`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
`
`
`HEMP INDUSTRIES ASSOCIATION; and
`RE BOTANICALS, INC.
` Plaintiffs,
`v.
`
`UNITED STATES DRUG ENFORCEMENT
`ADMINISTRATION and TIMOTHY SHEA,
`in his Official Capacity,
` Defendants.
`
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`Case No. 1:20-cv-2921 (JEB)
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`PLAINTIFFS’ MEMORANDUM AND POINTS OF AUTHORITIES
`IN OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 2 of 53
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`TABLE OF CONTENTS
`
`INTRODUCTION .......................................................................................................................... 1
`BACKGROUND ............................................................................................................................ 3
`I.
`Statutory and Regulatory History. ...................................................................................... 3
`II.
`The 2014 Farm Bill. ............................................................................................................ 5
`III.
`The 2018 Farm Bill. ............................................................................................................ 7
`IV.
`The Contemporary Hemp Market. ...................................................................................... 9
`V.
`DEA’s Recent Hemp Related Activities. ............................................................................ 9
`ARGUMENT ................................................................................................................................ 12
`This Case is About Whether the 2018 Farm Bill Authorizes the Manufacture and
`I.
`Possession of In-Process Hemp Materials. ....................................................................... 12
`A.
`Plaintiffs’ Statutory Challenge. ............................................................................. 12
`B.
`Plaintiffs Are Not Challenging the IFR. ............................................................... 14
`This Court Has Federal Question Jurisdiction. ................................................................. 18
`A.
`Thunder Basin Does Not Apply. ........................................................................... 18
`Plaintiffs’ structural claim falls outside of the administrative review
`1.
`scheme....................................................................................................... 19
`Plaintiffs’ challenge based on the 2018 Farm Bill does not belong in the
`CSA’s administrative review scheme. ...................................................... 21
`TRAC Does Not Apply.......................................................................................... 24
`No Court Has Held That § 877 Abolishes Federal Question Jurisdiction to Decide
`Any Federal Question Related to the CSA or DEA. ............................................. 26
`If this Court Concludes Plaintiffs Are Challenging Agency Action, Then
`Leedom Jurisdiction is Proper. .............................................................................. 33
`Plaintiffs’ Claim is Fit for Review. ................................................................................... 37
`A.
`Plaintiffs Have Standing. ...................................................................................... 37
`B.
`Plaintiffs’ Claim is Ripe........................................................................................ 38
`C.
`The Court Should Not Decline Jurisdiction Based in Equity. .............................. 40
`CONCLUSION ............................................................................................................................. 45
`
`
`II.
`
`III.
`
`2.
`
`B.
`C.
`
`D.
`
`
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`
`
`
`
`-i-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 3 of 53
`
`TABLE OF AUTHORITIES
`
`
`
`
`
`
`
`
`
`Cases
`
`Bohon v. Fed. Energy Regulatory Comm’n,
`2020 WL 2198050 (D.D.C. May 6, 2020) ................................................................................. 23
`
`
`
`
`
`
`
`
`
`
`
` Page(s)
`
`
`Clapper v. Amnesty Int’l USA,
`568 U.S. 398 (2013) .................................................................................................................. 37
`
`
`Credit Suisse Sec. (USA) LLC v. Billing,
`551 U.S. 264 (2007) .................................................................................................................. 13
`
`
`Elk Run Coal Co. v. U.S. Dep’t of Labor,
`804 F. Supp. 2d 8 (D.D.C. 2011) ......................................................................................... 19, 21
`
`
`FiberLight, LLC v. Nat’l R.R. Passenger Corp.,
`81 F. Supp. 3d 93 (D.D.C. 2015) ............................................................................................... 40
`
`
`Flynt v. LFP, Inc.,
`245 F. Supp. 2d 94 (D.D.C. 2003) ............................................................................................. 44
`
`
`*Free Enter. Fund v. Pub. Co. Accounting Oversight Bd.,
`561 U.S. 477 (2010) ........................................................................................................... Passim
`
`
`General Elec. Co. v. EPA,
`360 F.3d 188 (D.C. Cir. 2004) ................................................................................................... 20
`
`
`Glenn v. Thomas Fortune Fay,
`222 F. Supp. 3d 31 (D.D.C. 2016) ............................................................................................. 41
