Case 1:20-cv-02921-JEB Document 1 Filed 10/12/20 Page 1 of 30
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
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`HEMP INDUSTRIES ASSOCIATION; and RE
`BOTANICALS, INC.
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`vs.
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`UNITED STATES DRUG ENFORCEMENT
`ADMINISTRATION;
`and TIMOTHY SHEA, in his Official Capacity
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`Plaintiffs,
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`Defendants.
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`Case No.: 1:20-cv-2921
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`COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
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`Plaintiffs Hemp Industries Association (“HIA”) and RE Botanicals, Inc. (“RE
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`Botanicals,” and together with HIA, “Plaintiffs”), by and through their undersigned counsel,
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`allege as follows:
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`INTRODUCTION
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`1.
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`This case is the latest chapter in the Drug Enforcement Administration’s (“DEA”)
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`long-running attempt to regulate the production of legal hemp in excess of its statutory and
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`delegated authority.
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`2.
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`In August 2020, DEA published an interim final rule entitled Implementation of
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`the Agriculture Improvement Act of 2018, 85 Fed. Reg. 51639 (the “IFR”). The IFR purports to
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`implement amendments to the Controlled Substances Act (the “CSA”) made by the Agricultural
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`Improvement Act of 2018, codified at 7 U.S.C. § 1639o et seq. (the “2018 Farm Bill”).
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`However, the IFR’s regulatory changes do not track the 2018 Farm Bill’s amendments.
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`3.
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`Through the 2018 Farm Bill, Congress acted decisively and drew clear regulatory
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`lines. The 2018 Farm Bill defines hemp broadly to explicitly include any part of the hemp plant,
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`including its extracts, derivatives, cannabinoids, isomers, acids, salts, and salts of isomers; carves
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`out “hemp” from the CSA’s definition of marijuana; and removes “tetrahydrocannabinols in
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`hemp” from the CSA’s list of Schedule I substances. The 2018 Farm Bill also delegates
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`exclusive authority over hemp production to the United States Department of Agriculture
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`(“USDA”), with only one narrow exception for the Food and Drug Administration (“FDA”).
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`4.
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`Contrary to the plain language and intent of the 2018 Farm Bill, DEA through the
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`IFR, now claims that the statutory amendments in the 2018 Farm Bill do not remove essential steps
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`of hemp production from DEA’s purview.
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`5.
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`Specifically, DEA’s faulty interpretation of the 2018 Farm Bill criminalizes key
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`steps of hemp production by improperly making intermediate hemp material (“IHM”) and waste
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`hemp material (“WHM”)—two necessary and inevitable byproducts of hemp processing—
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`Schedule I substances.
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`6.
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`DEA’s latest jurisdictional overstep threatens every stage of the hemp production
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`supply chain and jeopardizes the entire hemp industry. If allowed to stand, DEA’s intrusion will
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`undermine a lynchpin of the new hemp economy that has created tens of thousands of new jobs
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`and provided a lucrative new crop for America’s struggling farmers.
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`Case 1:20-cv-02921-JEB Document 1 Filed 10/12/20 Page 3 of 30
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`7.
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`Through this action, Plaintiffs seek a declaratory judgment to reset the lines
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`Congress drew in the 2018 Farm Bill and confirm that the hemp production process does not
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`violate the CSA. Plaintiffs and the hemp industry deserve basic regulatory clarity and should not
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`be forced to operate under constant threat of DEA enforcement that would be both crippling and
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`unlawful.
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`JURISDICTION AND VENUE
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`8.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and
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`1343. This action arises under the Constitution and laws of the United States.
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`9.
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`This Court has the authority to issue the relief sought pursuant to 28 U.S.C.
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`§§ 1343(a), 2201, and 2202.
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`10.
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`11.
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`Venue is proper under 28 U.S.C. § 1391(e).
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`This Court has Leedom jurisdiction.
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`THE PARTIES
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`12.
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`Plaintiff HIA is a 501(c)(6) trade association whose mission is to advance the
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`hemp economy, educate the market about hemp, and maintain and defend the integrity of hemp
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`products. HIA represents approximately 1,050 member-hemp businesses who cultivate,
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`manufacture, process, store, transport, distribute, and/or sell hemp and hemp-derived products.
