Big Sky Scientific LLC was incorporated on December 17, 2018, just days before enactment of the 2018 Farm Bill that removed hemp from the Controlled Substances Act and established federal protection for transportation of the plant. §§ 12619, 10114(b). Five weeks later, the Colorado company had already bought 13,000 pounds of industrial hemp from a state-licensed industrial hemp grower in Oregon. Big Sky planned to ship the plants to Aurora, Colorado for processing and extraction of approximately $2.5 million worth of CBD, which the company would then sell. Big Sky was well positioned to take advantage of the landmark legislation in order to tap into the CBD market which industry analysts believe will hit $20 billion in the next few years.
Everything was going according to plan until a truck containing half of Big Sky’s hemp was detained at a port of entry outside Boise, Idaho for a routine safety check. Upon learning that the truck contained hemp, an Idaho State Patrol officer confiscated the shipment and arrested the driver. Idaho does not distinguish between hemp and marijuana, and the driver was charged by the Ada County prosecutor with marijuana trafficking, which carries a mandatory minimum five-year prison sentence. Notably the ISP later sent the plants to labs in Kentucky for testing, which revealed that they contained less than 0.3% delta-9 THC. That is, they were hemp, not marijuana under federal law despite the irrelevance of the distinction under Idaho’s Criminal Code.
After the seizure, Big Sky contacted the ISP and Ada County, and requested that the hemp be released or, at least, properly stored to prevent mold growth. When the Idaho authorities refused Big Sky’s requests, the company sued in federal court, filing an emergency motion for a temporary restraining order and preliminary injunction seeking the same relief. The lawsuit names the ISP, Ada County, and the county prosecutor.
In its emergency motion, Big Sky argued that its plants were “hemp” within the definition of the 2018 Farm Bill, which legalizes interstate commerce in hemp and forbids states from prohibiting “transportation or shipment of hemp or hemp products.” § 10114(b). Thus, Big Sky argued, Ada County and the ISP could not interfere with its shipment of hemp in interstate commerce.
The court disagreed, and instead held that the 2018 Farm Bill only prevents states from prohibiting transportation of hemp that has been produced in accordance with state and USDA hemp regulatory plans provided for in the Bill. Because no such plans had yet been approved, the court reasoned, “the hemp that was seized . . . could not possibly meet that standard because no ‘plans’” were yet in place. See Big Sky Scientific LLC v. Idaho State Police et al., 19-cv-00040, Memorandum Decision and Order at 11 (Dkt. 6). The court thus denied Big Sky’s emergency motion on the basis that the company was unlikely to succeed on the merits, and later denied the company’s motion for a temporary restraining order and preliminary injunction, in its entirety, based on the same reasoning.
Big Sky’s appeal (for which it hired former Solicitor General Neal Katyal) is currently pending in the Ninth Circuit. Among other things, the company argues that the district court erred in holding that only hemp produced pursuant to state and USDA plans is protected against interference from state authorities. The Ninth Circuit’s decision will necessarily establish some of the parameters for the many clashes between federal and state law regarding hemp expected in the years to come.
Needless to say, hemp companies eager to take advantage of the landmark 2018 Farm Bill will be hesitant to transport hemp across certain state lines if doing so will expose them to seizure, litigation or even prosecution. Companies may decide that the lesser evil is to wait until the Ninth Circuit weighs in, or for the state or USDA plans take effect. Some companies may opt to transport hemp via more circuitous routes that avoid states like Idaho. In any case, the Big Sky case is a good reminder that the 2018 Farm Bill did not flip a switch so much as start a process that will be long, messy, and full of litigation over the interaction between state and federal law.
Andrew Orr is a litigator who follows the cannabis industry, and has represented agricultural companies in a variety of commercial and other complex cases.