Just a few days ago, the Texas Court of Appeals issued its opinion on smoking marijuana. Before entering the ruling, let us review what happened in Texas after the enactment of the 2018 Farm Bill.
In 2019, the Texas Legislature issued regulations regulating certain cannabis products. One of the regulations prohibits any state agency from authorizing a person to manufacture cannabis-containing products for smoking. The legislature also instructs the Ministry of Health Services (“the Ministry”) to adopt rules and procedures to manage and enforce these statutory regulations, including regulations and procedures related to smoking for the manufacture of cannabis-containing products.
In 2020, the department passed rule 300.104, which stipulates that “the manufacture, processing, distribution, or retail of cannabis consumer products used for smoking is prohibited.” Therefore, rule 300.104 prohibits smokeable cannabis products in Texas.
Several cannabis companies (“cannabis companies”) filed suits against the U.S. Department of Commerce, alleging two claims for declarative relief. (Look here, here, and here Background of declarative relief claims). In the first claim, the cannabis company asked the court to declare that the regulations prohibiting the processing and manufacturing of cannabis products are unconstitutional. In the second claim, the cannabis company asked the court to declare that rule 300.104, which prohibits the distribution and retail of cannabis products for smoking, is invalid under Texas law. The cannabis company also asked the court to issue an injunction to prevent the department from enforcing the statewide ban on the manufacture, processing, distribution, and retail of smokeable cannabis products.
The cannabis company subsequently applied Temporary restraining order (“TRO”) opposed to the department. After the evidence hearing, the court partially approved the TRO and instructed both parties to prepare the proposed order. But the two parties could not agree on the wording and raised concerns to the court. The court entered a TRO that prohibited the department from fully implementing Rule 300.104.
The department appealed. The department first believed that the scope of the TRO was too broad. The department argued that the cannabis company has never asked the court to prohibit the department from implementing rule 300.104 because it applies to the manufacture and processing of cannabis products for smoking, but only asked the court to prohibit the department from implementing rule 300.104 because it involves the prohibition of smoking cannabis. Distribution and retail of products. The Court of Appeal agreed and overturned the TRO because it prevented the department from enforcing the rules prohibiting the manufacture and processing of smokeable cannabis products. (The first lesson here is that parties seeking a TRO must be very careful to determine the exact relief requested.)
The department then argued that the Texas Legislature authorized it to issue a rule prohibiting the distribution and sale of smokeable cannabis products. Therefore, it argued that the court of first instance had gone too far in prohibiting the enforcement of this part of 300.104.
The appellate court did not agree with the department’s opinion for two main reasons. The first is that the legislature has clearly stipulated a statutory ban on the manufacture and processing of cannabis-containing products. But the legislature has not explicitly prohibited the distribution or retail of smokable cannabis products.The appellate court stated that it may have, which means that the department did not expressly act within its rule-making authority when it passed a rule return The distribution and retail of smokeable cannabis products is prohibited. This analysis led to another reason: when looking at the regulations that gave the department the power to make rules, the legislature did not give the department broad and comprehensive powers. Instead, the Court of Appeals found that the Texas legislature narrowly restricted the department’s power to make rules to enforce various marijuana regulations.
These reasons together led the Court of Appeals to believe that the court of first instance was not wrong in prohibiting the department from enforcing the ban on the distribution and retail of smokable marijuana.
This is good news for distributors and retailers of smoking marijuana, but what is certain is that the case is not over yet. The ruling means that TRO may continue to be valid through the court of first instance. Of course, this case is not good news for companies in Texas that want to process or manufacture smokable cannabis products.
As we wrote before, in Texas and elsewhere, the issue surrounding smokeable marijuana continues and is far from certain. For more information, see: