Cannabis litigation: Washington, DC court dismissed cannabis industry’s challenge to DEA’s provisional final rule

On May 3, the District Court for the District of Columbia (“Trial Court”) dismissed the Hemp Industry Association and other organizations (“Applicants”) against the DEA Provisional Final Rule (hereinafter referred to as “rule”) revised its regulations after the enactment of the “Agricultural Improvement Act of 2018” (“The 2018 Farm Act”). Although not a good result for the hemp industry, it was filed in the District of Columbia Court of Appeals (“DC Circuit”). After a similar lawsuit, all hope of challenging the rule has not been lost.

Here, the court of first instance rejected the challenge of the Rules on the grounds of lack of subjective jurisdiction, essentially telling the petitioner that the DC Circuit Court is the only court that can grant him the relief he seeks.

Nathalie Bougenies Harris Bricken’s other marijuana lawyers have been following the rule since it was passed, and have been following litigation since the rule was established:

In a nutshell, this rule has a significant negative impact on cannabis extractors/processors. That’s because of the rules”Indicates that in any process where the THC concentration exceeds 0.3% by dry weight, the cannabis extracts in the process are all controlled substances in Schedule I. In other words, even if the THC content of the final product is less than 0.3% by dry weight, the cannabis processing plant may be attacked and criminally liable for processing its own cannabis raw materials into petroleum or other derivatives.

DEA (not surprisingly) claims that the rule is designed to make its regulations “compliance” with the statutory amendments to the 2018 Farm Act. As mentioned in the previous articles, our view on this is: “It is clear that this rule is an excuse for the DEA to maintain its authority over cannabis.”

If you find that DEA’s position runs counter to the purpose and wording of the 2018 Farm Bill, then you are not alone. Therefore, there are two lawsuits against these rules, the first one was filed in the DC Circuit Court, and the second one was filed in the court of first instance.

For non-lawyers, a key point is that the judgment of the court of first instance is not a judgment on the merits. This is by no means an affirmation of DEA’s position in any respect. On the contrary, the court of first instance believed that the applicable regulations and precedents compelled the court to rule that the petitioner’s challenge to this rule must be conducted and heard by the District of Columbia Circuit Court. Even the judgment of the trial court on jurisdiction is narrowly written as:

It is important to understand the meaning of this decision. The court did not conclude that an unconditional challenge to any issue related to DEA is within the scope of Section 877, so the district court may not accept the challenge.It also did not find that Section 877 must have exclusive jurisdiction [in the] The Court of Appeal for all enforcement actions conducted under the CSA. On the contrary, its claims are much more modest-that is, when the substance of the litigation disputes the claims of the agency specified in the DEA rules, the DEA rules provide for an exclusive review of the appellate court, and such litigation falls within the scope. within. Part of the exclusive review clause.

(Quotations and citations omitted). Therefore, in the long run, the judgment is not a huge victory for DEA, because the trial court did not deny its ability to hear other challenges related to DEA, nor did it comply with the rules.

So what will happen next?

As mentioned earlier, the same petitioner filed a lawsuit against the rules in the DC circuit. In October 2020, the DC Circuit Court put its case on hold, pending the settlement of the trial court procedures. Now that the Tribunal’s issues have been resolved and there is no appeal, the DC Circuit Court may “restart” the litigation and proceed to address the merits of the petitioner’s challenge to the Rules.

The short-term practical effect of the judgment of the trial court is also limited, which is not good for the cannabis industry. This rule has been in effect for nearly a year and will continue to be effective. The ruling of the court of first instance also means that it will not obtain immediate relief for the rule by prohibiting the DEA from enforcing the rule’s injunction. Therefore, unfortunately, for the foreseeable future, cannabis extractors and processors are still in a legal dilemma. I think one bright spot is that news in the cannabis industry has not been dominated by the headlines of DEA attacking extractors. However, the chilling effect on capital investment and industry growth due to this rule is not a trivial matter.

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