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rev_charlestucker
Cannabis Sacrament Minister
Cannabis Sacrament Minister


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PostPosted: Mon Mar 07, 2005 9:46 am    Post subject: "DEA Looses Hemp Case"...long but worth reading!! Reply with quote

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HEMP INDUSTRIES ASSOCIATION; ü
ALL-ONE-GOD-FAITH, INC., dba Dr.
Bronner’s Magic Soaps; ATLAS
CORPORATION; NATURE’S PATH
FOODS USA INC.; HEMP OIL
CANADA, INC.; HEMPZELS, INC.; No. 03-71366
KENEX LTD.; TIERRA MADRE, LLC;
RUTH’S HEMP FOODS, INC.; ORGANIC ý DEA No. CONSUMERS ASSOCIATION, Fed. Reg. DEA-
Petitioners, 205F
v.
DRUG ENFORCEMENT
ADMINISTRATION,
Respondent. þ
HEMP INDUSTRIES ASSOCIATION; ü
ALL-ONE-GOD-FAITH, INC., dba Dr.
Bronner’s Magic Soaps; ATLAS
CORPORATION; NATURE’S PATH
FOODS USA INC.; HEMP OIL CANADA, INC.; HEMPZELS, INC.; No. 03-71603
KENEX LTD.; TIERRA MADRE, LLC; DEA No.
RUTH’S HEMP FOODS, INC.; ORGANIC ý Fed. Reg. DEA-
CONSUMERS ASSOCIATION, 206F
Petitioners, OPINION
v.
DRUG ENFORCEMENT
ADMINISTRATION,
Respondent. þ
1787
On Petition for Review of an Order of the
Drug Enforcement Agency
Argued and Submitted
September 17, 2003—San Francisco, California
Filed February 6, 2004
Before: Mary M. Schroeder, Chief Judge, Betty B. Fletcher,
and Alex Kozinski, Circuit Judges.
Opinion by Judge B. Fletcher
1788 HEMP INDUSTRIES ASSOC. v. DEA
COUNSEL
Joseph E. Sandler, Sandler Reiff & Young, Washington, D.C.
and Patrick Goggin, San Francisco, California, for the
petitioners-appellants.
Daniel Dormont, Senior Attorney, Drug Enforcement Administration,
Washington, D.C., for the respondent-appellee.
OPINION
B. FLETCHER, Circuit Judge:
Appellants manufacture, distribute, or sell comestible items
containing oil or sterilized seeds from “hemp” — a species of
plant within the genus Cannabis. They challenge two Drug
Enforcement Administration (“DEA”) regulations that, taken
together, would ban the sale or possession of such items even
if they contain only non-psychoactive trace amounts of
tetrahydrocannabinols (“THC”). The DEA asserts that natural,
as well as synthetic, THC is included in Schedule I of the
Controlled Substances Act (“CSA”). We have previously held
that the definition of “THC” in Schedule I refers only to synthetic
THC, and that any THC occurring naturally within
Cannabis is banned only if it falls within the Schedule I definition
of “marijuana.”1 We reiterate that ruling here: in accor-
1The Act spells this as “marihuana.” We employ the modern spelling
here.
1790 HEMP INDUSTRIES ASSOC. v. DEA
dance with Schedule I, the DEA’s relevant rules and regulations
may be enforced only insofar as they ban the presence
of marijuana or synthetic THC.
I. BACKGROUND
Appellants’ business activities include importing and distributing
sterilized hemp seed and oil and cake derived from
hemp seed, and manufacturing and selling food and cosmetic
products made from hemp seed and oil.2 On October 9, 2001,
the DEA published what it labeled an “Interpretive Rule” stating
that “any product that contains any amount of THC is a
schedule I controlled substance . . . .” Interpretation of Listing
of THC in Schedule I, 66 Fed. Reg. 51530, 51533 (Oct. 9,
2001). This rule would have banned the possession and sale
of Appellants’ products. On the same day, the DEA proposed
2We refer to hemp stalks, fiber, oil and cake made from hemp seed, and
sterilized hemp seed itself—i.e., those substances excluded from the definition
of marijuana under 21 U.S.C. § 802(16)—as “non-psychoactive
hemp.” A “psychoactive” substance is one “affecting the mind or behavior.”
Merriam-Webster Dictionary.
The non-psychoactive hemp used in Appellants’ products is derived
from industrial hemp plants grown in Canada and in Europe, the flowers
of which contain only a trace amount of the THC contained in marijuana
varieties grown for psychoactive use. The hemp seed used in food products
is an “achene,” or small nut, that is either hulled for direct consumption
or crushed for oil. It “contains 20 percent high-quality, digestible
protein, which can be consumed by humans.” U.S. Dept. of Agriculture,
Industrial Hemp in the United States: Status and Market Potential 15 (Jan.
2000), available at http://ers.usda.gov/publications/ages001e/
ages001e.pdf. Hemp seed oil “has a better profile of key nutrients, such
as essential fatty acids and gamma-linolenic acid, than other oils . . . and
a similar profile of other nutrients, such as sterols and tocopherols.”