`
`
`Gonzales v. Oregon,
`546 U.S. 243 (2006) .................................................................................................................... 4
`
`
`Griffith v. Fed. Labor Relations Auth.,
`842 F.2d 487 (D.C. Cir. 1988) ................................................................................................... 34
`
`
`Hemp Indus. Ass’n v. DEA,
`357 F.3d 1012 (9th Cir. 2004) ................................................................................................. 4, 5
`
`
`Hemp Indus. Ass’n v. DEA,
`333 F.3d 1082 (9th Cir. 2003) ................................................................................................. 3, 5
`
`
`In re Bluewater Network,
`234 F.3d 1305 (D.C. Cir. 2000) ................................................................................................. 24
`
`
`
`
`
`-ii-
`
`
`
`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 4 of 53
`
`Int’l Union, United Mine Workers of Am. v. U.S. Dep’t of Labor,
`358 F.3d 40 (D.C. Cir. 2004) ..................................................................................................... 24
`
`
`Jarkesy v. S.E.C.,
`803 F.3d 9 (D.C. Cir. 2015) ................................................................................................. 19, 23
`
`
`John Doe, Inc. v. DEA,
`484 F.3d 561 (D.C. Cir. 2007) ............................................................................................. 27, 30
`
`
`Leedom v. Kyne,
`358 U.S. 184 (1958) ............................................................................................................ 33, 35
`
`
`Mapes v. Reed,
`2020 WL 5545397 (D.D.C. Sept. 16, 2020) .............................................................................. 34
`
`
`MedImmune, Inc. v. Genentech, Inc.,
`549 U.S. 118 (2007) ............................................................................................................ 22, 37
`
`
`Menominee Indian Tribe of Wisconsin v. DEA,
`190 F. Supp. 3d 843 (E.D. Wis. 2016) ................................................................................ 21, 32
`
`
`*Monson v. DEA,
`589 F.3d 952 (8th Cir. 2009) .............................................................................................. Passim
`
`
`Moore v. U.S. House of Representatives,
`733 F.2d 946 (D.C. Cir. 1984) ................................................................................................... 44
`
`
`*Morgan Drexen, Inc. v. Consumer Fin. Prot. Bureau,
`979 F. Supp. 2d 104 (D.D.C. 2013) ........................................................................................... 41
`
`
`*N.H. Hemp Council, Inc. v. Marshall,
`203 F.3d 1 (1st Cir. 2000) ................................................................................................... Passim
`
`
`Nat’l Air Traffic Controllers Ass’n AFL–CIO v. Fed. Serv. Impasses Panel,
`437 F.3d 1256 (D.C. Cir. 2006) ................................................................................................. 34
`
`
`New Hampshire Lottery Comm’n v. Rosen,
`986 F.3d 38 (1st Cir. 2021) ........................................................................................................ 37
`
`
`North v. Smarsh, Inc.,
`160 F. Supp. 3d 63 (D.D.C. 2015) ............................................................................................. 25
`
`
`*Novelty Distributors, Inc. v. Leonhart,
`562 F. Supp. 2d 20 (D.D.C. 2008) ....................................................................................... 30, 31
`
`
`
`
`
`-iii-
`
`
`
`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 5 of 53
`
`Nyunt v. Chairman, Broad. Bd. of Governors,
`589 F.3d 445 (D.C. Cir. 2009) ................................................................................................... 34
`
` Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft,
`282 F. Supp. 2d 1236 (D.N.M. 2002) ........................................................................................ 32
`
` O
`
`
`Oestereich v. Selective Serv. Sys. Local Bd. No. 11, Cheyenne, Wyo.,
`393 U.S. 233 (1968) .................................................................................................................. 36
`
`Oregon v. Ashcroft,
`368 F.3d 1118 (9th Cir. 2004) ................................................................................................... 16
`
`
`Oregon v. Ashcroft,
`192 F.Supp.2d 1077 (2002) ................................................................................................. 16, 17
`
`
`Pub. Affairs Assocs., Inc. v. Rickover,
`369 U.S. 111 (1962) .................................................................................................................. 40
`
`
`Susan B. Anthony List v. Driehaus,
`573 U.S. 149 (2014) .................................................................................................................. 37
`
`
`Swish Marketing, Inc. v. F.T.C.,
`669 F. Supp. 2d 72 (D.D.C. 2009) ....................................................................................... 42, 43
`
`
`Telecommunications Research and Action Center v. FCC,
`750 F.2d 70 (D.C. Cir. 1984) ..................................................................................................... 24
`
`
`Thunder Basin Coal Co. v. Reich,
`510 U.S. 200 (1994) .................................................................................................................. 19
`
`
`Tilton v. Sec. & Exch. Comm’n,
`824 F.3d 276 (2d Cir. 2016) ................................................................................................ 22, 23
