In January 2018, the USA Postal Service (USPS) seized a bundle in Denver, Colorado despatched by KAB, LLC, a registered, Colorado industrial hemp cultivator. The bundle contained 1170 grams of cannabidiol (CBD) powder, derived from industrial hemp. KAB appealed USPS’s resolution, arguing that the powder was not a managed substance and subsequently mustn’t have been withheld. Administrative Regulation Choose (ALJ) James G. Bilbert oversaw the enchantment and wrote an opinion in favor of KAB.
In his opinion, the ALJ thought of whether or not CBD grown and cultivated from industrial hemp, consistent with Part 7606 of the Agriculture Act of 2014 (Farm Invoice) was nonmailable as a Schedule I managed substance. The ALJ noticed that marijuana is assessed as a Schedule I substance underneath the Managed Substances Act (CSA) and that “CBD that may be a by-product of the marijuana plant, as outlined underneath the CSA, is non-mailable.” The ALJ quoted USPS, Publication 52, Hazardous, Restricted, and Perishable Mail § 453.31 (Aug. 2017) stating that “[i]f the distribution of a managed substance is illegal underneath [the CSA or related regulation] than the mailing of the substance can also be illegal underneath 18 USC § 1716.”
The ALJ’s evaluation then turned to the Farm Invoice, reciting well-known § 7606, which establishes the next:
- However the CSA, a state division of agriculture might domesticate industrial hemp whether it is grown for the aim of analysis carried out underneath an agricultural pilot program and is permitted by state legislation.
- Industrial hemp means the plant hashish sativa L. and any a part of such plant, whether or not rising or not, with lower than .three% THC on a dry weight foundation.
The ALJ recognized that the Farm Invoice and the CSA seem like in battle. The CSA broadly defines marijuana to incorporate practically all components of the hashish plant. In flip, the Farm Invoice defines industrial hemp as all components of the hashish plant as properly. The distinction? The .three% threshold. The ALJ decided that that the Farm Invoice “draw a transparent and distinct distinction by delineating that the plant with lower than zero.three% THC focus is industrial hemp.”
The ALJ thought of the DEA’s much-maligned Assertion of Ideas on Industrial Hemp, which reiterated the DEA’s place that the sale and transport of commercial hemp throughout state traces was prohibited. The ALJ didn’t put a lot weight into the Assertion, writing that based mostly on an “amicus temporary filed by members of Congress in a latest Ninth Circuit matter, and in correspondence from members of Congress to company officers, the [Assertion’s’ legitimacy as a legitimate interpretation of the Agriculture Act of 2014 was strongly criticized.”
Ultimately, the ALJ’s ruling turned on statutory interpretation, specializing in the usage of “however” within the Farm Invoice:
By selecting to outline industrial hemp based mostly upon the focus of THC within the plant Hashish sativa L, Congress didn’t amend the CSA a lot as carve out a transparent exception for industrial hemp. The language “[n]otwithstanding the Managed Substances Act” is especially instructive on this regard. “The Supreme Court docket has indicated as a basic proposition that statutory ‘however’ clauses broadly sweep apart probably conflicting legal guidelines.” United States v. Novak, 476 F.3d 1041, 1046 (ninth Cir. 2007) (citing Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993)) (“As we’ve got famous beforehand in construing statutes, the usage of such a ‘however’ clause clearly indicators the drafter’s intention that the provisions of the ‘however’ part override conflicting provisions of another part.”)[.]
The events stipulated to the truth that KAB had a license to domesticate industrial hemp and used industrial hemp to create the CBD powder. KAB was registered with Colorado Division of Agriculture (CDA). Accompanying the bundle was “Industrial Hemp Inspection and Chain of Custody” paperwork from the CDA exhibiting the powder was derived from a crop of commercial hemp with lower than .three% THC. The CBD isolate additionally examined for low quantities of THC.
Given the proof that the powder was made in compliance with the Farm Invoice, the ALJ dominated it was mailable. In that sense, the ALJ got here to the identical dedication because the Ninth Circuit earlier this 12 months, when it opined that Congress supposed to take away Farm Invoice hemp from the strictures of the CSA.
The story of KAB, nonetheless, is a reminder that industrial hemp comes with threat. Regardless that the ALJ finally dominated in favor of KAB, the corporate nonetheless needed to take care of the unwarranted seizure, enterprise disruption and litigation. Let’s hope for a great Farm Invoice quickly!