It’s no secret that the 2018 Farm Bill created a lot of confusion across the country. As delta-8 THC, HHC and many other cannabinoids found themselves legal – albeit unintentionally – states scrambled to put the genie back in the bottle through clarifying legislation.
Arkansas made their own attempt through Act 629, which would have banned delta-8 THC, delta-10 and many other cannabinoids, but an Arkansas federal court ruled this month that the law is invalid and cannot be enforced.
Here’s what the ruling said and what it means for the industry, both in Arkansas and around the country.
The Background: Act 629 and Why It Exists
First off, let’s take a look at the bill that caused all of this.
Act 629 (aka Senate Bill 358) was passed in April 2023, and the opening to the bill pretty much sums it up, “It is the intent of the General Assembly to prohibit the production and sale of intoxicating substances derived from industrial hemp.”
They did this by amending the controlled substance laws to include anything derived from hemp “as a result of a synthetic chemical process” that converted a hemp component into “Delta-8, Delta-9, Delta-6a, 10a, or Delta-10 tetrahydrocannabinol.” Additionally, the bill changed the definition of “industrial hemp” in the state. It modified the allowable limit for delta-9 THC in hemp to be 0.3% of “the hemp derived cannabidiol” (i.e. the CBD) on a dry weight basis, unless the contents are already covered by the state’s controlled substances act.
As the bill makes clear, this is all intended to stop delta-8 THC and similar intoxicating cannabinoids. Along with most states, Arkansas had passed hemp laws (through Act 565) which followed federal definitions of industrial hemp – with a THC limit that explicitly referenced the 2018 Farm Bill – and legalized delta-8 THC in the process. They probably didn’t mean to do that, but they did.
This situation has been repeated across the country over the past few years, with lawmakers trying to backpedal after accidentally crossing a line they never intended to. Sometimes the District Attorney offers a creative “interpretation” of what the words written in law mean, sometimes regulators bring in rules to outlaw using one cannabinoid to produce another, and sometimes lawmakers just pass more bills to try to keep the situation under control. Often this ends in a lawsuit, but very few have actually been concluded so far.
Bio Gen et al.’s Arguments Against Act 629
Bio Gen, along with Drippers Vape Shop, the Cigarette Store, Smoker Friendly and Sky Marketing Corporation/Hometown Hero filed a lawsuit against the bill on July 31st. Their brief in support of a motion for a Temporary Restraining Order against the state gives a good run-down of the main arguments.
To put the case as simply as possible, they argue that Act 629 is preempted by the Farm Bill, and that state lawmakers have no right under the law to alter the definition of hemp or prevent the interstate transportation of hemp.
The State Tried to Redefine “Hemp”
The definition argument is pretty straightforward. Not only did the Farm Bill define hemp, the Conference Report for the bill stated explicitly, “state and Tribal governments are authorized to put more restrictive parameters on the production of hemp, but are not authorized to alter the definition of hemp.”
The problem for the state is that Act 629’s definition states, that hemp must have “a total delta-9 tetrahydrocannabinol concentration of no more than three-tenths of one percent (0.3%) of the hemp-derived cannabadiol on a dry weight basis, unless specifically controlled under the Uniform Controlled Substances Act.” (emphasis added)
The Farm Bill definition, though, states, “with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” There is no reference to the quantity of CBD here, for example, and the practical implications of this are obviously quite significant.
The brief points out that “farmers awaiting harvest and those intending the plant seeds have no idea how to grow a plant which is required to meet a total delta-9 THC concentration level that is a specific fraction of the CBD concentrations. No seeds on the market can guaranty this ratio.”
Additionally, they point out that the state creates a distinction that doesn’t exist in federal law by recriminalizing anything derived from hemp that is “produced as a result of a synthetic chemical process.”
Act 629 Prevents Interstate Commerce in Hemp
Bio Gen and others also argued that Act 629 violates the Farm Bill’s provision that “no State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products” grown in accordance with the Farm Bill. This is simply because possession of many federally-legal hemp components would be illegal in Arkansas under the bill.
As they write, “A truck driver transporting hemp extracts to Tennessee from a farm in Oklahoma faces criminal sanction were his truck to be stopped by law enforcement in Arkansas.”
They point out that the state includes a couple of paragraphs claiming that this section “does not prohibit the continuous transportation through Arkansas of [hemp],” but argue that these sections are internally contradictory.
The State’s Response: The Law Is Consistent With the Farm Bill
The state responded to these arguments, claiming that the case falls down on both procedural grounds and on merit.
The procedural issues are a little thorny – when is it appropriate to file a claim against state officials – but aren’t especially relevant for this discussion about hemp law. If you want more information about this, it’s explained in some detail in the order.