`
`
`Time Warner Entm’t Co. v. FCC.,
`93 F.3d 957 (D.C. Cir. 1996) ..................................................................................................... 26
`
`
`Toilet Goods Association v. Gardner,
`387 U.S. 158 (1967) .................................................................................................................. 40
`
`
`Ukiah Adventist Hosp. v. FTC,
`981 F.2d 543 (D.C. Cir. 1992) ................................................................................................... 26
`
`
`*United States v. Mallory,
`372 F. Supp. 3d 377 (S.D.W. Va. 2019) ............................................................................. Passim
`
`
`
`
`
`-iv-
`
`
`
`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 6 of 53
`
`United States v. Safehouse,
`408 F. Supp. 3d 583 (E.D. Pa. 2019) ......................................................................................... 32
`
`
`United States v. Safehouse,
`2021 WL 97622 (3d Cir. Jan. 12, 2021) .................................................................................... 31
`
`
`United States v. White Plume,
`447 F.3d 1067 (8th Cir. 2006) ............................................................................................... 5, 32
`
`
`Wedgewood Vill. Pharmacy v. DEA,
`509 F.3d 541 (D.C. Cir. 2007) ..................................................................................................... 4
`
`
`Statutes
`
` 5
`
` 7
`
` U.S.C. § 706 ................................................................................................................................. 1
`
` U.S.C. § 1639o ............................................................................................................. 1, 8, 35, 36
`
`
`*7 U.S.C. § 1639r .................................................................................................................. Passim
`
` 7
`
` 7
`
` 7
`
` U.S.C. § 5940(a)(2) .................................................................................................................. 6, 7
`
` U.S.C. § 5940(b) .......................................................................................................................... 5
`
` U.S.C. § 5940(b)(2) ................................................................................................................... 33
`
`
`21 U.S.C. § 802(16)(B)(ii) .............................................................................................................. 4
`
`21 U.S.C. § 824(d) ........................................................................................................................ 31
`
`21 U.S.C. § 841(a) ........................................................................................................................ 14
`
`21 U.S.C. § 856(a)(2) .................................................................................................................... 32
`
`*21 U.S.C. § 877 .................................................................................................................... Passim
`
`*21 U.S.C. § 882 .................................................................................................................... Passim
`
`21 U.S.C. §§ 822, 823, 841(a) ........................................................................................................ 4
`
`28 U.S.C. § 1331 ........................................................................................................................... 27
`
`50 U.S.C. § 456(g) ........................................................................................................................ 36
`
`Pub. L. No. 114-113, § 763, 129 Stat. 2242, 2285 (2015) .............................................................. 6
`
`
`
`
`-v-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 7 of 53
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`Pub. L. No. 115-31, § 773, 131 Stat. 135, 182 (2017) .................................................................... 6
`
`Rules
`
`Fed. R. Civ. P. 12(i) ...................................................................................................................... 45
`
`Regulations
`
`Establishment of a Domestic Hemp Production Program,
`84 Fed. Reg. 58522 (Oct. 31, 2019) ............................................................................................ 9
`
`
`Establishment of a Domestic Hemp Production Program,
`86 Fed. Reg. 5596 (Jan. 19, 2021) ............................................................................................. 11
`
`
`Implementation of the Agriculture Improvement Act of 2018,
`85 Fed. Reg. 51639 (Aug. 21, 2020) .................................................................................. 10, 15
`
`
`Statement of Principles on Industrial Hemp,
`81 Fed. Reg. 53395 (Aug. 12, 2016) ........................................................................................... 7
`
`
`Other Authorities
`
`10B Wright, Miller & Kane, Federal Practice and Procedure §§ 2759, 2763 (4th ed.) ....... 42, 44
`
`
`
`-vi-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 8 of 53
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`INTRODUCTION
`
`(b) Authority. Subject to subsection (c)(3)(B), the Secretary [of Agriculture] shall
`have sole authority to promulgate Federal regulations and guidelines that relate to
`the production of hemp, including Federal regulations and guidelines that relate to
`the implementation of sections 1639p and 1639q of this title.