Thompson, Berger & Allen, Univ. of Kentucky Center for Business and
Economic Research, Economic Impact of Industrial Hemp in Kentucky 7-
8 (July 1998), available at www.industrialhemp.net/pdf/hempstudy.pdf.
Appellants list a wide range of current and planned commercial products
that use hemp oil or seed, including roasted hulled seed, nutrition bars, tortilla
chips, pretzels, beer, candy bars, margarine, sauces, dressings, and
non-dairy versions of milk and cheese.
HEMP INDUSTRIES ASSOC. v. DEA 1791
two rules that subsequently became final on publication in the
Federal Register on March 21, 2003. Clarification of Listing
of THC in Schedule I, 68 Fed. Reg. 14114 (March 21, 2003).
These rules (“Final Rules”) are the subject of the instant
appeal. DEA-205F amends the DEA’s regulations at 21
C.F.R. § 1308.11(d)(27) so that the listing of THC in Schedule
I includes natural as well as synthetic THC. DEA-206F
exempts from control non-psychoactive hemp products that
contain trace amounts of THC not intended to enter the
human body. We stayed enforcement of the Final Rules pending
disposition of this appeal.
Appellants challenged the putative Interpretive Rule in
Hemp Industries Assoc. v. DEA, 333 F.3d 1082 (9th Cir.
2003) (“Hemp I”). During our consideration of that case, the
DEA notified us that it would soon issue the Final Rules. We
set aside considering the merits of Hemp I to await them.
After their publication, we solicited briefing from both parties
as to whether Hemp I was rendered moot by the publication
of the Final Rules. Appellants in Hemp I argued that the case
was not moot. A majority of the panel agreed. Hemp I was
filed on June 30, 2003.
Hemp I addressed whether the putative Interpretive Rule
was an interpretive rule or a legislative rule under the Administrative
Procedure Act. That question turned primarily on
whether the putative Interpretive Rule would “amend the
DEA’s own regulation on the coverage of naturally-occurring
THC in Schedule I.” Hemp I, 333 F.3d at 1088. In that context,
we held that the listing of “marijuana” in Schedule I
excludes
the mature stalks of such plant, fiber produced from
such stalks, oil or cake made from the seeds of such
plant, any other compound, manufacture, salt, derivative,
mixture, or preparation of such mature stalks
(except the resin extracted therefrom), fiber, oil, or
1792 HEMP INDUSTRIES ASSOC. v. DEA
cake, or the sterilized seed of such plant which is
incapable of germination.
Id. (quoting 21 U.S.C. § 802(16)). We held further that the
listing of THC in Schedule I, as part of the Comprehensive
Drug Abuse Prevention and Control Act of 1970, applied only
to synthetically-created THC. We reasoned that “if naturallyoccurring
THC were covered under THC, there would be no
need to have a separate category for marijuana, which obviously
contains naturally-occurring THC. Yet Congress maintained
marijuana as a separate category.” Hemp I, 333 F.3d at
1089. We concluded that THC naturally-occurring within
non-psychoactive hemp products did not fall under the DEA’s
regulation, which provided:
The Director has investigated and designates all
drugs, unless exempted by regulations in this part,
containing any amount of the following substances
as having a potential for abuse because of their:
. . .
(3) Hallucinogenic effect:
. . .
Synthetic equivalents of the substances contained in
the plant, or in the resinous extractives of Cannabis,
sp. and/or synthetic substances, derivatives, and their
isomers with similar chemical structure and pharmacological
activity . . . .
21 C.F.R. § 320.3(c) (1970).3 We held that the imposition of
3In 1971 the title “Tetrahydrocannabinols” and a code number were
added. The regulations were later transferred from 21 C.F.R. § 320.3(c) to
21 C.F.R. § 1308.11(d)(27). The Final Rules amended 21 C.F.R.
§ 1308.11(d)(27) to insert the words “Meaning tetrahydrocannabinols nat-
HEMP INDUSTRIES ASSOC. v. DEA 1793
a ban on THC occurring naturally within non-psychoactive
hemp products amended the DEA’s own regulations, and that
doing so could be accomplished, if at all, only by a legislative
rule. Hemp I, 333 F.3d at 1091. We explicitly reserved the
question of the validity of the DEA’s proposed legislative
rules, which have become the Final Rules, until the instant
case was before us. Id.
II. JURISDICTION
We have jurisdiction to review Appellants’ claims that the
DEA’s Final Rules are invalid under 21 U.S.C. § 877, and the
claim of a violation of the Regulatory Flexibility Act under 5
U.S.C. § 611.