For the other issues, the state makes a couple of key points. Firstly, they point out that the Farm Bill states that it does not “preempt or limit any law of a State or Indian tribe that—(i) regulates the production of hemp; and (ii) is more stringent than this subchapter,” and that states are even permitted to ban hemp altogether.
For the differences in definition, the state simply argues – apparently with a straight face – that the two definitions quoted above are identical. They even place them side by side in a small table as if the additional words in their definition have no meaning whatsoever.
For the claim that the law prevents interstate commerce, they simply referred to the paragraph in the law which says – just says – that it doesn’t prohibit the “continuous transportation” of hemp through Arkansas.
The companies filed a response to this document from the state, in which they took many of the tables the state used and simply highlighted the sections that undermine their claim. While they did flesh out the arguments too, the highlighting alone is devastating to the state’s case.
The Ruling: Act 629 Cannot Be Enforced
The order itself was filed on September 7th, and broadly comes down on the side of the industry and against the state. After addressing the more technical issues of sovereign immunity of state officials and whether the Farm Bill created a “private right of action” – if one is needed at all – it gets into the meat of the issue.
Firstly, the court was not fooled by the state’s baffling claim that its definition of hemp matches the federal one. It simply doesn’t. District Judge Billy Roy Wilson draws attention to the list of THCs in the Arkansas controlled substances list, writing:
“The THC substances listed above are likely legal under the 2018 Farm Bill. The relevant portion of the 2018 Farm Bill removes ‘hemp’ from the definition of marijuana in the Controlled Substances Act. Under the 2018 Farm Bill’s standard, the only way to distinguish controlled marijuana from legal hemp is the delta-9 THC concentration level. Additionally, the definition extends beyond just the plant to ‘all derivatives, extracts, [and] cannabinoids.’”
Judge Wilson also neatly describes the overall issue with the state’s conduct:
“Congress realized potential benefits with hemp as it defined it, and allowed states to participate in its research and development. Once, at least some benefits were recognized, Congress took steps to legalize hemp nationally. Arkansas apparently saw some benefits as well, and got onboard with the federal program. Now, after realizing some potential negative implications with its participation, the Arkansas legislature has attempted to take a step back. Clearly, under the 2018 Farm Bill, Arkansas can regulate hemp production and even ban it outright if it is so inclined. The legislature seems to have tried to keep the parts of the program it likes (purely industrial uses) and eliminate the parts it doesn’t (human consumption). That may very well be an acceptable distinction as it applies to the state’s criminal code, but changing definitions in a federal program, which it has already fully joined, is not a constitutionally valid way to do it.”
For the argument that the bill limits interstate commerce in hemp, the judge re-iterated the question posed in the suit: would a hemp industry employee from a state like Tennessee be criminally liable for possession of, say, delta-8 products if he or she stayed overnight in Arkansas? Wilson writes, “I can’t answer that question. Based on testimony at the hearing. Plaintiffs do not know, and I don’t think anyone can, based on Act 629 as written.”
Judge Wilson also discusses the issues with the vagueness of the bill, saying it “contains terms that would confuse even an exceptionally intelligent reader.” He lists continuous transportation, synthetic substances, psychoactive substances, danger of misuse and others as examples, pointing out:
“These terms are paired with, at best, fuzzy standards—and record no explicit statutory definition– making it next to impossible for the typical person to know what to do. If the person guesses wrong, the consequences are potential criminal punishment. Circumstances like these, could make Act 629 void for vagueness.”
For all of these reasons, the court granted a preliminary injunction against the state, preventing them from enforcing Act 629. The case will go to trial on August 27th, 2024.
What Does This Mean for the Industry? Can Other State Bans Be Stopped?
In summary, there has been a ruling against a poorly thought-out state law in Arkansas… but so what? Is this just a case of a single state government overreaching or does it have broader implications for the hemp industry?
Creating Two Roadmaps for Future Action on Delta-8
In his post discussing the ruling, cannabis lawyer Rod Kight explains that “the court’s findings have sweeping implications for hemp laws in states across the country. It is not an overstatement to say that every state law that defines hemp differently from federal law or that restricts downstream hemp products based on anything other than their delta-9 THC concentrations is now in jeopardy of being struck down as unconstitutional.”
But not everybody agrees. We spoke to Neil Willner, Co-Chair of the Cannabis Group at Royer Cooper Cohen Braunfeld, who commented that:
“The holding in the Arkansas action is much narrower than what industry members are lauding. When it comes down to it, Judge Billy Roy Wilson temporarily struck down an overly broad state statute but also provided a pathway for states to prohibit final products without running afoul of the preemption issues present in Arkansas. That said, Judge Wilson’s dicta was broad and sweeping, implying that even D8 THCO and D9 THCO were legal under the 2018 Farm Bill.”