`
`This case turns on the above statutory subsection, 7 U.S.C. § 1639r(b)—a provision the
`
`Government never cites in its Motion. Plaintiffs contend this provision from the Agricultural
`
`Improvement Act of 2018 (“2018 Farm Bill”), together with the 2018 Farm Bill’s broad definition
`
`of “hemp” in 7 U.S.C. § 1639o and removal of hemp from the Controlled Substances Act (“CSA”),
`
`establishes an immunity or authorization that permits the manufacture and possession of two
`
`in-process hemp byproducts made during the production of hemp. That immunity is a critical
`
`component of the 2018 Farm Bill. But over the past several months, DEA has disregarded this
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`immunity both in its statements and conduct. Plaintiffs ask this Court for a judicial determination
`
`confirming the immunity.
`
`The Government has a different view of the case. It says “[t]his action challenges an interim
`
`final rule that the Drug Enforcement Administration (DEA) has issued regarding hemp.” Mot. 1.
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`It is a curious take. Plaintiffs do not request relief in this action consistent with a rule challenge;
`
`the operative pleading never mentions 5 U.S.C. § 706 or the Administrative Procedure Act
`
`(“APA”); and a ruling from this Court on whether an immunity applies to in-process hemp
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`materials will neither sustain nor invalidate DEA’s interim final rule (“IFR”) in any way. In fact,
`
`the rule Plaintiffs are supposedly challenging does not discuss in-process hemp materials at all. At
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`most, a ruling in this case would prevent enforcement of the CSA, not the IFR, in a specific,
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`concrete context.
`
`To be sure, Plaintiffs discuss the IFR in their amended complaint. But that is because it is
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`a prominent symptom of the deeper structural issue: despite an unambiguous prohibition in the
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`- 1 -
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 9 of 53
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`2018 Farm Bill, DEA asserts and has acted as if it has the authority to regulate the production of
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`hemp and hemp derivatives. That does not make the IFR the object of Plaintiffs’ challenge, but it
`
`illustrates why this case is ripe and jurisdiction is proper.
`
`The Government’s redrafting of Plaintiffs’ cause of action to obtain a jurisdictional
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`dismissal is unfortunate, but hardly a surprise. As discussed below, DEA has for decades tried to
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`expand its regulatory authority to regulate non-psychoactive hemp, and in so doing, the agency
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`has been rebuked by both the courts and Congress. At this juncture, DEA’s best bet is to deny the
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`hemp industry a statutory immunity and assert authority where it has none is to play jurisdictional
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`keep away. To this end, the Motion makes four arguments for dismissal. None has merit.
`
`First, it argues that the CSA’s review scheme makes the court of appeals the exclusive
`
`forum for the claim Plaintiffs raise. But Plaintiffs do not challenge the IFR in this case, and the
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`scheme evinces no intent to preclude judicial review of Plaintiffs’ precise declaratory judgment
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`non-liability claim. On the contrary, 21 U.S.C. § 882 indicates Congress wanted this type of claim
`
`in district court. The Motion also argues that TRAC bars this action because resolving Plaintiffs’
`
`claim might affect the circuit court’s future jurisdiction. But the outcome of this case can have no
`
`bearing on the appellate court’s jurisdiction to hear the IFR challenge or any other administrative
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`proceeding.
