South Dakota Law Banning Intoxicating Hemp Products Takes Effect After Judge Declines To Block It

“The Legislature’s passage of HB 1125 falls squarely within the police powers traditionally reserved to states.”

By John Hult, South Dakota Searchlight

A new law barring the production or sale of high-inducing, hemp-derived cannabis products will take effect Monday after a judge declined to block it.

Hemp Quarters 605, a Pierre-based shop that sells those products, filed a lawsuit earlier this month in U.S. District Court in South Dakota. The business claims the new law’s provisions are unconstitutional and in conflict with federal law.

The 2018 federal Farm Bill legalized the production and sale of industrial hemp and hemp-derived products, provided they contain less than 0.3 percent of the intoxicating compound delta-9 tetrahydrocannabinol, known as THC, by dry weight.

House Bill 1125, signed into law in March by Gov. Kristi Noem (R), targets five types of chemicals that appear at low levels in hemp plants. The chemicals can be synthesized and added in amounts large enough for hemp products to ape the intoxicating effects of the delta-9 THC found in marijuana.

Marijuana remains illegal at the federal level, even though it’s legal in some states and medical marijuana is legal in South Dakota.

A violation of the new law will be a class 2 misdemeanor, the state’s lowest-level criminal offense. Like most laws adopted by the Legislature, its effective date is July 1.

Products like gummies, vape pens and smokable hemp containing the chemicals targeted by the new law are widely available across South Dakota. They’re sold in gas stations, grocery and liquor stores and in specialty smoke shops like Hemp Quarters 605.

The company had asked U.S. District Judge Eric Schulte to issue a preliminary injunction to block the law from taking effect as the case plays out in court.

At a hearing on that injunction Thursday in Pierre, Hemp Quarters 605 representatives testified that hemp-derived products constitute more than two-thirds of their retail business.

They argue the state is violating the U.S. Constitution’s commerce clause by interfering with the sale of federally legal products across state lines. An injunction is appropriate, they said, because they will suffer irreparable harm—namely the potential closure of their business—when the law takes effect.

To earn a preliminary injunction, plaintiffs must first prove they’re likely to “prevail on the merits,” according to an opinion that Judge Schulte filed electronically on Saturday. If the plaintiff—the hemp store in this case—is able to hit that mark, a judge must then find that the plaintiff would suffer irreparable harm without an injunction. The judge must also consider the wider implications of an injunction on other “interested parties”—in this case, the state and those affected by the new law.

A preliminary injunction denial does not settle the lawsuit or guarantee a win for the state, represented in the case by Attorney General Marty Jackley’s (R) office.

Judge Schulte wrote that Hemp Quarters’s arguments weren’t enough to earn an injunction, even if the law might cause its business irreparable harm.

The 2018 Farm Bill did not expressly prohibit states from enacting laws regulating the hemp trade. In fact, Schulte wrote, it did just the opposite, allowing states to impose “more stringent” regulations for hemp.

“The Legislature’s passage of HB 1125 falls squarely within the police powers traditionally reserved to states, as it is intended to promote the health and welfare of South Dakota’s citizens,” Schulte wrote.

Schulte cited a case challenging a Virginia law regulating hemp in which the judge came to a similar conclusion.

On the commerce clause question, Hemp Quarters had argued that a truck driver from Minnesota carrying federally legal hemp through South Dakota could be subject to state prosecution.

Schulte disagreed. He wrote that the law wouldn’t apply in such a scenario, because it doesn’t criminalize the possession of hemp products. It only bans their production or distribution.

The opinion also noted that the Hughes County state’s attorney has said it has no plans to immediately prosecute the owners of Hemp Quarters. The Attorney General’s Office has made no such promise, Schulte wrote, but lawyers for the state pointed out that “The South Dakota Attorney General’s Office does not typically prosecute misdemeanor offenses such as those contained within HB 1125.”

This story was first published by South Dakota Searchlight.

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