018 Farm Bill[, which] criminalizes key steps of hemp production by improperly making intermediate hemp material (“IHM”) and waste hemp material (“WHM”)—two necessary and inevitable byproducts of hemp processing— Schedule I substances.” With the 2018 Farm Bill, the plaintiffs averred, Congress drew clear lines by carving out “hemp” from CSA’s definition of marijuana (currently a Schedule I substance), and removing “tetrahydrocannabinols in hemp” from the CSA’s list of Schedule I substances.

When the DEA propounded an interim final rule entitled “Implementation of the Agriculture Improvement Act of 2018,” (IFR) in August, it sought “to classify IHM and WHM as unlawful Schedule I substances,” contrary to the law’s plain language, the plaintiffs argued. Further, by publishing the IFR, the agency allegedly overstepped its statutory and delegated authority.

The plaintiffs contended that the hemp plant is safe, i.e., it does not have psychoactive properties because it lacks a sufficient concentration of delta-9 tetrahydrocannabinol to produce psychoactive effects. It is also a robust and multiuse agricultural commodity, the plaintiffs explained, writing that “hemp has thousands of industrial and commercial applications,” including use in fabrics and textiles, animal bedding, papermaking, foods, beverages, and bath and cosmetic products.   

The thrust of the plaintiffs’ legal arguments center on both the DEA’s misinterpretation of the law and that it lacked the authority to propound the IFR in the manner it did. The IFR’s regulatory changes were meant to, and according to the DEA, do, track the 2018 Farm Bill. The plaintiffs disagreed, arguing that the agency’s definition of hemp contradicts that provided in the 2018 Farm Bill. Also, the plaintiffs claimed that the DEA overstepped its authority by, “[r]ather than work[ing] cooperatively with and through [U.S. Department of Agriculture]  to regulate hemp production— as the statute commands— DEA went at it alone,” amongst other procedural faux pas.

In sum, the plaintiffs averred, they and the hemp industry “deserve basic regulatory clarity and should not be forced to operate under constant threat of DEA enforcement that would be both crippling and unlawful.” The plaintiffs seek a declaratory judgment to “reset the lines” Congress delineated in the 2018 Farm Bill, and affirm that the hemp production process does not violate the CSA. In addition, they seek preliminary and permanent injunctive relief preventing the DEA from “enforcing the CSA as to IHM and WHM and from classifying IHM or WHM as Schedule I substances under the CSA.”

The plaintiffs are represented by Vicente Sederberg LLP, and RE Botanicals by Kight Law Office PC and Hoban Law Group.