Adding, “Moreover, this is a district court decision out of a district court in Arkansas. It is not binding on any other court.”
Rod Kight’s post also stresses this point, but explains that “Although the court’s ruling does not directly affect the laws of other states, it creates a roadmap for attacking state laws that restrict hemp, hemp derivatives, and hemp products, including THCa, D8, D10, HHC, THCP, and THCa hemp flower on a number of legal grounds.”
Both believe that this ruling creates a roadmap, but the reality is that it creates two roadmaps. Firstly, it gives a hint to the approach states could take if they wanted to ban some cannabinoids – just ban the sale of them without changing what hemp means in law.
Neil explains, “Judge Wilson expressly acknowledged that Arkansas can regulate and even prohibit hemp product for human consumption but in his opinion, the law as written was preempted by the 2018 Farm Bill. If a state were to prohibit the sale of hemp products within its borders, that would not interfere with the right to transport hemp in interstate commerce. The vagueness of the Arkansas statute was its death knell.”
He also comments that, “While savvy plaintiffs challenging other hemp laws across the country can argue the decision is persuasive, courts will have to analyze the legality of the challenged hemp laws on a case-by-case basis.”
So the real question is: how would that case-by-case basis work out? How good is the other roadmap? Of course we can’t know this until more rulings are made, but here is our summary of the argument on the other side.
How Other Delta-8 Bans Could Be Challenged, Based on the Ruling
The major arguments addressed by the ruling crop up far more than you may think. One example is the claim that delta-8 THC is “synthetic” and therefore can be classed as a controlled substance, which has been made by some states (for example, Indiana, Massachusetts and Colorado to some extent). The court – just like the Ninth Circuit Court has previously – pointed out that the method of production is not relevant for the definition of “hemp” and the cannabinoids included in this term by the Farm Bill.
It’s notable that the court also agreed that Arkansas modified the definition of hemp in a way that is preempted by the federal Farm Bill. Several states have arguably done this by modifying the 0.3% delta-9 THC limit to apply to other THCs, including Kansas, Michigan, Virginia and Nevada. And this is only one way states may have impermissibly altered the definition of hemp – a “total THC” standard (taking account for THCa’s conversion to THC) also arguably does the same thing in a different way.
Finally, the ruling that the ban of Act 629 disrupts interstate commerce has pretty big implications. If the hemp employee from Tennessee risking arrest by stopping overnight in Arkansas is an illegal impediment on interstate hemp commerce, what about the bans in states like Alaska, Delaware, Idaho and Mississippi, or the debate in South Carolina? In all of these cases, their insistence that delta-8 THC is a controlled substance would presumably prevent interstate commerce too.
Will It Actually Change Anything?
Although there is potential for many state laws to change, the question remains: will this actually change anything? Neil Willner points out that, “With negotiations concerning the definition of hemp under the 2023 Farm Bill heating up, the hemp industry is running out of time to challenge current state legislation.”
“Currently, there are lawsuits challenging hemp legislation or regulation in six states: New York, Indiana, Maryland, Arkansas, Pennsylvania and Virginia. Depending on the statutes, regulations, or interpretations at issue in each of those states, the Arkansas decision may or may not have any impact. If the definition of hemp is changed in the 2023 Farm Bill then it is very likely any positive impact for the hemp industry from the Arkansas decision would be rendered moot depending on what the federal changes do.”
While the actual decision itself won’t affect the decisions of other courts, those courts are working on the basis of essentially the same facts. It’s hard to see how the action in Virginia – where state law includes other THCs in the definition of hemp’s 0.3% limit, thus changing the federal definition – is appreciably different from this case. If Arkansas’ definition change was preempted by federal law, how can Virginia’s not be?
In short, with two federal courts now having ruled that the plain text of the Farm Bill legalizes delta-8 and other hemp cannabinoids – intoxicating or not – it’s hard to see how these same arguments wouldn’t hold weight in other places too.
Conclusion: The Fight for Legal Hemp Continues
The 2018 Farm Bill is still causing controversy just months before the 2023 bill will be signed into law, but it looks like the rulings will continue to favor the industry until we get federal clarification.
The bad news is that it’s likely that the 2023 Farm Bill will limit hemp more than the 2018 bill did, with a possibility it will explicitly ban hemp products created with lab-dependent processes. However, if it doesn’t – or at least until then – the Arkansas federal court has just handed a huge win to the still-growing hemp industry.