In a short memorandum opinion, issued just a week after it heard oral argument, the appellate court did not address the merits of Big Sky’s claim that the 2018 Farm Bill bars states from prohibiting transportation of hemp in interstate commerce. Instead, the three-judge panel ruled that the federal district court in Idaho should refrain from hearing Big Sky’s claims to avoid interfering with the parallel in rem forfeiture action over Big Sky’s hemp that was ongoing in Idaho state court. Ignoring Big Sky’s argument that the lower federal misread the relevant provisions of the 2018 Farm Bill, the Ninth Circuit held that the lower court should have applied Younger abstention, the doctrine under which federal courts do not interfere with parallel state proceedings absent extraordinary circumstances, and not addressed Big Sky’s claims at all.
As a result of the Ninth Circuit’s decision, Big Sky will have to litigate its claims in the state court forfeiture proceeding rather than the Idaho federal court where Big Sky filed its lawsuit.
For Big Sky—whose plant matter was seized nearly nine months ago—the decision is a significant disappointment. Given that CBD isolates dissipate after hemp is harvested, the value of the company’s hemp has likely been deteriorating, especially given that the ISP has not stored the product in a climate controlled setting. The decision was also a disappointment for the hemp and CBD industry more broadly, which was hoping the Ninth Circuit would adopt Big Sky’s arguments that section 10114 of the 2018 Farm Bill forbids states from prohibiting the transport of hemp even though the Bill’s implementing regulations have not yet been issued.
But while the Ninth Circuit’s decision was a disappointment for industry stakeholders, it was hardly a surprise after the judges’ questions at oral argument on August 28, 2019. Indeed, from the very first moment, the exceptionally active panel was so focused on the abstention issue that the underlying substantive dispute was hardly mentioned.
The panel also took the unusual step, during oral argument, of eliciting representations from counsel regarding matters that were not before the lower court. In particular, the judges asked the lawyers for the Idaho law enforcement entities whether the state forfeiture action would be able to proceed promptly to a decision, including on Big Sky’s arguments based on the 2018 Farm Bill, if the lower federal court exercised Younger abstention. And the Ninth Circuit’s opinion went so far as to say that its decision was based on the assumption that the state court would, in fact, “proceed expeditiously with the in rem action, including Big Sky’s challenge to Idaho’s interpretation of the . . . 2018 Farm Bill.” (Mem. Op. at 3.)
In declining to decide Big Sky’s substantive claims, the Ninth Circuit passed on the opportunity to shape the law that will govern the inevitable flood of preemption litigation in the wake of the 2018 Farm Bill. But the decision—as well as the panel’s sharp focus during oral argument—underscores that the interaction between state and federal law will play a central role in litigation around industrial hemp for the foreseeable future.
Andrew Orr is a litigator who follows the cannabis industry, and has represented agricultural companies in a variety of commercial and other complex cases.