Why the Ninth Circuit Court Ruling on Delta-8 THC Still Matters

Written by

Lee Johnson

Lee Johnson is the senior editor at CBD Oracle, and has been covering science, vaping and cannabis for over 10 years. He has a MS in Theoretical Physics from Uppsala...

CBD Oracle's Editorial Process
Federal court decision on delta-8 THC legality
Advertisement for hemp delta-8 THC products

On May 19th, 2022, the Ninth Circuit Court of Appeals ruled in favor of AK Futures, and in the process affirmed what the hemp industry had been arguing for years: delta-8 THC derived from hemp is legal based on federal law. The echoes of this are still heard today, with a recent ruling out of Arkansas using almost the exact same language in its interpretation of the 2018 Farm Bill.

But what exactly did the Ninth Circuit Court of Appeals decide? Does it still matter in 2023, with the looming uncertainty of the new Farm Bill on the horizon?

The Case: Boyd Street Distro Sold Counterfeit “Cake” Vapes

While most people citing this case do so because of the – kind of incidental – ruling that delta-8 THC was likely legalized by the federal Farm Bill, in reality the dispute was a simple one of trademark.

AK Futures, the original manufacturer of “Cake” branded delta-8 THC vapes, heard in the summer of 2021 that Boyd Street Distro was selling Cake-branded vapes. However, Boyd Street is not an authorized retailer for Cake vapes, so AK Futures sent a private investigator to, well, investigate. After the investigator picked up a Cake-branded vape and it was compared with an original, they determined that they were selling counterfeit products.

Boyd Street’s defense for this was kind of pathetic, kind of like if you were caught with weed in an illegal state and tried to tell the cops that the guy who sold it to you said it was just oregano. They claim an unidentified “someone” came up to the store selling Cake products, but they have no receipts for the sales. On a second occasion, someone told the CEO of Boyd Street that they were “an authorized distributor” of Cake products, and the CEO apparently checked his story by asking for an invoice.

Perhaps not-so-shockingly, these random people walking into the store armed with nothing other than a box-full of vapes and an invoice form didn’t turn out to be legitimate. When AK Futures sued them initially, Boyd Street didn’t file anything in opposition, so the District Court gave AK an injunction, preventing Boyd Street from selling anything with the Cake logo or any of the company’s trademarks. After this, Boyd Street appealed the decision, and their (quite absurd) argument is why we’re still talking about this case today.

RELATED: AK Futures vs. Smoke Tokes: The Legal Battle Explained

Is Delta-8 THC Legal Enough to Have Trademark Protection?

Quoting Judge D. Michael Fisher’s description from the ruling: 

Appealing the preliminary injunction, Boyd Street does not contest the District Court’s finding that it was selling counterfeit versions of AK Futures’ Cake products. Instead, its chief argument is that AK Futures could not own a valid trademark in connection with these products because federal law forbids the possession and sale of delta-8 THC. 

Judge D. Michael Fisher

So, Boyd Street essentially admits that they were selling counterfeit products – containing delta-8 – but insists that they are actually illegal so the counterfeit part isn’t punishable. First off, if you’re right you’ll still be punished for selling illegal products yourself. But are they right? 

The Farm Bill’s definition of hemp is:

“The term ‘hemp’ means 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 [THC] concentration of not more than 0.3 percent on a dry weight basis.” 

The court interprets the “plain text” as meaning that hemp is anything sourced from a cannabis plant that contains no more than 0.3% delta-9 THC and can be called a derivative, extract, cannabinoid or anything else listed. The judge adds, “This seemingly extends to downstream products and substances, so long as their delta-9 THC concentration does not exceed the statutory threshold.”

We spoke to Neil Willner, co-chair of the cannabis group at Royer Cooper Cohen Braunfeld, who commented that, “The main factor here was that the plain meaning of the 2018 Farm Bill’s definition of hemp was clear, despite its sheer breadth. The 9th Circuit stated multiple times that the definition of hemp was not ambiguous and extended ‘beyond just the plant to ‘all derivatives, extracts, [and] cannabinoids’’ noting that ‘use of the word ‘all’ indicates a sweeping statutory reach.’”

Judge Fisher also pointed out that these terms “do not impose meaningful constraints,” but still goes through some of the basics of what it means to be a derivative of something and confirms that delta-8 THC is a cannabinoid produced naturally by the plant. It’s worth noting that the court didn’t actually check that AK’s specific products were legal by way of lab testing, but pretty much took their assertion that they met the threshold at face value. It doesn’t really change the overall conclusion, but it’s good to know.

Is Delta-8 THC a “Synthetic” Cannabinoid? 

One of Boyd Street’s arguments was that the way delta-8 THC is manufactured makes it a controlled substance. They point out that naturally, “Delta-8 exists in extremely small quantities, too small to be simply extracted outright. A chemical process is required to make it commercially viable, plus it is concentrated and flavored for vape purposes.”

They claim that the manufacturing process makes it a synthetic cannabinoid, and this is not allowed. Their memo in support of the appeal points to a DEA document claiming that: 

“The AIA [2018 Farm Bill] does not impact the control status of synthetically derived tetrahydrocannabinols […] because the statutory definition of ‘hemp’ is limited to materials that are derived from the plant Cannabis sativa L. For synthetically derived tetrahydrocannabinols, the concentration of D9-THC is not a determining factor in whether the material is a controlled substance. All synthetically derived tetrahydrocannabinols remain schedule I controlled substances.”

But the problem with using this quote to support this argument is right there in the quote: “the statutory definition of hemp is limited to materials that are derived from the plant Cannabis Sativa L.” 