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`HIA’s members include approximately 300 hemp processors, all of whom manufacture, process,
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`and/or store IHM and WHM. The majority of HIA’s non-processing members transact with
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`and/or rely on persons or businesses who manufacture, process, and/or store IHM and WHM.
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`13.
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`Plaintiff RE Botanicals is a private corporation with its principal place of business
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`in South Carolina. In 2019, RE Botanicals acquired Palmetto Synergistic Research LLC dba
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`Palmetto Harmony (“Palmetto Harmony”). Founded by Janel Ralph, a mother of a child with
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`severe epilepsy, Palmetto Harmony manufactures and sells consumer products derived from
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`hemp. RE Botanicals was founded by John Roulac, a pioneer of the hemp seed industry. Its
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`mission is to produce and market lawful, high quality hemp products.
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`14.
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`15.
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`Defendant DEA is the federal agency that administers the CSA.
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`Defendant Timothy Shea is a government official serving as DEA’s Acting
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`Administrator.
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`FACTUAL BACKGROUND
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`I.
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`Hemp is a Versatile, Non-Psychoactive Agricultural Commodity.
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`16.
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`Hemp is a variant of the plant Cannabis Sativa L. with a delta-9
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`tetrahydrocannabinol (“∆9-THC”) concentration of not more than 0.3% on a dry weight basis. In
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`sufficiently high concentrations, Δ9-THC can produce psychoactive effects. Such
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`concentrations, however, are not present in hemp.
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`17.
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`As an agricultural commodity, hemp has thousands of industrial and commercial
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`applications. It can be grown indoors, outdoors, organically, and in a variety of climates; fits
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`within typical crop rotation systems; and consumes nutrients similar to other agricultural crops,
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`like corn. Hemp is used in fabrics and textiles; the woody cores of hemp stalks are used in
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`animal bedding, papermaking, and oil absorbents; hemp seeds are used in a range of foods and
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`beverages; and hemp extracts are used in a wide range of products, including soaps, shampoo,
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`lotions, bath gels, and cosmetics. The following chart illustrates the modern uses of hemp:
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`Modern Uses of Hemp
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`II.
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`Early Legislation Eliminates Domestic Hemp Cultivation.
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`18.
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`Hemp has a storied place in our nation’s history. It was introduced in America
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`around 1545 and was cultivated in the Jamestown colony as early as 1611. Over a century later,
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`many of our founding fathers, including George Washington, Thomas Jefferson, and Benjamin
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`Franklin, cultivated and used hemp. George Washington spoke extensively about hemp in his
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`diaries. Benjamin Franklin launched one of America’s first paper mills making hemp paper.
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`Thomas Jefferson invented a better “hemp brake” to separate hemp fibers from stalks. U.S.
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`officials throughout the nineteenth century, including former House Speaker Henry Clay,
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`cultivated the plant.
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`19.
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`Although hemp forms an integral part of our nation’s history, between 1937 and
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`2014, the hemp economy was dormant largely due to prohibitive tax schemes relating to the
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`production of marijuana—another variety of the Cannabis plant—and, subsequently, the outright
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`prohibition of marijuana.
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`20.
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`In 1937, Congress passed the Marihuana Tax Act (the “MTA”). In the MTA,
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`Congress recognized the difference between hemp and marijuana, as well as the usefulness of the
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`hemp plant. The MTA’s definition of marijuana excluded the low ∆9-THC portions of the plant:
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`the mature stalks of such plant, fiber produced 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.
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`The MTA required all growers, sellers, manufacturers, importers, and distributors of marijuana
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`to register with the U.S. Department of Treasury and imposed hefty taxes on those activities.
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`Technological limitations prevented differentiating between hemp and marijuana variants
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`according to ∆9-THC levels, as we do today.
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`21.
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`The MTA’s stringent requirements, and the technological limitations preventing
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`differentiation between hemp and marijuana, caused American farmers to stop growing hemp,
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`sweeping away America’s hemp economy.
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`22.
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`In 1969, the Supreme Court deemed a large portion of the MTA unconstitutional.
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`However, the following year, Congress re-criminalized hemp cultivation by passing the CSA.
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`The CSA adopted the MTA’s definition of marijuana, prohibiting the cultivation of hemp absent
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`a DEA registration.
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`III. The Resurgent Modern Hemp Economy.
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`23.
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`Today, thanks to the 2018 Farm Bill, hemp is making an American comeback. In
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`2017, approximately 41,000 acres of land were licensed for hemp cultivation in the U.S. That
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`figure exploded to nearly 512,000 acres in 2019.
