The Cannabis Industry’s Own Private Idaho: State Court Upholds Seizure of Truckload of Hemp Bound for Colorado

Big Sky Scientific is a Montana-based manufacturer of hemp-derived cannabidiol (CBD) products, including isolate powders, oils, and distillates. Big Sky sources its products from hemp producers, including in Oregon. During late 2018, it purchased more than two tons of hemp plant material containing less than 0.3% THC from an Oregon producer and arranged for its transport to a production facility in Colorado. Both Colorado and Oregon have liberal cannabis laws; in both states, recreational use of THC and CBD-containing products is legal. Unfortunately for Big Sky and the truck driver who transported the load, the route went through Idaho, a jurisdiction with perhaps the most restrictive cannabis laws in the country.

During January 2019, the Idaho State Police seized more than 6,700 pounds of Big Sky’s hemp plant material being transported to its Colorado facility. They also seized the truck, arrested the driver, and charged him with felony marijuana trafficking. Several months later, the Idaho State Police filed an action in state court seeking forfeiture of the cannabis and the truck. Big Sky wasn’t particularly stoked about the potential forfeiture of its hemp plants given that federal law now generally defines industrial hemp as cannabis containing less than 0.3% THC by weight and promptly filed an action in federal district court in Idaho seeking a preliminary injunction. The motion was based on the company’s argument that the 2018 Farm Bill and the Commerce Clause prohibited seizure of hemp being transported through Idaho from Oregon to Colorado. In an Order, dated February 2, 2019, U.S. Magistrate Judge Ronald Bush denied Big Sky’s motion, concluding that it was not likely to prevail on the merit of its claim. Not surprisingly, Big Sky wasn’t too high on the district court’s decision and sought an interlocutory review of that decision before the U.S. District Court for the Ninth Circuit. That effort didn’t bring on the desired buzz that the company was seeking either; to the contrary, in a memorandum decision issued on September 9, 2019, the Ninth Circuit declined to reverse the denial of the preliminary injunction decision and further concluded that the district court should have abstained from the case and let the Idaho state court decide the pending forfeiture action.

More than four months later, during late January 2020, an Idaho state court judge issued an Order denying Big Sky’s motion for summary judgment and granting the Idaho State Police’s motion to have the hemp plants forfeited to the state. Idaho District Court Judge Jonathan Medema concluded that under Idaho’s Uniform Controlled Substances Act, all plants within the Cannabis genus are controlled substances and possession – including of low THC-containing plants, is a crime other than possession of the mature stalks of the plant. Because the seized plants contained THC, there was a presumption that the plant material is presumptively contraband and subject to forfeiture.

In its Order, Judge Medema rejected Big Sky’s preemption arguments, noting that Congress did not intend to occupy the field of cannabis husbandry because parallel state regulation of cannabis is permitted. In a lengthy discussion of the 2014 and 2018 Farm Bills, the court noted that federal law still prohibits the manufacture or distribution of plant material containing THC. Despite Idaho State Police’s concession that the truckload contained only low-THC (less than 0.3% THC by weight) Cannabis sativa plants (which under the 2018 Farm Bill are not controlled substances), the Court concluded that because the seized hemp was grown before USDA promulgated regulations under the 2018 Farm Bill and was not grown according to a plan submitted by Oregon to USDA thereunder, the 2018 Farm Bill provision that prohibited states from interfering with interstate transport of low-THC cannabis did not apply. The Court based its decision, in part, on its conclusion that the 2014 Farm Bill only permitted hemp cultivation under pilot programs conducted by universities and states. Unlike the 2018 Farm Bill, the earlier legislation did not permit commercial cultivation of hemp. The 2014 Farm Bill also provided no federal protection from seizure for the interstate shipment of hemp plants.

On a positive note, the Big Sky opinion is not likely to have future adverse impacts on hemp producers, truckers, or CBD manufacturers transporting cannabis across the Gem State because Idaho’s Governor, on November 19, 2019, issued an Executive Order permitting the interstate transport of hemp produced under either the 2014 Farm Bill or the 2018 Farm Bill as long as the transporter complies with several other requirements, including lab results confirming that the load does not contain more than 0.3% THC. Unfortunately for Big Sky, it is far from clear whether it will ever recover the more than two tons of hemp plants seized by the Idaho State Police.

Those involved in the cultivation, trucking, and manufacture of CBD products need to be extremely careful when transporting hemp in interstate commerce through states with restrictive cannabis laws. For hemp plants grown before enactment of the 2018 Farm Bill, the risks are extremely high. Even today, only hemp plants harvested during and after the 2019 growing seasons in states that have a USDA-approved regulatory plan or grown in accordance with USDA’s regulatory plan have federal protection from seizure of low-THC cannabis plants transported in inter-state commerce. The takeaway from the court’s opinion is that hemp producers, trucking companies, and CBD manufacturers should consult with knowledgeable counsel before transporting hemp across state lines.

Categories: For Export, USDA

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