`
`Second, the Motion argues that Plaintiffs do not have standing because they have not
`
`suffered injury. But Plaintiffs have numerous Article III injuries, including fear of prosecution or
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`civil enforcement actions based on true life experiences, not conjecture, in addition to tangible
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`economic harm, such as the reduction of operations and investment. Fundamentally, DEA’s
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`current position forces Plaintiff Hemp Industries Association’s (“HIA”) members and Plaintiff RE
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`-2-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 10 of 53
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`Botanicals to choose among registering with DEA, risking an enforcement action, or halting
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`essential parts of their operations.
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`Third, the Motion argues that the dispute is not ripe. Yet its rhetoric belies that very claim.
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`It asks this Court to abstain so DEA can apply its expertise and create policy regulating hemp
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`production—the very conduct Congress forbade. The merits turn on a pure, abstract question of
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`statutory interpretation and how the 2018 Farm Bill interacts with the CSA. This claim is fit for
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`judicial resolution now.
`
`Finally, the Government says the Court should exercise its equitable discretion to decline
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`declaratory judgment jurisdiction “so that Plaintiffs’ claims may be resolved in the pending action
`
`before the D.C. Circuit.” Mot. 23. But Plaintiffs’ D.C. Circuit action does not address the claim
`
`raised in this Court, and relief in the D.C. Circuit would not vindicate the statutory immunity
`
`Plaintiffs urge here. This case presents questions of law that this Court can and should resolve
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`swiftly and efficiently.
`
`I.
`
`Statutory and Regulatory History.
`
`BACKGROUND
`
`For as long as Congress has regulated the plant Cannabis sativa L. (cannabis) and related
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`psychoactive substances, it has attempted to distinguish between psychoactive cannabis with high-
`
`levels of THC (marijuana), and non-psychoactive cannabis with low-levels of THC (hemp).
`
`Congress first regulated cannabis through the 1937 “Marihuana Tax Act” (“MTA”). 50
`
`Stat. 551. Although the MTA required all growers, sellers, manufacturers, importers, and
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`distributors of marijuana to register with the U.S. Department of Treasury, the statute carved out
`
`the non-psychoactive parts of the cannabis plant, such as hemp seed and oil, from the MTA’s
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`reach. Hemp Indus. Ass’n v. DEA, 333 F.3d 1082, 1089 (9th Cir. 2003) (“HIA I”). At the time,
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`technological limitations prevented differentiating between hemp and marijuana variants directly
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`-3-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 11 of 53
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`according to THC levels, as we do today. Accordingly, although the MTA did not prohibit hemp
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`cultivation, its restrictions and technological limitations caused domestic hemp production to
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`effectively disappear. See First Amended Complaint (“FAC”) ¶ 20.
`
`In 1970, Congress enacted the CSA as part of the Comprehensive Drug Abuse Prevention
`
`and Control Act of 1970. See Gonzales v. Oregon, 546 U.S. 243, 250 (2006) (discussing legislative
`
`history). The CSA creates a comprehensive, closed regulatory regime that criminalizes the
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`unauthorized manufacture, distribution, and possession of substances classified in any of its
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`schedules. Id; see also 21 U.S.C. §§ 822, 823, 841(a). In this closed system, manufacturers and
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`handlers of controlled substances must register with DEA to become a part of the legitimate
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`distribution chain. See Wedgewood Vill. Pharmacy v. DEA, 509 F.3d 541, 542 (D.C. Cir. 2007).
`
`Like the MTA, the CSA’s definition of marijuana excluded the non-psychoactive portions
`
`of the plant. See 21 U.S.C. § 802(16)(B)(ii); Hemp Indus. Ass’n v. DEA, 357 F.3d 1012, 1014 (9th
`
`Cir. 2004) (“HIA II”). “Congress knew what it was doing” in the CSA and “its intent to exclude
`
`non-psychoactive hemp from regulation is entirely clear.” Id. at 1018; see also id. (“Congress was
`
`aware of the presence of trace amounts of psychoactive agents (later identified as THC) in the resin
`
`of non-psychoactive hemp when it passed the 1937 ’Marihuana Tax Act,’ and when it adopted the
`
`Tax Act marijuana definition in the CSA.”).
