LAW HALTED: Federal Judge Bill Roy Wilson issued a ruling yesterday that will stop the state's hemp ban while the case plays out in court. Matthew Martin

A group of hemp-related businesses has filed a lawsuit in federal court in Little Rock to stop a new state law that makes psychoactive hemp-derived products, including Delta-8 THC, illegal. 

The plaintiffs in the suit include a manufacturer, wholesaler, distributor and retailer of hemp-derived products inside and outside of Arkansas who would be affected by a shutdown of the Arkansas market. A law banning the products was passed by the state legislature this spring and is set to go into effect tomorrow. 

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The plaintiffs in the case are Bio Gen, LLC of Fayetteville; Drippers Vape Shop, LLC of Greenbrier; The Cigarette Store LLC of Colorado doing business as Smoker Friendly and Sky Marketing Corporation of Texas doing business as Hometown Hero. Drippers is a retailer of hemp products, including non-psychoactive CBD as well as hemp-derived psychoactive substances Delta-8 and Delta-9 THC, and has stores in Greenbrier, Cabot, Hot Springs, El Dorado and Benton. 

The case has been assigned to Judge Billy Roy Wilson and Magistrate Judge Thomas Ray. Here’s the complaint.

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The controversy over hemp-derived products stems from the 2018 federal farm bill, in which Congress fully legalized hemp for the first time since it was banned by federal law in 1937. The bill defined hemp as Cannabis sativa L plants with a Delta-9 THC content of 0.3% or less. Plants with a higher THC content are considered marijuana and remain illegal federally, although 39 states have legalized marijuana for either medical or recreational use. Arkansas legalized marijuana for medicinal use in 2016.

But psychoactive products can still be extracted from plants that contain low levels of THC. Arkansas, like many states, has struggled with how to regulate these “hemp-derived” products, which fall outside the scope of the state’s medical marijuana program and are not sold in the state’s 38 dispensaries. The products have been sold in CBD stores as well as restaurants and liquor stores. Producers of Lark, a beverage made with hemp-derived Delta-9 THC, said in May that the beverage was in close to 400 locations across the state at the time

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The state legislature addressed the issue with Senate Bill 358, sponsored by state Rep. Jimmy Gazaway (R-Paragould) and state Sen. Tyler Dees (R-Siloam Springs), which Gov. Sarah Sanders signed into law as Act 629. The law states that its intent is to prohibit “intoxicating substances derived from industrial hemp” but recognizes that hemp should remain legal for industrial uses, such as home and building construction. 

The law makes hemp-derived products such as Delta-8, Delta-9 and Delta-10 THC illegal, as well as many synthetic variations of those cannabinoids. 

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The law also includes a regulatory structure that would go into effect in the event a court strikes down the ban. This alternative regulatory framework would require wholesalers, distributors and retailers to obtain a permit from Arkansas Tobacco Control at a cost of $5,000 a year. The products would remain legal under the regulations, but the law would prohibit them from being combined with other things, including liquids, sweeteners or non-hemp substances. The plaintiffs contend that amounts to a “regulatory taking” in which the state limits the use of private property to the point it can’t be used. 

Last year, the federal Ninth Circuit Court of Appeals issued a ruling in a case over trademark infringement that hinged on whether Delta-8 products were privy to trademark protection if they were federally illegal.

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Regardless of the wisdom of legalizing delta-8 THC products, this Court will not substitute its own policy judgment for that of Congress,” the appellate court said. “If  … Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.”

The federal Drug Enforcement Administration has chimed in on the issue with a pair of letters of guidance that reflect how the agency has interpreted the law. 

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In a 2021 letter, the DEA stated that cannabinoids extracted from cannabis plants with a THC concentration of 0.3% or less meet the definition of hemp and are not controlled under the Controlled Substances Act. 

Earlier this year, the DEA issued another letter in which it said cannabinoids that do not naturally occur in the hemp plant are controlled under the Controlled Substances Act. The letter did not address the legality of naturally occurring cannabinoids found in hemp. 

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