Welcome to our weekly roundup of CBD and hemp-related legal and regulatory news:
Hemp
N.J. federal judge dismisses proposed class for false hemp packaging information
U.S. District Judge Susan D. Wigenton dismissed plaintiffs Ricardo Santiago and Vaughn Frederick's third amended complaint against Total Life Changes. The proposed class suit alleged they failed a drug test after consuming a hemp tea product marked as containing 0% THC, but tested otherwise. Total Life Changes is represented by Kelley Drye's own Lauri A. Mazzuchetti and Glenn T. Graham.
Hemp-derived edibles sales discriminates against marijuana-derived edibles, notes lawsuit
Cannabis MSO Vireo Health filed a lawsuit against the state, alleging a law allowing hemp-derived edibles sales unfairly discriminates against marijuana-derived edibles. Under the law, which took effect on July 1, Vireo is restricted to selling products to patients registered in the state's medical marijuana program. While the law doesn't prevent the company from manufacturing hemp-derived THC, it argues it would have to drastically change its business model to incorporate hemp. If a judge rules in Vireo's favor, the court would essentially legalize recreational marijuana sales in Minn.
N.Y. amends hemp program
N.Y.'s Cannabis Control Board announced amendments to its hemp program, including:
- The creation of a new license type for approved hemp farmers to sell the hemp flower they grow; and
An increase in the maximum cannabinoid allowance per serving to 100 mg from 75 mg.
Soured hemp deal leads to $1.14M recovery for two Colo. companies
The District of Colo. court awarded a total of $1.14 million to Moose Agricultural and Colorado Hemp Solutions after finding that defendants Layn USA and Hemprise breached a contract for hemp biomass supply. Under the terms of the deal, Moose Agricultural and Colorado Hemp agreed to sell – and Layn agreed to buy – high cannabidiol industrial hemp biomass product. But the two plaintiffs said Layn sat on thousands of pounds of product without taking any action, and then Layn and Hemprise demanded the samples be put through a spice grinder and that testing was botched. Layn allegedly began to raise issues with the plaintiffs' performance under the deal, including whether they were allowed to obtain the biomass product from third parties.
Hemp farm responds to seed supplier's bid to toss bad crop suit
In a response brief filed in N.Y. federal court, HempChain Farms said Organic Growers and its CEO, Kenneth Sack, were aware that they were misleading HempChain by stating the seeds would have a low ratio of male plants and would have a germination rate of 84%, representations HempChain said were crucial to the sale agreement. The germination rate was determined by Colo. State University, and Organic Growers' failure to do its own testing and research on its products doesn't absolve it from liability HempChain said. Based on industry prices for hemp biomass and CBD oil, HempChain argued it – along with several companies it resold the seeds to – lost between $2.1 million and $3.1 million. HempChain also informed the court that the other companies had assigned their claims against Organic Growers to HempChain.
Fla. CBD, hemp company faces TCPA complaint
Veronica Miller alleges, in the Middle District of Fla. filing, that Organic Natural Healing engaged in aggressive sales calls without prior express written consent, even continuing after she responded to the defendant with "Stop" to opt-out of any further text messages. The claims fall under the Telephone Consumer Protection Act and Fla.'s Telephone Solicitation Act. In addition to an award of statutory damages, Miller asks the court for orders declaring that Organic Natural's actions break the TCPA and the FTSA plus an injunction requiring the retailer to halt all telephone sales calls without express written consent.
DOJ insists marijuana remains illegal, even if not enforced
The DOJ is urging a Fla. federal court to dismiss a suit challenging a DOJ rule that medical cannabis users don't have Second Amendment rights, saying that even if the federal government isn't currently spending money to prosecute federal laws against cannabis, possession of it remains a federal crime, even if the state says otherwise. As it's undisputed that possession of cannabis is a federal crime, the department concludes, there's no reason for the suit to proceed.
First Circuit won't review dormant commerce clause decision
The decision from the full circuit court leaves in place a 2-1 ruling from Aug. that struck down Maine's residency requirement for medical cannabis business owners, saying it was a clear violation of the constitutional interstate commerce doctrine. In upholding the lower court's decision, the circuit panel repudiated arguments that marijuana's federal illegality means the dormant commerce clause couldn't override a policy that favored in-state actors. The decision will have consequences in all state-legal jurisdictions with residency requirements, and marks a victory for MSOs.
Calif. regulator seeks $128M in penalties from group of unlicensed cannabis product makers
Calif.'s Department of Cannabis Control revealed evidence, including admissions from the defendants, turned up in the course of litigation that left no question four business entities and three individual owners were making and selling unlicensed cannabis products for approximately one and a half years. The regulator asked a state judge to grant a summary judgment award of $128 million in penalties from the group. The fine was calculated as a trebled $81,000 license fee further multiplied by 527, once for each day of violation.
Okla. Supreme Court rules voters will decide on cannabis question, but not in Nov.
The high court determined there isn't enough time for Okla.'s Secretary of State to put the legalization proposal, State Question 820, on the general election ballot before a statutory deadline since two legal challenges to the question still needed to be determined. The justices also ruled that the question is sufficient to be voted upon by the people of Okla., but must wait for an election following Nov. 8, or at a special election set by the Governor or the Legislature.
Insurers seek to keep cannabis coverage suit in federal court
In Aug., New Mexico Top Organics and four patients moved to have the proposed lawsuit returned to state court, arguing the federal court doesn't have subject matter jurisdiction and that the case involves local controversy – insurance coverage for medical cannabis. However, BCBS of N.M., Presbyterian Health Plan and Western Sky Community Care opposed the plaintiffs' request on the grounds that they can't dispute the court has original jurisdiction under CAFA and failed to meet the burden of proof required for the local controversy exception. Further, the plaintiffs' claims also raise substantial issues of federal law, the insurers said, adding the case was properly removed from state court.
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