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`24.
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`The multi-billion-dollar global hemp market consists of more than 25,000
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`products in nine submarkets: agriculture, textiles, recycling, automotive, furniture, food and
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`beverages, paper, construction materials, and personal care.
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`25.
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`Hemp’s product development cycle from cultivation to sale is complex and
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`almost always requires some form of manufacturing or processing. The following chart
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`illustrates a typical product development cycle for hemp-derived products:
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`26.
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`Given hemp’s wide supply chain and multitude of uses, the hemp industry has—
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`particularly since the passage of the 2018 Farm Bill—taken root and grown in the U.S., allowing
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`farmers to grow a financially lucrative crop, thereby creating new jobs and economic activity
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`throughout the supply chain.
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`27.
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`This explosive growth has driven a dramatic increase in the number of state-
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`licensed hemp processors, and accordingly, new jobs. A 2019 survey conducted by Vote Hemp
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`found that of the states that issue hemp processor licenses, there are approximately 2,220
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`licensed processors; a more recent survey pegged that figure at more than 5,400 in 2020. While
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`not capturing the full scope of hemp processors in the U.S., each of these 5,400 state-licensed
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`hemp processors can employ dozens, even hundreds, of Americans.
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`28.
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`Thus, in a time of declining employment, the hemp industry has created a new
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`economy resulting in many new jobs and significant tax revenue. If permitted to blossom—as
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`Congress intended through the enactment of the 2018 Farm Bill—the hemp economy will only
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`continue to flourish.
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`29.
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`Not surprisingly, politicians from both parties have lauded hemp and its economic
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`potential. Senator Mitch McConnell (R-KY), one of the chief architects of the 2018 Farm Bill,
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`declared his “commit[ment] to helping our farmers, processors, and manufacturers take full
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`advantage of hemp’s potential.” Senator Chuck Schumer (D-NY) similarly described hemp as
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`“an oyster with a pearl of opportunities that could mean millions in economic revenue while also
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`helping to support new local jobs…”
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`IV.
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`The Hemp Extract Submarket.
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`30.
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`One of the most lucrative components of the modern hemp economy is the market
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`for hemp-derived extracts, which are used as ingredients in a variety of products. Like the hemp
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`plants from which they are derived, these extracts are not psychoactive and contain less than
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`0.3% ∆9-THC. The U.S. wholesale market for hemp extracts currently stands at $2 billion U.S.
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`dollars, while the wholesale market for products containing extracts exceeds $5 billion U.S.
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`dollars.
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`31.
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`Part of this hemp extract market consists of cannabinoids. Cannabinoids are
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`compounds that naturally occur in the hemp plant, primarily in the resins thereof. Scientists have
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`identified over one hundred distinct cannabinoids, with cannabidiol (“CBD”) and Δ9-THC being
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`the two most well-known.
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`32.
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`Hemp grown for cannabinoid production is particularly profitable. For example,
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`in 2019, hemp grown for its fiber generated approximately $700 per acre. By contrast, hemp
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`grown for cannabinoids, such as CBD, can command over $5,000 per acre. Without high-margin
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`cannabinoid cultivation, many hemp farmers (and a large part of the new hemp economy) would
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`crumble. In fact, recent surveys found that between 80%-85% of the hemp currently cultivated
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`in the U.S. is grown for cannabinoids.
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`33.
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`The process of making hemp extracts starts with the cultivation and harvest of
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`hemp plants. Under the 2018 Farm Bill, USDA rules, and state regulations, prior to harvesting
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`hemp, the hemp is sampled for its Δ9-THC potency.
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`34.
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`If the sampled hemp measures at or below 0.3% Δ9-THC, it may then be
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`harvested. Upon harvest, it is weighed and transferred to a third-party processor for “milling.”
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`During the milling process, hemp flower is separated from sticks, stems and other adulterants
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`captured as part of the sample. Although the milled hemp’s Δ9-THC content has not changed
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`during the milling process, after removing the sticks and stems (and any adulterants), the
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`remaining hemp flower material—which is naturally rich in resins and cannabinoids—is
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`virtually certain to exceed 0.3% Δ9-THC, at least by percentage volume. This is because the
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`portions of the hemp plant containing little or no Δ9-THC (i.e., the sticks and stems), which were
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`previously present when the plant was initially sampled, are stripped away during the milling
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`process.
