Federal Judge Issues Mixed Ruling On New Jersey’s Intoxicating Hemp Product Restrictions

“The big deal here is you can buy this on the internet, and that may obviate a lot of retail that’s here now.”

By Sophie Nieto-Munoz

A federal judge handed a partial victory Thursday to hemp businesses that sued to stop enforcement of the state’s new law restricting sales of intoxicating hemp products, though the judge declined their request to set the entire law aside.

It remains unclear the exact effect the decision by U.S. District Court Judge Zahid N. Quraishi will have on New Jersey’s hemp industry. But Quraishi agreed with the hemp businesses that parts of the law violate what’s known as the dormant commerce clause—which holds that states cannot place an excessive burden on interstate commerce—and are preempted by a 2018 federal law that legalized hemp.

Still, the decision upheld much of the new law, with Quraishi siding with New Jersey attorneys who argued they have the power to regulate hemp despite the 2018 federal law.

“The New Jersey Legislature can continue to otherwise regulate the production of hemp as stringently as it would like so long is it does not prohibit the transportation or shipment of hemp or hemp products,” he wrote in his 24-page decision.

Attorneys for the parties involved were still parsing through the details of the ruling on Thursday afternoon and figuring out how it would impact businesses across the state. One lawyer representing a hemp company called it a “wild decision” and “messy.”

At the center of the lawsuit is a law signed by Gov. Phil Murphy (D) last month that effectively bans hemp product sales amid concerns children could easily buy them. The law also put the hemp market under the purview of the Cannabis Regulatory Commission, which will dictate how people can apply for licenses to sell hemp, and it allows liquor stores to sell hemp products.

The law’s critics asked the judge to strike down most of the law, seeking to keep in place only the provision that bans the sale of hemp products to anyone under the age of 21. A group of hemp companies filed the suit two weeks after Murphy signed the bill.

Hemp is federally legal under the 2018 Farm Bill. The plaintiffs argued that the state law would turn farmers, business owners and consumers into “criminals” and that thousands would lose their jobs because businesses would have to close.

The judge expedited the decision as the deadline for businesses to pull hemp products off the shelves is 30 days after the bill signing, or October 12. That means after Saturday, hemp drinks, delta-8 gummies and CBD joints must be off the shelves in local smoke shops, gas stations and bodegas under the law. Until the cannabis agency sets up rules, those products can’t be sold again.

The Attorney General’s Office declined to comment on the decision.

Cannabis attorney Bill Caruso pointed out that people can still order these products online from out-of-state businesses. He believes the court’s decision opens the door for online shops to continue selling the products the law sought to ban.

“The big deal here is you can buy this on the internet, and that may obviate a lot of retail that’s here now,” he said.

Quraishi said one issue with the New Jersey law is lawmakers’ decision to use the phrase “in this State” in their definition of intoxicating hemp products. That language creates disparate treatment between hemp products cultivated in New Jersey and those derived from outside the Garden State and, combined with other language in the law, “alters the stakes for out-of-state hemp producers by subjecting them to civil and criminal liability,” he wrote.

He agreed there are health and public safety risks to hemp sales but said the Legislature cannot “blatantly discriminate against out-of-state economic interests.”

Quraishi ultimately disagreed that the entire law is unconstitutional, saying he “declines to engage in any additional judicial surgery to cure the constitutional violations.”

This story was first published by New Jersey Monitor.

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