Iowa Companies Claim In Lawsuit That State Approved THC Drinks With 10 ‘Servings’ Per Can

“DHHS knew that these cans contained as many as 10 servings per can. With that knowledge, DHHS approved those cans.”

By Clark Kauffman, Iowa Capital Dispatch

The companies that are fighting the state’s efforts to restrict THC levels in carbonated beverages claim the state knowingly approved the sale of 12-ounce cans with up to 10 “servings” per can.

Ten different Iowa companies are suing the state to block enforcement of a new hemp law that restricts the levels of THC in beverages and other consumables. THC, short for tetrahydrocannabinol, is the main psychoactive compound found in cannabis or hemp.

The companies allege a new law—based on House File 2605 and House File 2641, both of which were passed this year by state lawmakers—is preempted by federal law. In court filings, the companies say they “continue to have no understanding what constitutes lawful business and what constitutes criminal conduct as of Monday, July 1, 2024.”

They also argue that attorneys for the state have misled the court by arguing state regulators were unaware that they had for years approved the sale of 12-ounce cans of THC-infused beverages that declared there were 10 servings, rather than one, in a single can.

At issue is the new law’s language limiting the THC in a consumable hemp product to “four milligrams per serving.” The companies say the law doesn’t define a serving, creating uncertainty as to the legality of all their products.

The attorney general’s office, representing the state, argued in court papers filed this week that no state defines serving sizes for food and beverage manufacturers, in part because federal law requires the companies to calculate serving size and publish that information on their product labels.

“To know how many servings are in their products, [the companies] need only look to the side of their cans,” the attorney general’s office argues. “Once they see the number of servings that they are federally required to list, they can compare it with the amount of THC in the beverages. [They] know how to do this.”

The companies say the law’s vagueness has led to their products being unofficially “shadow banned,” with retailers refusing to sell them. They also note that while the state claims anyone can easily determine the legality of a product, the state’s own regulators have “refused to definitively tell” the companies which of their products are legal.

The state’s lawyers claim the litigation over serving size stems not from legitimate concerns of vagueness but from the companies’ opposition to the Iowa Legislature’s “public-safety decision to lower the amount of THC in consumable hemp products.”

Federal law states a serving should be “an amount customarily consumed,” and for carbonated and non-carbonated beverages, the standard serving size is 12 ounces. “The industry—which comprises many persons of ordinary intelligence—thus well understands what HF 2605 meant when it set a limit of THC content per serving of consumable product,” lawyers for the state have told the court.

The companies argue that the state has not always embraced the 12-ounce standard for serving sizes. They say that prior to July 1, the state appears to have determined a beverage’s serving size based on the manufacturers’ own recommendations. DHHS, they say, was “approving 12-ounce beverages with one, two, five or 10 servings per container.” Only now, the companies say, is the state adopting the theory that a single serving is defined as 12 ounces.

At a July 11 hearing, a lawyer for the state argued that DHHS never knowingly approved beverages that claimed to have 10 servings per 12-ounce can.

“This is not true,” plaintiff Field Day Brewing Co.’s director of operations, Dan Caraher stated in a sworn affidavit filed with the court. “DHHS required that manufacturers submit information on serving and container. Based on this requirement, and on information and belief, DHHS knew that these cans contained as many as 10 servings per can. With that knowledge, DHHS approved those cans.”

In a brief filed with the court, the attorney general’s office argues the state has an interest in restricting the amount of THC in beverages.

“Since the onset of Iowa’s consumable hemp market, Iowa has seen a 1,050% uptick in calls to the Iowa Poison Control Center regarding children exposed to THC,” lawyers for the state claim. In addition, they say, Iowa’s hospitals have seen “a drastic increase in emergency visits relating to THC consumption.”

The 10 companies suing the state include Climbing Kites, a Polk County beverage manufacturer; Field Day Brewing Co., the Johnson County producer of Day Dreamer beverages; HW Premium CBD of Urbandale; American Shaman, which has retail locations in Altoona, West Des Moines and Indianola; Greene Goods Market and Greenhouses of Jefferson; Your CBD Store, which is a national franchise with a West Des Moines store; Beyond CBD of Des Moines; Campbell’s Nutrition Centers of Des Moines; Sky High of Cedar Falls; and Icanna of Iowa.

Last month, U.S. District Court Chief Judge Stephanie M. Rose denied the initial motion by Climbing Kites and Field Day for a preliminary injunction blocking enforcement of the law. Her decision, she noted, was based on the argument that the state law was preempted by federal law.

But in her ruling, Rose noted she had separate, “serious concerns” with the law, indicating it may be so vague as to be unconstitutional since it limits the amount of THC in a single serving without defining a serving. “It is unclear how this provision would be enforced,” Rose stated in her ruling.

Immediately after Rose raised that issue, Climbing Kites and Field Day incorporated the vagueness argument into their case and renewed their push for an injunction.

This story was first published by Iowa Capital Dispatch.

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