Judge Fisher noted, “This language suggests the source of the product—not the method of manufacture—is the dispositive factor for ascertaining whether a product is synthetic.”

Overall, the argument did not persuade the judge, who noted “The Farm Act’s definition of hemp does not limit its application according to the manner by which ‘derivatives, extracts, [and] cannabinoids’ are produced. Rather, it expressly applies to ‘all’ such downstream products so long as they do not cross the 0.3 percent delta-9 THC threshold. While this statutory definition is broad, its breadth does not make it ambiguous.” (citation omitted) 

Did Congress Intend to Legalize Delta-8? 

The other main argument advanced by Boyd Street was that Congress only meant to legalize hemp for industrial use, so the products (again, the products they sold) are illegal. Judge Fisher seemingly had little patience for this argument, pointing out that the court cannot effectively add a limitation into the bill as passed by Congress. He writes:

“Regardless of the wisdom of legalizing delta-8 THC products, this Court will not substitute its own policy judgment for that of Congress. If Boyd Street is correct, and Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.” 

RELATED: Is Delta-8 THC Legal? A State-by-State Guide

Does the Ruling Still Matter? 

This ruling was filed on May 19th, 2022 – over a year ago. So it’s natural to wonder: does it even matter anymore? Won’t the 2023 Farm Bill change all this anyway?

We should acknowledge right off the bat that there are limitations to the ruling. 

Neil Willner explained that, “The 9th Circuit Court of Appeals decision in favor of AK Futures is a limited ruling for two reasons. First, the appeal was taken from the district court’s grant of a preliminary injunction which means the record in which the appeal was decided was a limited one. Indeed, a plaintiff only needs to demonstrate a ‘likelihood of success on the merits’ to obtain a preliminary injunction. The 9th Circuit recognized this limitation, remarking several times throughout the opinion that AK Futures’ ‘uncontradicted declaration’ stated that its delta-8 THC products were ‘hemp-derived’ and contained ‘less than 0.3’ percent delta-9 THC. While the 9th Circuit acknowledged Boyd Street’s argument that DEA considers delta-8 THC ‘a synthetic cannabinoid because, among other things, it is concentrated and flavored,’ this argument was not based on any facts in the record and completely misstates the process in which all delta-8 THC on the market is converted. 

Second, the 9th Circuit Court of Appeals is only binding on a handful of states and not the entire country. Accordingly, the court’s holding that delta-8 THC is hemp and therefore entitled to trademark protection is binding on Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. 

It’s also important to note that after the 9th Circuit issued its opinion, the parties settled and the district court did not have the opportunity to decide the action after a trial on the merits.”

That said, the arguments considered by the court are exactly the same arguments we’ve seen playing out across the country in the past few years. And the conclusions were strong. Strong enough, in fact, that an Arkansas federal judge recently worded his conclusion in an almost identical manner: 

“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.’ The definition covers downstream products and substances, if their delta-9 THC concentration does not exceed the statutory threshold.”

RELATED: Arkansas Federal Court Rules That Delta-8 THC Is Legal

Courts don’t copy each other, but good lawyers and good judges read these arguments and the conclusions reached by the courts. So while the finding from the Ninth Circuit doesn’t “legalize” delta-8 THC nationwide, it puts a strong case forward to attorneys and judges across the country that the plain text of the Farm Bill does include delta-8 THC as part of “hemp.” 

The Ruling in Context of the 2023 Farm Bill 

Now we come to the 2023 Farm Bill. If the new bill brings in substantial changes to the definition of hemp – or if the DEA issues new rules on the subject, as is expected – then the AK Futures ruling could lose direct relevance. So does it really still matter today?

Neil Willner points out that “Despite the decision’s procedural limitations, it is still very relevant today and has been widely cited as authority for the argument that hemp-derived delta-8 THC is not a controlled substance. Even though the 2018 Farm Bill expires in less than three months, we do not yet know whether Congress will change the definition of hemp to prohibit delta-8 THC or other intoxicating cannabinoids.” 

As Neil said, we don’t know what exactly will be in the 2023 Farm Bill. It’s likely that Congress will take some action against intoxicating products, but this could come in many forms. For instance, if they impose a maximum THC dosage on hemp products but leave the definition basically the same, the arguments about delta-8 in the ruling would apply just as much as they do today.

Congress may limit the specific process of “isomerization” used to produce delta-8 THC. In that case, what if manufacturers find a new way to produce it? What about HHC, which is hydrogenated THC that can be made from delta-9

Well then we get right back to the same type of argument: Didn’t Congress mean that all synthetically-derived hemp intoxicants are banned? Isn’t HHC synthetic? And then all of a sudden the conclusions of this court case come back into view, underlining the point that the statute itself is the most important consideration, not our guesses as to the intent of the words or our attempts to strain our eyes so that the law says what we want it to. 

Of course, it’s entirely possible that the 2023 Farm Bill will come out ironclad and loophole-free. But after the past five years, anybody holding out hope that there won’t be some new unintended consequence may be in for a surprise. This problem could well continue in some form until Congress just straight-up legalizes weed.

Conclusion: The 2018 Farm Bill Legalized Delta-8 THC 

Regardless of what the 2023 Farm Bill finds, the Ninth Circuit Court ruling and the recent Arkansas ruling are both huge wins for the hemp industry. They serve as an important reminder that scary-sounding proclamations – even from authoritative sources – about Schedule I controlled substances aren’t the end of the discussion. If the law is on your side, and if you have the will and the ability to take your case to a judge, you might just find yourself scoring a huge victory for businesses across your state or even your country.  

Advertisement for hemp delta-8 THC products