`
`Although the CSA effectively banned hemp cultivation, it did not prohibit the importation,
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`sale, and consumption of cannabis products made from excluded parts of the plant, such as the
`
`mature stalks. But as these legal hemp products grew in popularity in the late 1990s, DEA
`
`unlawfully attempted to impose a ban on THC occurring naturally within these legal products. See
`
`generally HIA II, 357 F.3d at 1015-18. Bypassing notice-and-comment, DEA issued a rule in
`
`October 2001 purporting to interpret the CSA and DEA regulations to ban all naturally occurring
`
`
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`-4-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 12 of 53
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`THC. HIA I, 333 F.3d at 1085. The Ninth Circuit invalidated the rule, concluding that DEA had
`
`attempted “to evade the time-consuming procedures of the APA by interpreting an existing
`
`regulation to cover naturally-occurring THC, which was consciously omitted from the scope of
`
`the current regulation.” Id. at 1091. “[T]o properly bring organic THC under the listing of THC,”
`
`the court explained, “DEA must promulgate a legislative rule in accordance with the APA.” Id.
`
`Thereafter, following notice-and-comment, DEA issued a final rule banning organic THC. But the
`
`Ninth Circuit enjoined that rule because it was contrary to Congress’ unambiguous intent to
`
`exclude non-psychoactive parts of cannabis from the CSA. HIA II, 357 F.3d 1017-18.
`
`II.
`
`The 2014 Farm Bill.
`
`The popularity of hemp products continued to grow in the early 2000s. Notwithstanding
`
`federal law, several states passed laws permitting hemp cultivation subject to certain parameters.
`
`For example, in 1999, North Dakota legalized the hemp cultivation by licensed and registered
`
`farmers. Kramer Decl. Ex. A at 17. Montana legalized hemp cultivation in 2001, and several other
`
`states, including Hawaii, Kentucky, Maine, Maryland, and West Virginia, adopted hemp
`
`cultivation and research programs in the early 2000s. Id. These laws gave rise to numerous disputes
`
`between hemp cultivators and DEA regarding whether the CSA encompassed non-psychoactive
`
`hemp. See, e.g., N.H. Hemp Council, Inc. v. Marshall, 203 F.3d 1, 5 (1st Cir. 2000); United States
`
`v. White Plume, 447 F.3d 1067 (8th Cir. 2006); Monson v. DEA, 589 F.3d 952, 957 (8th Cir. 2009).
`
`Each time DEA took the position that hemp cultivation was unauthorized under the CSA, and each
`
`time the agency prevailed.
`
`Then, in 2014, Congress changed federal law. As part of the Agricultural Act of 2014 (the
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`“2014 Farm Bill”), Congress authorized hemp cultivation without DEA interference under certain
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`conditions. Through the 2014 Farm Bill, Congress authorized the domestic cultivation and
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`marketing of industrial hemp as part of an agricultural pilot program or for research purposes. 7
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`-5-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 13 of 53
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`U.S.C. § 5940(b). The 2014 Farm Bill also provided a more expansive definition of hemp
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`compared to the 1937 MTA language by distinguishing psychoactive marijuana from non-
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`psychoactive cannabis based on THC content. The 2014 Farm Bill defines “industrial hemp” as
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`“the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9
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`tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” 7 U.S.C.
`
`§ 5940(a)(2).
`
`Conflicts among DEA, Congress, and the hemp industry persisted. See United States v.
`
`Mallory, 372 F. Supp. 3d 377, 382 (S.D.W. Va. 2019). For example, in May 2014, DEA seized
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`hemp seeds destined for use by farmers who complied with a pilot program administered by the
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`Kentucky Department of Agriculture (“KDA”). Senator Mitch McConnell (R-KY) and
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`Representative Thomas Massie (R-KY), both of whom participated in the drafting of the 2014
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`Farm Bill, called these actions “an outrage” and “ridiculous,” and the KDA similarly commented
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`that the “DEA is trying to place…illegal restrictions on Kentucky…restrictions on the program
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`that Congress doesn’t allow.” Kramer Decl. Ex. B.
