Hemp importers see victory in legal setback against US Customs

A California court is giving hemp and CBD importers reason to smile, even though a federal judge dismissed most of a CBD company’s legal challenge to U.S. Customs and Border Protection.

In his decision, U.S. District Judge Jesus Bernal repeatedly said the 2018 Farm Bill makes clear that hemp shipments shouldn’t be considered marijuana nor destroyed.

The case started last year, when CBD manufacturer Innovative Neutraceuticals sued the federal government over hemp shipments seized in California, Kentucky and New York.

Based in Lake Elsinore, California, the company imports hemp from Spain to extract the cannabinoid.

The company argued U.S. Customs should not able to destroy hemp imports without first giving the recipient an opportunity to prove the plant material isn’t marijuana.

The court dismissed Innovative Neutraceuticals’ argument last week, but the rationale was encouraging to the industry.

Bernal wrote in his ruling that because the 2018 Farm Bill makes clear that cannabis with no more than 0.3% THC is legal, “these shipments will no longer be subject to summary forfeiture.”

He noted the Farm Bill makes “moot” the problem of U.S. Customs considering any cannabis plant containing THC to be illegal.

“Any future shipments of industrial hemp product containing less than 0.3% THC by dry weight will clearly fall outside the … definition of marijuana,” Bernal wrote.

Remaining case

“The case isn’t over, not by a long shot,” said Michael Chernis, Innovative Neutraceuticals’ lawyer.

The judge left intact the company’s claim that U.S. Customs should return roughly 50 kilograms (110 pounds) of hemp seized last year at the Louisville, Kentucky, airport. The federal government had argued the entire case should be tossed.

Chernis told Hemp Industry Daily that he’s looking for other hemp importers who have seen products destroyed by U.S. Customs in order to pursue future damages. He also wants to find government records on how often cannabis imports labeled as hemp are being destroyed.

“It might look like marijuana, but it’s not marijuana,” he said.

“How often has this happened? Who has this happened to? The government’s good at keeping records, so we’re going to find out.”

Lost profits

Also seeking damages is Innovative Neutraceuticals owner Dave Hargett.

He told Hemp Industry Daily that he’s cheered by the judge’s position – but dismayed that he won’t be paid for what he estimates to be hundreds of thousands of dollars in lost hemp product.

“It doesn’t make up for all the wrongs and troubles I went through getting to this point,” Hargett said of Bernal’s order.

“I haven’t received a single dime of compensation.”

Importers need clarity

An industry activist who isn’t involved in the California lawsuit said the decision is a powerful signal that U.S. Customs needs to adopt policies to ensure that legal hemp products, including hemp-derived CBD, are not confused with marijuana and destroyed.

“Under federal law and the new legal environment that we find ourselves, law enforcement should treat the hemp industry as they would other industries and create a pathway for safe trade and safe distribution,” said Michael Bronstein, founder of the American Trade Association of Cannabis and Hemp.

Chernis said the nascent hemp industry needs assurances that the plant can be consistently imported in a timely manner.

“It’s not a reliable business model when you don’t know if your inputs are going to make it or if your material is just going to be stolen by the government,” he said.

Kristen Nichols can be reached at [email protected]

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