Much has been made of this ruling, many (non attorneys) argue the Supremecy Clause now prohibits state law from banning smokable hemp - thus all smokable hemp is legal. That is far from accurate. Indiana made two key mistakes: 1. Banning the finance, transport & possession of smokable hemp; 2. criminalizing the finance, transport & possession of smokable hemp. The 2018 Farm bill specifically authorizes transport of hemp:
“No State or Indiana Tribe shall prohibit the transportation or shipment of hemp or hemp products . . . .”.
Clearly, Indiana’s new law impermissibly precludes the transportation of hemp by criminalizing its delivery and possession. Here, CY will prevail. However, this is far from legalizing smokable hemp. The Farm bill provides legal cover for transporters to move smokable hemp commerce through Indiana. However, every State is specifically authorized by the 2018 Farm bill to “regulate hemp production” and limit what forms of hemp are sold in the State, as the Judge recognized in her Order:
" [The] 2018 Farm Bill … amends the Agricultural Marketing Act of 1946, “to allow States to regulate hemp production based on a state or tribal plan.” H.R. Rep. No. 115-__ at 738 (2018).
Outcome Expected: Indiana will be forced to allow possession, finance & transport of hemp in the state, however the state may amend their law to limit the sale & possession of smokable hemp in the state. This can be accomplished in many ways outside of a direct ban. For example, by requiring 3rd party testing and registration of all smokable hemp. Cost and failed testing of most all hemp above 10% CBD will work as a ban on its own. Or, limiting transport and possession to hemp licensed operators, and prohibiting possession by non-licensed persons.
Expected Take home: The Supremecy Clause is not a green light to smokable sales in all states. State law dictates what forms of hemp may be sold in state, nothing in this case will change that. Weak Indiana law is at the heart of this issue. No ruling in this case will authorize smokable hemp sales in any other state.
BACKGROUND
2018 Farm Bill Signed. Several months later in May, 2019, Indiana signs into law SEA 516 criminalizing smokeable hemp. This law is seriously flawed and poorly written:
C.Y. WHOLESALE, INC., et al., sues the State, arguing that by criminalizing smokable hemp after the 2018 Farm Bill, Indiana violated the Supremacy Clause of the United States Constitution. CY argued the State is preempted from criminalizing smokable, by the 2018 Farm Bill and in criminalizing, the State violated the Commerce Clause because they restricted the transportation of an interstate good. The court agreed, granted CY’s Motion for Preliminary Injunction stating CY proved a likelihood of success on their preemption claims, but did not address the Commerce Clause claim. The State appealed this ruling, the appeals court has not yet ruled in the matter.
CY advanced three arguments:
First, the 2018 Farm Bill expressly preempts the State’s attempt to criminalize the transport of smokable hemp. Section 10114(b) of the 2018 Farm Bill unequivocally states, “No State or Indiana Tribe shall prohibit the transportation or shipment of hemp or hemp products . . . .” Despite this express prohibition, SEA 516 impermissibly precludes the transportation of hemp by criminalizing its delivery and possession. Ind. Code § 35-48-4-10.1(a).
Second, conflict preemption renders SEA 516 unconstitutional because it alters (and narrows) the definition of hemp, and thereby places it in direct conflict with both the language and intent of the 2018 Farm Bill. The 2018 Farm Bill purposefully broadened the definition of hemp to include all hemp derivatives and extracts – like hemp bud and hemp flower (i.e., smokable hemp) – and removed it
from the Controlled Substances Act. Moreover, Congress specifically stated in the Conference Report for the 2018 Farm Bill that states “are not authorized to alter the definition of hemp . . . .” (Conference Report for Agricultural Improvement Act of 2018, p. 738, D. 1-3 at 2.) Yet despite this clear legislative intent, SEA 516 altered the definition of hemp by carving out smokable hemp and making it illegal. Ind. Code § 35-48-4-10.1(a). This stands in direct conflict with Congress’s intent with the 2018 Farm Bill and is therefore conflict preempted.
Third, the State’s attempt to preclude the transportation of smokable hemp is an impermissible restriction on interstate commerce in violation of the Commerce Clause of the United States Constitution. The dormant Commerce Clause prevents states from curtailing the movement of articles of commerce through the state. SEA 516 impermissibly restricts interstate commerce because it seeks to stop smokable hemp from ever entering Indiana’s borders, as the mere possession of smokable hemp in Indiana is illegal. Ind. Code § 35-48-4-10.1(a).
Preliminary Order of the Court:
Cy Hemp_order.pdf (131.3 KB)