Is It Legal To Sell Smokable Hemp? Our cannabis and hemp CBD lawyers are often asked this question. Your answer, no doubt, is that it depends on where you want to sell smokable hemp. (We provide a 50-state CBD Risk Matrix overview of the rules and regulations governing the sale of smokable hemp and other hemp CBD products, including ingestible and cosmetic products.) As the state’s laws, rules, and regulations change frequently , sometimes related to litigation, we research and update the records for each state monthly.
This post is about Indiana banning the sale of smokable hemp and a lawsuit seeking to lift that ban. A bit of background will help. As we wrote in July 2020:
Indiana has long been a leader in regulating hemp products. Two years ago, in 2018, Indiana passed a comprehensive bill regulating low-THC hemp extracts. At the time, state regulation of CBD was mostly limited to medical marijuana programs in conservative states that only allowed CBD extracts for use by medical patients. Very few states differentiated CBD from hemp (hemp CBD), and even fewer made requirements for manufacturing, testing and labeling.
Indiana’s hemp framework, however, was similar to the packaging and labeling requirements for cannabis products in West Coast states, where marijuana is legal for recreational use. One such requirement that Indiana adopted was a scannable QR code. (See previous link for more details). Similar requirements were then adopted in Utah, Louisiana, and Texas. More states may see similar requirements, and possibly even the FDA. So should everyone do what Indiana does? No.
In 2019, Indiana passed Senate Enrolled Act 516 (“SEA 516”) to bring Indiana’s definition of hemp into line with the 2018 Farm Bill and create a legal framework for hemp production. SEA 516 criminalized the possession of “smokable hemp,” which it defines as any industrial hemp product, “in a form that allows THC to be introduced into the human body by inhaling smoke.” Ind. Code § 35-48-1- 26.6. The law provides that “[a] A person who knowingly or intentionally manufactures, funds, supplies, funds, or owns the supply of smokable hemp … commits smokable hemp trafficking, a Class A. “Ind. Code § 35-48-4-10.1 .
In short, Indiana made it a crime to manufacture, supply, or own smokable hemp. The law has been challenged in a federal lawsuit arguing, among other things, that the 2018 Farm Bill prevented the ban on smokable hemp. This lawsuit was appealed to the Seventh Court of Appeal, which issued a statement last summer. You can read our coverage of this opinion here.
While that appeal was pending, Indiana enacted Senate Enrolled Act 335 (“SEA 335”), which restricted the scope of SEA 516 to save the law. But SEA 335 didn’t make smokable hemp legal. Rather, SEA 335 sought to clarify that the prohibition on the supply and possession of smokable hemp “does not apply to the shipping of smokable hemp from a licensed manufacturer in another state in continuous transit through Indiana to a licensed dealer in any state” . For example, smokable hemp passed through Indiana to another state is “legal,” while smokable hemp otherwise owned or supplied in Indiana is not. And that’s not good for smokable hemp sellers and buyers.
The Seventh Circuit dismissed the case and plaintiffs moved to amend their complaint to add claims challenging both SEA 516 and SEA 535 and align their complaint with the Seventh Circuit’s decision. This meant including allegations that:
SEA 516 violates the 2018 Farm Bill’s ban on restricting the interstate transport of hemp products. This issue was not resolved by SEA 335 as SEA 335 imposes licensing requirements that are not included in the 2018 Farm Bill. The plaintiffs therefore claim that both laws are expressly excluded. Plaintiffs also allege that the criminalization of hemp buds and hemp flowers in SEA 516 is contrary to the legalization of all parts of the hemp plant, including hemp buds and flowers, by the 2014 Farm Bill and re-confirming the legalization of all parts of the hemp by the farm The 2018 Bill stands hemp plant and its clear ban against states that change the federal definition of hemp and are therefore conflict-free. Y. Wholesale, Inc. v Holcomb, No. 119CV02659SEBTAB, 2020 WL 6583069, at * 2 (SD Ind. Nov. 10, 2020).
Although federal law provides that courts should freely allow changes, the standard differs when the defendant claims that there is no point in making a change, which the defendants here argued against the amendment. When one party argues that a change is “pointless”, the party says, “Look, Judge, you shouldn’t have the other side changed because the new complaint cannot survive a motion to dismiss. Even if everything in the new complaint were true, the plaintiffs will lose on legal grounds. The request for change is therefore pointless. “If either party makes that argument, the court will analyze the proposed change as part of a motion to dismiss the standard – nowhere near as mild as the rule that courts“ freely ”allow changes.
Fortunately for smokable hemp sellers everywhere, the court disagreed with the defendants and granted the motion for change. That ruling means plaintiffs can continue their legal challenge to Indiana’s smokable hemp ban, despite the court finding plaintiffs face an uphill battle. If the plaintiffs ultimately prevail, Indiana’s ban on smokable hemp will be lifted. Perhaps just as importantly, other states that have bans on smokable hemp see these laws fall, and yet other states will hesitate to put bans on smokable hemp products. On the other hand, if Indiana complies with the ban, other states can take similar action. We will continue to monitor this case closely.