Federal court blocks Indiana law banning smokable hemp

Indiana’s law criminalizing smokable hemp has been snuffed out, at least temporarily, by a federal court, which found the proponents of hemp made convincing arguments that the federal farm bill of 2018, expanding the definition of hemp and removing the plant from the federal schedule of controlled substances, pre-empted the state statute.

Judge Sarah Evans Barker of the U.S. District Court for the Southern District of Indiana issued a preliminary injunction Sept. 13 in C.Y. Wholesale, Inc., et al. v. Eric Holcomb, Governor in his official capacity, et al., 1:19-cv-02659. Under the ruling, the state is prevented from enforcing portions of Senate Enrolled Act 516 that criminalized the manufacture, financing, delivery or possession of smokable hemp.

The court found without the preliminary injunction, the plaintiffs would suffer “irreparable harms.” These included a credible threat of criminal prosecution that could impact their ability to procure a license to grow or handle legal hemp, and the loss of an “untold amount” of profits.

Indiana had argued the legalization of smokable hemp would create significant obstacles to enforcing the state’s laws against marijuana. Distinguishing between the two substances is difficult and typically requires a test of THC levels that needs to be done in a laboratory.

The court recognized that the state had a legitimate interest in ensuring drug laws are enforced and legalizing smokeable hemp may pose additional challenges for law enforcement. However, the court noted, as the plaintiffs had pointed out, the state had earmarked additional funding to purchase the equipment needed to test the products and had enhanced the penalties for knowingly selling marijuana packaged as low-THC hemp.

Moreover, the court agreed with the plaintiffs that the fact the “local law enforcement may need to adjust tactics and training in response to changes in federal law is not a sufficient basis for enacting unconstitutional legislation.”

Represented by Bose McKinney & Evans LLP, the plaintiffs include wholesalers or retailers of hemp products as well as the Midwest Hemp Council, Inc., an Indiana nonprofit that advocates for the hemp industry.

The complaint is focused on a single provision in SEA 516, codified in Indiana Code section 35-48-4-10.1, that made dealing in smokable hemp a Class A misdemeanor. Indiana legislators crafted and passed SEA 516 during the 2019 General Assembly session after Congress passed the Agriculture Improvement Act of 2018. Similar to the 2018 federal law, SEA 516 expanded the definition of hemp and legalized its commercial production in Indiana.

However, the state law also criminalized smokable hemp, defined as “a product containing not more than three-tenths percent (0.3%) delta-9-tetrahydrocannabinol (THC), including precursors and derivatives of THC, in a form that allows THC to be introduced into the human body by inhalation of smoke.”

When SEA 516 was introduced in the Statehouse, the smokable hemp provision was not included. However, the bill’s author, former Sen. Randall Head, added the language to the second version of the statute. It passed through both houses with little opposition and was signed by Gov. Eric Holcomb May 2.

The plaintiffs filed their complaint in late June, days before the law was to take effect on July 1. Only the section governing smokable hemp has been blocked by the court. All other provisions in SEA 516 remain in effect.

In their lawsuit, plaintiffs argued the smokable hemp provision is pre-empted by the 2018 federal farm bill.

Specifically, the plaintiffs asserted a conflict pre-emption claim. They argued Indiana’s criminalization of smokable hemp hindered the federal government’s objective of legalizing all low-THC hemp products, including all hemp derivatives.

The state countered there is no evidence Congress contemplated, let alone had the intent of, legalizing smokable hemp. To support its arguments, the state offered a 2018 report from the Congressional Research Service issued several months before the passage of farm bill that nowhere identifies smokable hemp as a use of hemp.

Looking at the report closely, the court noted that after receiving this report, Congress broadened the definition of hemp to include derivatives and extracts such as the hemp bud and hemp flower, which can be smoked.

“The 2018 Farm Bill’s expansion of the federal definition of hemp and removal of all low-THC hemp from the federal list of controlled substances evinces a clear congressional objective to legalize all forms of low-THC hemp, including the hemp derivatives specifically criminalized under SEA 516,” Barker wrote.

Plaintiffs also argued the SEA 516 provision violated the Commerce Clause of the Constitution. In a footnote, the court said because the plaintiffs had shown they would likely prevail on their pre-emption claims, the constitutionality question did not need to be addressed. But, the court continued, it found the Commerce Clause arguments to be “less convincing.”