Why hemp businesses are (mostly) shaking off transportation setback

National shipments of hemp and its byproducts will march on, even if some businesses take extra care in the wake of a surprising court ruling delaying the return of roughly 7,000 pounds of hemp in police custody in Idaho, industry members and attorneys say.

The 9th Circuit Court of Appeals declined to order Idaho to return the hemp biomass to Big Sky Scientific of Aurora, Colorado, which was having the hemp trucked from Oregon when police seized it as suspected marijuana and charged the truck driver with drug crimes.

The ruling came despite a legal opinion from the U.S. Department of Agriculture (USDA) taking Big Sky’s side and arguing that the 2018 Farm Bill’s guarantee of interstate transport for hemp should take effect right away, not after all the rules are settled for growing and shipping hemp products.

Temporary setback

Attorneys representing hemp producers told Hemp Industry Daily that the Idaho case won’t chill the interstate commerce in hemp products such as CBD.

“This won’t affect other shipments,” said Jonathan Miller, a Kentucky-based attorney for the U.S. Hemp Roundtable, a lobbying group for the hemp industry.

“We’re hopeful that policing and law enforcement across the country will listen to USDA and allow for the interstate transportation.”

Miller pointed out that the federal appeals court didn’t side with Idaho’s argument that hemp transportation isn’t legal until the 2018 Farm Bill is fully implemented, which could take a few months.

Instead, the court simply told Big Sky to take up its claim in Idaho.

But the lack of clear guidance from a federal court means transportation confusion will continue, lawyers said.

For example, South Dakota has seized another shipment of cannabis biomass that the buyer and seller say is hemp, not marijuana.

Philadelphia attorney David Landau, who represents hemp clients, said transporters will need to be “cautious, at least in those two states.”

Full implementation of the Farm Bill could take months, he said, as states await USDA approval of their various plans for regulating the new crop and testing it to make sure it is not marijuana.

“I don’t think this decision is going to affect the hemp industry in the long term. It’s just in the short term,” Landau said.

“It’s not like the industry is not going to be ramped up for the next two years while we wait” for transportation rules, he added.

“The ramp-up, as you know, is now.”

Businesses shrug

Big Sky’s lawyers did not immediately say how the ruling affects the company’s business, though Big Sky lawyer Christopher Pooser told the court last week that cannabinoids in hemp flowers may break down over time, putting in question the current value of hemp seized in January.

Still, several hemp entrepreneurs who move the plant across state lines but aren’t involved in the Idaho case told Hemp Industry Daily that they’re undeterred by the ruling.

Because the case doesn’t affect other states, “it does not concern me,” said Bob Crumley, CEO of Founder’s Hemp of Asheboro, North Carolina, which ships hemp-derived CBD products to 21 states.

“What concerns me more is Idaho law enforcement seeking to harm legitimate farmers and processors from sister and neighboring states,” he said.

Krista Whitley, CEO of Altitude Products, a Las Vegas-based company that develops and manufactures CBD products under 11 different brands, reacted similarly to the Idaho setback.

“We are not holding off shipping hemp,” she said, “but we are certainly more cautious about the states we ship hemp through.”

The case simply underscores the need for the USDA to move swiftly in implementing the law, she added.

“Uniform federal regulations will provide states guidance and avoid damaging hemp producers and manufacturers who are making every effort to conduct a legal, professional business under the 2018 Farm Bill,” Whitley said.

Next steps

The USDA originally planned to release hemp rules by August, then said the rules would be delayed in part because of testing complications. Agency officials insist that rules will be in place for the 2020 growing season.

Even after the rules are set, though, hemp businesses will still need to watch for state differences in hemp rules, said David Bush, president of the Industrial Hemp Research Foundation and a Denver attorney who advises hemp clients.

“The bigger picture on all this is that the relationship between state and federal authorities in the regulation of hemp, and protection of interstate commerce in hemp, is still very much up in the air,” Bush wrote in an email to Hemp Industry Daily.

Bush pointed out that the Farm Bill guaranteed interstate commerce for hemp while giving states broad authority to set their own hemp rules.

“It may be inevitable that we now see a clash between state and federal authorities when the 2018 Farm Bill is equivocal on exactly how far states may go in enforcing their own laws,” he added.

The confusion from a Minnesota CBD producer’s shipment being snagged in South Dakota has prompted a state hemp group to warn against moving hemp across the border until businesses have more assurance that it’s legal.

The Idaho ruling “sets a precedent that is alarming for business owners and operators working in a federally legal space,” said Joe Radinovich, head of the Minnesota Hemp Association.

Kristen Nichols can be reached at [email protected]