Hemp marketers file suit in federal court of Arkansas’ new law restricting products

4 plaintiffs seek injunction until Act 629 can go to trial

Hemp plants drying at North Pulaski Farms near Cabot in this 2019 file photo. (Arkansas Democrat-Gazette/John Sykes Jr.)

A group of hemp product marketers in Arkansas, Colorado and Texas filed suit in federal court in Arkansas Monday challenging Act 629 of 2023, which outlawed the sale of products containing THC derived from hemp plants containing less than 0.3% tetrahydrocannabinol (THC) .

The plaintiffs include a manufacturer, a wholesaler, a distributor and a retailer of hemp-derived products who would be affected by the loss of Arkansas as a market under the new law, which went into effect Tuesday.

Act 629, passed in the 2023 regular session of the General Assembly, bans the production and sale of products containing delta 8, delta 9 and delta 10 THC inside the state of Arkansas. Such products have been legal federally since 2018 under provisions contained in the 2018 Farm Bill that removed hemp containing less than 0.3% dry weight delta 9 THC as a controlled substance. According to federal law, hemp containing more than 0.3% dry weight delta 9 is classified as marijuana and is still prohibited federally, despite 38 states -- including Arkansas --having legalized marijuana for medical use and 23 states giving the OK for recreational use.

Named in the lawsuit are the state of Arkansas, Gov. Sarah Huckabee Sanders, Attorney General Tim Griffin, the Arkansas Department of Finance and Administration, the Arkansas Tobacco Control Board, the Arkansas Department of Agriculture, the State Plant Board, and the prosecuting attorneys of the state's 28 judicial circuits.

The federal complaint was filed on behalf of four hemp-related businesses: 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.

The new law is targeted mostly at products containing delta 8, a psychoactive substance found in cannabis and used in a growing number of hemp-related products. Proponents of the Arkansas legislation, signed into law on April 11 by Sanders, said it is meant to keep such products away from children, but the law itself bans those products for everyone, even though some adults use delta 8 as a less potent alternative to marijuana.

According to the lawsuit filed Monday, Act 629 is being challenged as a violation of the U.S. Constitution's commerce and supremacy clauses as well as a violation of the 2018 Farm Bill, which the complaint says prohibits states from restricting the transport and shipment of hemp or hemp products through interstate commerce.

"Plaintiffs have been, and will be, harmed by Act 629," the complaint said, "as they are unable to transport in and through Arkansas hemp-derived cannabinoid products that have been declared legal under federal law."

Abtin Mehdizadegan of Little Rock, an attorney for the plaintiffs, said Tuesday that rule contained in the new law creates confusion for companies transporting the products because it doesn't address a number of things, such as how long transporters may be in the state, if they can stop for fuel or to unload other products that are allowed, or even stop for a rest break without risking arrest.

While Act 626 permits the sale of hemp-derived products, the complaint said, it states that a hemp-derived product "shall not be combined with or contain any of the following ... any amount of tetrahydrocannabinol," which the complaint said effectively bans all hemp-derived products containing THC, even if those products are legal federally under the 2018 Farm Bill signed into law by then President Donald Trump.

One immediate effect of the law, the complaint said, is to make worthless the substantial investments of affected businesses that were made based upon the established regulatory scheme that was in existence prior to the law's effective date.

"As of August 1, 2023," the complaint said, "Plaintiff's investments, inventory, and entire segments of their businesses will be deemed worthless," amounting to "a deprivation of all, or substantially all, beneficial economic use of Plaintiff's hemp lines of business in Arkansas."

The complaint also assails Arkansas' law prohibiting such products as unconstitutionally vague in violation of the due process clause of the Fifth and Fourteenth Amendments, which it says prohibits criminal enforcement of statutory and regulatory requirements that are "unconstitutionally vague and do not give fair warning of their requirements." As an example, the complaint said, Section 6 of Act 629 bans hemp containing any psychoactive substance, which it said is so overly broad that it could potentially ban any hemp-derived cannabinoid product whether it contains THC or not. The complaint also said there is no industry standard definition of "psychoactive substance" and although that term is used in Section 6 of Act 629, it is not defined.

Mehdizadegan also criticized Act 629 for being contradictory and incomprehensible on its face.

"Could a citizen of ordinary intelligence read Act 629 and understand what is and is not legal, when that would become illegal, and for whom?" he asked. "I would suggest that a roomful of lawyers have a very difficult time figuring that out and if the answer is no, this law needs to be set aside because it's unconstitutional ... because it criminalizes behavior that people don't know what is and isn't lawful."

A motion for a temporary restraining order or for a preliminary injunction to block implementation and enforcement of Act 629 was also filed Monday, saying the purpose of such an order is "merely to preserve the relative positions of the parties until a trial on the merits can be held." The complaint said Congressional intent of the 2018 Farm Bill was made clear by a conference report saying that "Congress intended to preclude states from adopting more restrictive definitions of hemp in an attempt to criminalize it."

According to the complaint, that report said that state and Tribal governments can place more restrictive parameters on the production of hemp but cannot alter the definition itself, which is cannabis sativa L containing less than 0.3% THC by dry weight.

Congressman David Scott, D-Georgia, a member of the House Agriculture Committee, wrote regarding the 2018 Farm Bill that, "Congress did not intend for the 2018 Farm Bill to criminalize any stage of legal hemp processing. ... It was our intent that derivatives, extracts and cannabinoids would be legal if these products were in compliance [with] all other Federal regulations."

U.S. District Judge Billy Roy Wilson, the federal judge assigned to preside over the lawsuit, issued an order Tuesday for the defendants to respond to the plaintiff's motion for a temporary restraining order on Aug. 8.