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`35.
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`Next, the milled hemp is extracted. Milled hemp is soaked, (typically) mixed
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`with an extraction solvent, and then fed into extraction equipment, where cannabinoids are
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`separated from the raw hemp flower material. The processed raw hemp flower material is
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`discarded, leaving an oil comprised of the extracted cannabinoids and the extraction solvent (if
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`applicable).
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`36.
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`This oil is then subjected to evaporation. Evaporation removes the processing
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`solvent (if applicable), along with some fats and lipids present in the mixture. The output from
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`evaporation is IHM, which contains concentrated levels of cannabinoids, because all other parts
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`of the plant have been stripped away. As explained below, IHM itself is not added to, or used as
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`an ingredient in, any consumer product; rather, IHM is refined into extracts or isolates containing
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`not more than 0.3% Δ9-THC.
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`37.
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`If the processor is creating isolates of specific cannabinoids, then another output
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`from evaporation is WHM, which contains concentrated levels of cannabinoids. WHM is not
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`added to, or used as an ingredient in, any consumer product.
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`38.
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`Up to the evaporation stage, the actual Δ9-THC content in the harvested hemp has
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`not changed at all. Each step of processing simply refines and strips away the non-resinous
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`portions of the plant that contain few, if any, cannabinoids. By separating and refining the hemp,
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`these steps concentrate the remaining compounds—predominantly the naturally-occurring
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`cannabinoids, including CBD and Δ9-THC—by percentage volume. As a result, IHM and WHM
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`naturally (and unavoidably) exceed 0.3% Δ9-THC.
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`39.
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`Once IHM is created, special equipment is used to further refine IHM and create
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`various types of hemp extracts and/or isolates of specific cannabinoids. These extracts and
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`isolates, whose Δ9-THC concentrations are at or below 0.3%, are used as ingredients in a variety
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`of products. The following chart illustrates the hemp production process for cannabinoids:
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`40.
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`In sum, even when a harvested hemp plant contains 0.3% or less Δ9-THC, during
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`processing, certain in-process hemp materials will inevitably exceed 0.3% Δ9-THC. These in-
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`process materials are not added to or used as ingredients in any consumer products.
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`V.
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`DEA Oversteps Statutory Authority to Unlawfully Regulate Hemp Products.
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`41.
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`Although the CSA prohibited the cultivation of hemp, it has never categorically
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`prohibited hemp products. Indeed, there has never been anything illegal about importing,
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`manufacturing, selling, possessing, or consuming hemp-derived products, provided that those
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`products were made with or derived from exempt portions of the cannabis plant.
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`42.
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`As early as 1975, DEA itself recognized that parts of the cannabis plant (including
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`certain hemp products intended for consumption) had been exempted under the CSA. See 40
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`Fed. Reg. 44164, 44167 (Sept. 25, 1975).
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`43.
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`Relying on this exemption, U.S. businesses and individuals have for decades
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`purchased and sold hemp products derived from exempt portions of the cannabis plant imported
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`from abroad.
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`44.
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`But beginning in the late 1990s and early 2000s, DEA attempted to sweep away
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`the legal market for hemp products through rulemaking—despite express prohibitions from
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`Congress to the contrary.
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`A.
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`45.
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`DEA Attempts to Bypass the CSA to Prohibit Legal Hemp Products.
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`On October 9, 2001, DEA issued a rule that attempted to classify all naturally-
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`occurring THC—including THC found in exempt portions of the cannabis plant—under the
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`CSA’s listing of THC, a Schedule I substance. Interpretation of Listing of
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`“Tetrahydrocannabinols” in Schedule I, 66 Fed. Reg. 51530 (Oct. 9, 2001). That rule, DEA-
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`204, purported to clarify that the listing of THC in Schedule I refers to both natural and synthetic
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`THC—meaning that, according to DEA’s interpretation of the CSA and DEA regulations, any
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`product containing any amount of THC was a Schedule I controlled substance, even if that
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`product was made from portions of the cannabis plant that are excluded from the CSA’s
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`definition of marijuana.
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`46.
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`Following a lawsuit, the Ninth Circuit concluded that DEA-204 was inconsistent
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`with then-existing regulations and was thus an invalid and unenforceable legislative rule. See
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`Hemp Industries Ass’n v. Drug Enf’t Administration, 333 F.3d 1082 (9th Cir. 2003) (“Hemp I”).
