CHICAGO (CN) – Indiana urged the Seventh Circuit in a telephone hearing Tuesday to throw out a preliminary injunction stopping the state from prohibiting the sale of smokable hemp.
A lawsuit filed last year by the Midwest Hemp Council and several stores selling hemp products challenges the state’s law May 2019 law banning the sale and transport of industrial hemp flowers and buds.
While marijuana sales remain illegal in Indiana, state and federal law allows for the production and sale of hemp containing less than 0.3% THC, or tetrahydrocannabinol, the mind-altering chemical found in marijuana.
While smokable hemp is low in THC, it contains a large about of CBD, or cannabidiol, a non-psychoactive chemical found in marijuana touted as having calming and medicinal properties. CBD is now being sold in smokable and oil forms everywhere from hemp stores to coffee shops.
The local NBC affiliate in Indianapolis reported farmers in the Hoosier State started their first hemp harvest last October and are expected to bring in $20 million from CBD products alone.
According to the companies’ complaint, the 2014 Farm Bill and 2018 Farm Bill, both federal laws, allow for the sale and transport of all hemp products, including those that can be ingested.
The federal government has the sole authority to regulate hemp, the plaintiffs say, and no state or tribe can prohibit the transport of hemp or change the federal definition. Indiana has done both by making one part of the hemp plant illegal, according to the lawsuit.
Senior U.S. District Judge Sarah Evans Barker in Indianapolis, appointed by President Ronald Reagan, granted a preliminary injunction last September prohibiting Indiana from enforcing the portions of its law dealing with smokable hemp, which the state appealed.
The appeal may not get very far though, as a three-judge panel of the Chicago-based Seventh Circuit considered remanding the case back to the district court on Tuesday. The hearing was held via telephone due to Covid-19 restrictions.
Judge Barker’s order was questioned by all three members of the panel – Chief U.S. Circuit Judge Diane Wood, a Bill Clinton appointee, and U.S. Circuit Judges Frank Easterbrook and Michael Kanne, both Reagan appointees – as an explicit and proper Rule 65 injunction is not found in her opinion.
The Seventh Circuit has interpreted Rule 65 to require injunctions and opinions explaining the injunction to be submitted in two separate documents, which Barker did not do, Deputy Solicitor General Kian Hudson, representing the state, told Courthouse News.
Calling the order somewhat rambling, Kanne said it “addresses many issues, but not anything you can attack directly as the injunction. Would it be better to remand and have her consider these matters?”
“Why isn’t that the right thing to do here?” Easterbrook agreed. “We are left without a proper Rule 65 injunction. Judges can’t just say well, we don’t care about that today.”
“There are a lot of questions about this that we don’t have answers to,” Wood added about the opinion.
Hudson said in an interview that the Seventh Circuit is known for taking procedural and jurisdictional rules seriously, but said both parties agreed that they didn’t mind the way the injunction was presented.
“It would just be a waste of resources,” he said of remanding the case so that Judge Barker could add a new document for the injunction itself. “There’s no reason to do that.”
“We hope the court will go on to consider the merits,” Hudson added.
Both parties moved on to their arguments, also addressing a new state law that will allow interstate transport of all hemp products between licensed producers or sellers located outside of Indiana, a new development Hudson thought could make the complaint moot.
Hudson said that the 2018 Farm Bill “sets out one thing that cannot be prohibited. Indiana law has made it crystal clear that it does not prohibit that one thing” – the transportation of hemp products.
Hudson also argued states are allowed to pass laws that are more strict than federal laws.
“The judges seemed receptive to the idea,” he said after the hearing, pointing out that federal law doesn’t prohibit speeding, but states certainly do.
“The Indiana General Assembly chose to prohibit the production, possession, and delivery of smokable hemp in Indiana in order to protect the efforts of law enforcement in enforcing state drug laws and to avoid setbacks like those experienced in other states. This prohibition is a valid exercise of Indiana’s traditional police powers, furthers significant public interests, and outweighs any remote chance C.Y. Wholesale has of prevailing on the merits,” the state’s brief says, referring to the lead plaintiff.
Attorney Paul Vink of the Indianapolis firm Bose McKinney & Evans, arguing for the companies challenging the law, told the court, “The new legislation is at best incomplete and at worst extremely vague as to what it purports to allow.”
Vink added that the law is unclear as to who needs a license, pointing out that the panel seemed to agree: “What is a licensed producer? What is a licensed handler?”
Even without the licensing confusion, the very requirement of a license hinders the transportation of hemp within the state, according to the plaintiff companies.
The law also bans the sale of smokable hemp and by singling out one part of the plant, Indiana has changed the federal definition of hemp, said Vink, something it is not authorized to do.
“There’s still an attempt to carve out a part of the fed definition and say, ‘we are not going to allow that in Indiana,’” he told the court.
The companies argued in their brief that “the entire purpose of the 2014 and 2018 Farm Bills was to expand the availability of low-THC hemp as a crop for farmers by removing it from a list of illegal substances and to open up new applications for [its] use.”
“All states are in the same boat” as far as figuring out how to make sure smokable hemp and other products are sold, consumed and transported in a responsible way, Vink told Courthouse News.
“I think there are plenty of other tools in the toolbox that the state can use to deal with the state police’s concerns,” the attorney said after the hearing. “There are constitutional ways to deal with the issue.”
Vink said he was happy to “engage intelligently with the court” and is hopeful the judges will see the merits of the companies’ arguments.
It is unclear when the Seventh Circuit panel will issue a ruling in the case.
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