Carriers have long relied on the ability to cross state lines without concern that state laws may impede or end their journey. The Supreme Court’s Dormant Commerce Clause jurisprudence (including the landmark trucking case Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520 (1959)), in combination with the preemptive effect of federal statutes and regulation, has allowed goods to flow with limited friction across state borders.

While it comes as no surprise that cannabis intended for consumption is an exception to the free flow of goods around the country, given the patchwork of state law and nominal federal prohibition, a lesser-known issue for carriers is the status of hemp in interstate commerce. Hemp is a variety of the cannabis sativa plant species grown specifically for industrial uses of its derivatives, such as paper, textiles, biodegradable plastics, biofuel and animal feed. While hemp looks and smells much like cannabis intended for consumption, it differs in that it contains less than .3% THC, the psychoactive component of cannabis. Hemp cultivation is legal (in varying degrees) in 41 states, but poses a challenge for both carriers and law enforcement given differing state law and limited ability to make a roadside determination of what a load contains.

The issue has come to a head in a case now before the Ninth Circuit. In January, Idaho State Police detected a strong smell coming from a box van trailer during a roadside inspection of a truck en route from Oregon to Big Sky Scientific LLC, based in Aurora, Colorado. Discovering a load of nearly 7,000 pounds of hemp legally grown under state law in Oregon, police arrested the driver on felony marijuana trafficking charges and confiscated the hemp. As described in a decision issued in early February by the District of Idaho:

the load was not concealed but, rather, in plain sight in the cargo area of the semi-truck trailer; the driver freely indicated that he was hauling hemp; the driver did not run or otherwise try to escape; and the driver did not try to dispose of the load which he was shipping. The bill of lading that accompanied the load indicated that the shipment consisted of “hemp” and that the shipment was being transported from Oregon to Colorado. (Citing plaintiff’s complaint.)

Subsequent testing confirmed the load to be legal industrial hemp as defined by the 2018 Farm Bill — that is, cannabis sativa containing less than .3% THC.

After Idaho prosecutors refused to release the impounded load, Big Sky filed a declaratory action in the District of Idaho seeking an order that they do so. The crux of the dispute was whether or not the 2018 Farm Bill preempts Idaho law, which prohibits cannabis and makes no exception for hemp. Big Sky pointed to Section 10114(b) of the 2018 Farm Bill that states, “[n]o State * * * shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State.” Big Sky contended that Section 10114(b) prevents Idaho from prohibiting the transport of hemp.

Idaho law enforcement, however, contended that Section 10114(b)’s prohibition applies only to hemp that is “produced in accordance with subtitle G of the Agricultural Marketing Act of 1946.” Here, the hemp was produced pursuant to Oregon law in compliance with the Agricultural Act of 2014. And while the 2018 Farm Bill authorizes states and the U.S. Department of Agriculture to create plans regulating the production of hemp, but no such plans have been approved yet. Therefore, Idaho argues, the seized hemp was not “produced in accordance with subtitle G,” and is not protected by 10114(b).

Examining the statutes at issue and considering Big Sky’s “likelihood of success on the merits,” Magistrate Judge Ronald Bush declined to grant a preliminary injunction, holding:

The takeaway from an examination of the respective arguments of Big Sky and the Defendants * * * is that a reasonable argument can be made that even though Big Sky may, at some point in time, be able to purchase industrial hemp that has been “produced in accordance with Subtitle G,” the hemp that was seized in Idaho could not possibly meet that standard because no “plans” to regulate the production of industrial hemp under the 2018 Farm Act have either been approved (by the federal government as to Oregon, as pertinent here) or created and promulgated by the United States Department of Agriculture for the federal government (to apply in the absence of an approved state or tribal plan).

* * * Primarily, the Court is attentive here to the circumstances – that is, the record carries a question as to whether Big Sky (in its efforts to get to the front of the burgeoning industry that is forming around industrial hemp) went forward without being certain that it could move any hemp it might buy from one state to another, or did so without paying attention to whether one route from Oregon to Colorado might be better than another. In one setting, it might be said that Big Sky was taking a gamble that it thought was worth taking; in another view, it might be said that Big Sky did not realize that Idaho might take a different position about whether Big Sky was free to move industrial hemp around the country (or at least across its borders). In either instance, the scale that the Court is permitted to draw from the record now before it does not slide so far as to overcome the open question about what constitutes “hemp” under the 2018 Farm Bill and the status of the regulatory framework required by that legislation.

Big Sky has appealed that decision, which is now pending an expedited hearing in the Ninth Circuit. Meanwhile, industry groups such as the American Trucking Associations are warning carriers to “exercise caution” in transporting hemp across state lines.

Whether or not hemp produced under 2014 Farm Bill regulations is within these protections is an open question. As states and tribes implement approved hemp regulatory schemes under the 2018 Farm Bill, Section 10114(b) should provide legal protection for carriers moving loads across state lines. But as the Big Sky case shows, that protection will depend on individual state compliance with the 2018 Farm Bill, requiring up to date information on the status of hemp in each jurisdiction. Further, the USDA has indicated that they do not intend to issue federal regulations or approve state plans until late 2019, leaving carriers in uncertain territory in the interim. And police agencies around the country are already noting that they are ill-equipped to determine whether transported cannabis is hemp or for consumption, raising further questions about how roadside encounters will play out.

Hans Huggler and Joan Robinson practice in Lane Powell’s Transportation Team, which provides advice and representation to a diverse range of clients across all modes. Sativa Rasmussen and Ben Pirie practice in the firm’s Cannabis Team, advising clients on federal, state and local issues involving commercial cannabis.

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Photo of Hans N. Huggler Hans N. Huggler

Hans Huggler resolves his clients’ cases with a practical and courteous approach. A long-time Pacific Northwesterner admitted to practice in Oregon, Washington, and Alaska, Hans has experience advocating for individual and business clients in state and federal courts and believes client service and responsiveness is the foundation of a successful practice.   

Hans regularly defends financial institutions on consumer mortgage and banking cases. He also represents businesses in contract disputes and represents insurers in a variety of claims contexts. Hans is effective at negotiating favorable resolutions for his clients and has resolved numerous cases for his clients out of court. Hans is actively involved in Lane Powell’s transportation, insurance, and banking practices, but enjoys a diverse range of cases touching on all areas of law.

Hans’s professional background helps him advocate for his clients effectively in any situation. His prior experience in public service and law enforcement make him an effective communicator not only with lawyers and judges but with clients, witnesses and opposing parties as well. Having worked in customer service from a young age, Hans recognizes the value of responsiveness and helping clients understand the often-daunting litigation process.  Moreover, his experience as a judicial clerk and extern provide him with insight into how best to persuade the judges and juries that will ultimately decide the outcome of a case.

No matter the case, Hans focuses on driving toward a fair and cost-effective resolution for his clients and enjoys the challenge of helping clients overcome the legal obstacles they face in pursuing thriving lives and businesses.