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`47.
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`After DEA’s issuance of DEA-204, DEA issued final rules—DEA-205F and
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`DEA-206F—which together amended DEA regulations such that the listing of THC in Schedule
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`I effectively included all products containing even naturally-occurring THC derived from exempt
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`portions of the plant.
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`48.
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`Following a second legal challenge, the Ninth Circuit issued an injunction and
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`held that these final rules were “scheduling actions that would place non-psychoactive hemp in
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`Schedule I for the first time,” contrary to Congressional intent, and failed to follow the
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`procedures for scheduling actions as required by the CSA. See Hemp Industries Ass’n v. Drug
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`Enf’t Administration, 357 F.3d 1012 (9th Cir. 2004) (“Hemp II”).
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`49.
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`Despite the injunction in Hemp II, DEA never removed the enjoined rules from its
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`regulations, and in publications continued to assert that its hemp rules still had the force and
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`effect of law. Even after Hemp II, DEA’s official position was that all consumable hemp
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`products were illegal. For example, in a November 2017 article in the Louisville Courier
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`Journal, a DEA spokesman told the newspaper that the agency viewed all hemp products that can
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`be consumed as illegal. DEA even asserted its unsupported position in its interactions with state
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`agencies.
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`B.
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`DEA Subverts the 2014 Farm Bill.
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`50. While DEA was attempting to tighten its grip over hemp production, several
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`states passed laws permitting the cultivation of hemp subject to certain parameters. In 1999, for
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`example, North Dakota legalized the cultivation of hemp if farmers complied with licensure and
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`registration requirements. Montana passed a state law authorizing hemp production in 2001, and
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`several other states, including Hawaii, Kentucky, Maine, Maryland, and West Virginia, adopted
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`state hemp cultivation and research programs in the early 2000s.
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`51.
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`Due to the rise of these various state laws and the growing interest in hemp across
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`the country, Congress acted to enable this budding industry.
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`52.
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`Congress began clearing the way for a renewed hemp economy with Section 7606
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`of the Agricultural Act of 2014, colloquially known as the 2014 Farm Bill. The 2014 Farm Bill
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`legalized the cultivation and research of hemp,1 defined as:
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`the plant Cannabis sativa L. and 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” (emphasis added)—under certain conditions.
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` U.S.C. § 5940(a)(2).
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` 7
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`1 Although the 2014 Farm Bill defines the plant as “industrial hemp” and the 2018 Farm Bill
`defines the plant as “hemp,” these terms can be, and are, used interchangeably.
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`53.
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`Consistent with federal law up to that point, the 2014 Farm Bill distinguishes
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`between hemp and marijuana based on a cannabis plant’s Δ9-THC concentration. A plant whose
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`Δ9-THC concentration is 0.3% or less on a dry weight basis (and which is cultivated in
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`accordance with the 2014 Farm Bill) is lawful hemp; any part of the plant whose Δ9-THC
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`concentration exceeds 0.3% Δ9-THC is unlawful marijuana.
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`54.
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`The 2014 Farm Bill removed hemp from DEA’s purview. Although it did not
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`expressly amend the language of the CSA to carve out hemp and its derivatives from the
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`definition of marijuana, it expressly preempted the CSA: “Notwithstanding the Controlled
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`Substances Act (21 U.S.C. § 801 et seq.), chapter 81 of title 41,… or any other Federal law . . . ,”
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`hemp may be lawfully produced in accordance with the 2014 Farm Bill.
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`55.
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`Twenty-nine members of Congress who drafted the 2014 Farm Bill confirmed its
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`preemptive intent in an amicus brief submitted to the Ninth Circuit: “Congress clearly stated in
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`the text of the [2014] Farm Bill that the dividing line between []hemp and marijuana is the THC
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`level, see 7 U.S. Code § 5940(b)(2), and by its terms the [2014] Farm Bill’s definition controls,
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`‘notwithstanding’ any conflicting definition that might apply under the CSA, see § 5940(a).” “In
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`enacting the [2014] Farm Bill,” the members of Congress continued, “it was Congress’s purpose
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`that hemp and any derivatives, extracts, and uses thereof would be exempted from the definition
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`of [marijuana] under the CSA. We know this because many of us helped draft the provisions and
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`voted for them.”
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`56.