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`Congress turned to the power of the purse. In a 2016 appropriations rider, it barred the use
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`of funds “to prohibit the transportation, processing, sale, or use of industrial hemp that is grown or
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`cultivated in accordance with subsection section 7606 of the Agricultural Act of 2014, within or
`
`outside the State in which the industrial hemp is grown or cultivated.” See Mallory, 372 F. Supp.
`
`3d at 382 (quoting Consolidated Appropriations Act of 2016, Pub. L. No. 114-113, § 763, 129
`
`Stat. 2242, 2285 (2015)). It renewed the rider in the Consolidated Appropriations Act of 2017. Id.
`
`(citing Pub. L. No. 115-31, § 773, 131 Stat. 135, 182 (2017)). And in the 2018 Consolidated
`
`Appropriations Act, it expanded the prohibition, adding the phrase “or seeds of such plant.” See
`
`id. “[T]his language was included in the Spending Bills to clear up any doubt that Congress did
`
`
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`-6-
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 14 of 53
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`not want these enforcement agencies from interfering with industrial hemp under the 2014 Farm
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`Bill.” Mallory, 372 F. Supp. 3d at 385.
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`Nevertheless, DEA, along with the United States Department of Agriculture (“USDA”)
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`and the United States Food and Drug Administration (“FDA”), issued a policy statement on August
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`12, 2016 entitled Statement of Principles on Industrial Hemp, 81 Fed. Reg. 53395-01 (Aug. 12,
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`2016) (“SOP”). Among other provisions, the SOP (i) took the position that hemp plants and seeds
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`grown in accordance with the 2014 Farm Bill could not be transported across state lines; and (ii)
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`attempted to rewrite the definition of hemp, explaining that “[t]he term ‘industrial hemp’ includes
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`the plant Cannabis sativa L. and any part or derivative of such plant, including seeds of such plant,
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`whether growing or not, that is used exclusively for industrial purposes (fiber and seed) with a
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`tetrahydrocannabinols concentration of not more than 0.3 percent on a dry weight basis.” Id. at
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`53,395 (emph. added). Compare with 7 U.S.C. § 5940(a)(2) (“The term ‘industrial hemp’ means
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`the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9
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`tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”).
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`The SOP generated significant concern. For example, the members of Congress who
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`drafted the 2014 Farm Bill stated in an amicus brief that the SOP contravened the 2014 Farm Bill
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`by improperly narrowing the scope of legal hemp activity exclusively to industrial use. Kramer
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`Decl. Ex. C at 16-20. They also noted that DEA attempted to curtail both private sector
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`participation in pilot programs and marketing activities related to pilot program industrial hemp.”
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`Id. at 19-20.
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`III. The 2018 Farm Bill.
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`In 2018, Congress acted more forcefully. As part of the 2018 Farm Bill, Congress legalized
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`a commercial hemp industry. And this time, it built a statutory fence to keep DEA out.
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`Case 1:20-cv-02921-JEB Document 33 Filed 03/02/21 Page 15 of 53
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`First, the 2018 Farm Bill broadly defines “hemp” to include “all derivatives, extracts,
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`cannabinoids, isomers, acids, 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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`7 U.S.C. § 1639o of 2018 Farm Bill (“Section 1639o”) (emph. added). This definition expands the
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`2014 Farm Bill’s definition of “industrial hemp,” and was “intended to facilitate the commercial
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`cultivation, processing, and marketing of hemp.” Kramer Decl. Ex. D.
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`Second, to prohibit DEA interference with hemp production, the 2018 Farm Bill grants
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`USDA the “sole authority to promulgate Federal regulations and guidelines that relate to the
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`production of hemp.” 7 U.S.C. § 1639r(b) (“Section 1639r”) (emph. added). The 2018 Farm Bill
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`also charges the USDA Secretary with administering and implementing hemp production plans,
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`id. §§ 1639q & 1639p, a mandate that extends beyond cultivation, see Kramer Decl. Ex. E at 737
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`(“In Sec. [1639p], the Managers intend to authorize states and tribal Governments to submit a state
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`plan to the Secretary for approval to have primary regulatory authority over the growing and
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`production of hemp.”).
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`Third, although the 2018 Farm Bill preserves FDA’s and the Depar