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`Despite clear Congressional intent to remove hemp and its derivatives from DEA
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`control and enable the hemp economy, in the years following the enactment of the 2014 Farm
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`Bill, DEA (i) pursued enforcement actions against institutions lawfully participating in hemp
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`pilot programs in compliance with the 2014 Farm Bill; and (ii) promulgated regulations designed
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`to continue to treat hemp and its derivatives and extracts as Schedule I substances.
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`57.
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`For example, in May 2014, DEA seized hemp seeds destined for use by farmers
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`who complied with Kentucky’s 2014 Farm Bill pilot program administered by the Kentucky
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`Department of Agriculture (“KDA”). Senator Mitch McConnell (R-KY) and Representative
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`Thomas Massie (R-KY), both of whom participated in the drafting of the 2014 Farm Bill, called
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`DEA’s actions “an outrage” and “ridiculous.” The KDA similarly commented that the “DEA is
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`trying to place…illegal restrictions on Kentucky…restrictions on the program that Congress
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`doesn’t allow.” Later, in 2018, the Kentucky General Assembly petitioned Congress to enact
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`measures that would prevent DEA from sending its agents onto farms and other sites where
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`hemp is grown, stored, and processed. 164 Cong. Rec. S2438 (2018).
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`58.
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`Forced to respond to DEA’s flouting of the 2014 Farm Bill, Congress first turned
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`to the power of the purse. Congress passed an appropriations bill prohibiting DEA, and any
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`other law enforcement agency, from using federal funds in “contravention” of the 2014 Farm
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`Bill or “to prohibit transportation, processing, sale, or use of hemp that is grown or cultivated in
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`accordance with [the 2014 Farm Bill]…” Notably, this language has been repeated and re-
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`adopted in each spending bill through 2020.
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`59.
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`DEA, however, doubled down. In its “Statement of Principles on Industrial
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`Hemp” published on August 12, 2016 (the “SOP”), DEA (with other federal agencies) attempted
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`to narrow the 2014 Farm Bill’s definition of hemp to include only “that [which] is used
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`exclusively for industrial purposes (fiber and seed)” and limit the sale of “[]hemp products” in
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`and among states with agricultural pilot programs. In response, Senator Mitch McConnell (R-
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`KY) noted that, through the SOP, DEA had unlawfully attempted to narrow the definition of
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`hemp “beyond what Congress explicitly prescribed in the [2014 Farm Bill]” and that “Federal
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`law…does not limit the ability to sell lawfully grown []hemp products only to states with
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`agricultural pilot programs.”
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`60.
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`Similarly, in December 2016, DEA published the “Establishment of a New Drug
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`Code for Marihuana Extract” (the “MER”), which stated that any extract “containing one or
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`more cannabinoids that has been derived from any plant of the genus Cannabis, other than the
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`separated resin (whether crude or purified) obtained from the plant” “will continue to be treated
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`as Schedule I controlled substances.” The MER effectively purported to classify hemp-derived
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`CBD as a Schedule I controlled substance.
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`61.
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`In an amicus brief voicing disagreement with DEA’s expansion of its authority to
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`control lawfully produced hemp products, the members of Congress explained that the “unduly
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`broad” MER “encompasses lawful activity set forth under the [2014] Farm Bill”; “effectively
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`repeals Section 7606 of the [2014] Farm Bill”; “subverts the Congressional definition of []hemp
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`contained in the [2014] Farm Bill”; inappropriately “subjects [hemp] extracts to DEA
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`enforcement powers”; “cannot be justified in light of Congress’s express action in this area”; and
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`“undercut[s] the legislative text of Section 7606 of the [2014] Farm Bill by prohibiting marketing
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`research of hemp-derived extracts under an agricultural pilot program…”
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`C.
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`62.
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`Congress Passes the 2018 Farm Bill Removing Hemp from the CSA and
`Divesting DEA of Authority.
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`In light of DEA’s repeated intrusions, Congress and President Donald Trump took
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`more decisive action in 2018. The 2018 Farm Bill, codified at 7 U.S.C. § 1639o et seq., removes
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`hemp and all its derivatives, extracts, and cannabinoids from the CSA. It also unequivocally
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`divests DEA of its regulatory authority in the sphere of hemp production.
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`63.
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`First, unlike prior legislation, Section 1639r of the 2018 Farm Bill places the sole
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`federal authority to regulate hemp production under USDA. See 7 U.S.C. § 1639r(b) (the
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`Secretary of Agriculture shall have “sole authority to promulgate Federal regulations and
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`guidelines that relate to the production of hemp.”). The one exception to USDA’s sole federal
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`authority is that the FDA commissioner retains authority to promulgate rules and guidelines
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`relating to the production of hemp-related products under the Food, Drug, and Cosmetic Act (the
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`“FDCA”). 7 U.S.C. § 1639r(c)(3).
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`64.
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`There is no carve out for DEA, its Administrator, or the CSA. The Conference
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`Report accompanying the 2018 Farm Bill makes the exclusive scope of the delegation clear:
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`“The Secretary is required to consult with the Attorney General on the promulgation of
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`regulations, but ultimately, the regulations shall only be issued by the Secretary of Agriculture.”
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`(emphasis added) H.R. Rep. No. 115-1072, at 738 (2018).
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`65.
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`Second, 7 U.S.C. § 1639o of 2018 Farm Bill (“Section 1639o”) contains a broader
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`definition of “hemp,” expressly including “all derivatives, extracts, cannabinoids, isomers, acids,
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`salts, and salts of isomers” of the plant:
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`[Hemp is] the plant Cannabis sativa L. and any part of that plant, including the
`seeds thereof and all 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.
`
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`(emphasis added).
`
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`66.
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`The decision to expand hemp’s definition to expressly include these components
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`was deliberate. In recent years, consumer demand for hemp-derived derivatives, extracts, and
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`cannabinoids has grown exponentially. A Congressional report therefore concluded that the
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`2018 Farm Bill “intended to facilitate the commercial cultivation, processing, and marketing of
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`hemp” (emphasis added). Replacing the term “industrial hemp” (which is used in the 2014 Farm
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`Bill) with the term “hemp” (which is used in the 2018 Farm Bill) further evidences Congress’
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`intent to legalize the full panoply of hemp-derived products and the associated supply chain.
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`67.
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`In fact, during the legislative process, Senator Chuck Grassley (R-IA) had
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`proposed a limiting amendment, seeking to strike the language emphasized above and add a
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`provision stating that hemp does not include the derivatives, extracts, cannabinoids, isomers,
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`acids, sales, and salts of isomers. That proposed amendment, however, never even came up for a
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`vote in committee.
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`68.
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`Third, Section 1639o distinguishes between lawful hemp and unlawful marijuana
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`based on Δ9-THC concentration measured on a dry weight basis. Per the plain language of
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`Section 1639o, the Δ9-THC concentration of wet hemp derivatives—such as extracts, oils, or
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`other liquid forms of hemp—is not measured during its wet stage since wet derivatives cannot,
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`by definition, be measured on a dry weight basis. By defining hemp (inclusive of its derivatives
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`and extracts) based on its Δ9-THC concentration on a dry weight basis, the 2018 Farm Bill deems
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`all hemp-derived materials as “hemp.”
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`69. When the 2018 Farm Bill was being debated, Congress knew and understood that
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`the intermediate stages of hemp processing and extraction cause most wet IHM and WHM to
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`exceed 0.3% Δ9-THC concentration. Indeed, many states operating under the 2014 Farm Bill
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`(and the 2018 Farm Bill) regulate IHM and/or WHM. In addition, neither the 2018 Farm Bill
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`nor USDA’s hemp regulations (see below) impose any post-harvest testing requirements for
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`hemp, including derivatives, extracts, or cannabinoids thereof.
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`70.
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`Finally, emphasizing Congressional intent to remove hemp and its derivatives
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`from DEA’s purview, the 2018 Farm Bill expressly amended the CSA’s definitions of both
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`marijuana and “tetrahydrocannabinols.” The CSA now states that “[t]he term [marijuana] does
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`not include…hemp, as defined in [7 U.S.C. § 1639o]” and excludes from Schedule I
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`“tetrahydrocannabinols in hemp (as defined under Section 1639o of title 7)” from the list of
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`substances controlled by the CSA. Thus, per Congress, “tetrahydrocannabinols in hemp” are not
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`scheduled substances. Importantly, these amendments to the CSA were self-executing.
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`71.
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`In sum, through the 2018 Farm Bill, DEA, whose raison d’être is to enforce the
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`CSA, is divested of its authority to regulate hemp—an agricultural commodity now expressly
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`removed from the CSA and under the sole federal regulat