III. ANALYSIS
Appellants offer three arguments why the Final Rules may
not be enforced with respect to THC naturally-occurring in
non-psychoactive hemp products. First, they argue that DEA-
205F is a scheduling action—placing non-psychoactive hemp
in Schedule I for the first time—that fails to follow the procedures
for such actions required by the Controlled Substances
Act (“CSA”). Second, they argue that the adoption of DEA
206F is arbitrary and capricious in exempting nonpsychoactive
hemp products intended to be eaten by animals
but not those intended to be eaten by humans, when humans
seeking (in vain) any psychoactive effect from these substances
could easily eat either. Third, they argue that in issuing
DEA-205F, the DEA violated the Regulatory Flexibility
Act (“RFA”). We need not reach the latter two arguments
urally contained in a plant of the genus Cannabis (cannabis plant), as well
as” immediately before “[s]ynthetic equivalents of the substances contained
in the cannabis plant” in the section quoted above. In considering
the propriety of the Final Rules, we necessarily consider the propriety of
this amendment to § 1308.11(d)(27).
1794 HEMP INDUSTRIES ASSOC. v. DEA
because we agree with appellants that the DEA scheduled
non-psychoactive hemp without following the required procedures.
[1] We review federal rules and regulations under Chevron
U.S.A, Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984). Under Chevron’s two-part test, “we must
decide (1) whether the statute unambiguously forbids the
Agency’s interpretation, and, if not, (2) whether the interpretation,
for other reasons, exceeds the bounds of the permissible.”
Barnhart v. Walton, 535 U.S. 212, 218 (2002) (citing
Chevron, 467 U.S. at 843). While at step one we “must give
effect to the unambiguously expressed intent of Congress,” if
“the statute is silent or ambiguous with respect to the specific
issue,” at step two we will “sustain the Agency’s interpretation
if it is based on a permissible construction” of a statute.
Id. at 217-18 (internal quotation marks omitted).
A. Procedures for Scheduling a Controlled Substance
[2] Since under the Chevron standard we conclude that
Congress did not regulate non-psychoactive hemp in Schedule
I, we must consider whether the DEA followed the appropriate
procedures to schedule it as a controlled substance. The
DEA concedes that it did not use the following procedures
spelled out in the CSA to adopt the Final Rules.
Under 21 U.S.C. § 811(a):
the Attorney General may by rule—
(1) add to such a schedule or transfer between
such schedules any drug or other substance
if he—
(A) finds that such drug or other substance
has a potential for abuse, and
HEMP INDUSTRIES ASSOC. v. DEA 1795
(B) makes with respect to such drug or other
substance the findings prescribed by subsection
(b) of section 812 of this title for
the schedule in which such drug is to be
placed.
. . .
Rules of the Attorney General under this subsection
shall be made on the record after opportunity for a
hearing pursuant to the rulemaking procedures prescribed
by subchapter II of chapter 5 of Title 5 [5
U.S.C. §§ 551 et seq.].
21 U.S.C. § 811(a) calls for formal rulemaking procedures,
as described in 5 U.S.C. §§ 556 and 557. Formal rulemaking
requires hearings on the record, and section 557(c) invites
parties to submit proposed findings and oppose the stated
bases of tentative agency decisions, and requires the agency
to issue formal rulings on each finding, conclusion, or exception
on the record. We will not reproduce the entirety of the
Administrative Procedure Act here; it suffices to say that the
DEA did not and does not claim to have followed formal rulemaking
procedures.
In addition, the DEA did not comply with § 811(a)(1)(B),
because the findings required by § 812(b) were not made.
Section 812(b) states:
(b) Placement on schedules; findings required.
Except where control is required by United States
obligations under an international treaty, convention,
or protocol, in effect on October 27, 1970, and
except in the case of an immediate precursor, a drug
or other substance may not be placed in any schedule
unless the findings required for such schedule are
made with respect to such drug or other substance.
1796 HEMP INDUSTRIES ASSOC. v. DEA
The findings required for each of the schedules are
as follows:
(1) SCHEDULE I.
(A) The drug or other substance has a high
potential for abuse.
(B) The drug or other substance has no currently
accepted medical use in treatment
in the United States.
(C) There is a lack of accepted safety for use
of the drug or other substance under medical
supervision.
The DEA does not purport to have met the requirements for
placement of non-psychoactive hemp on Schedule I, and
indeed disclaims any need to show that non-psychoactive
hemp “has a high potential for abuse.” Instead, the DEA
argues that naturally-occurring THC in those parts of the
hemp plant excluded from the definition of “marijuana” have
always been included under the listing for “THC,” and that it
had no previous need to clarify this because the intentional
use of such products in foodstuffs is relatively new within the
United States. The DEA urges that under Chevron its definition
of the meaning of “THC” in the CSA should be given
deference. However, no deference is required because this
issue is resolved at Chevron step one: the statutory language
on point unambiguously precludes an interpretation of the
THC definition that includes non-psychoactive hemp.
B. CSA Definitions of THC and Marijuana
[3] Two CSA provisions are relevant to determining
whether Appellants’ hemp products were banned before the
passage of the Final Rules: the definition of THC and the definition
of marijuana. Both are unambiguous under Chevron
HEMP INDUSTRIES ASSOC. v. DEA 1797
step one: Appellants’ products do not contain the “synthetic”
“substances or derivatives” that are covered by the definition
of THC, and non-psychoactive hemp is explicitly excluded
from the definition of marijuana.
1. Statutory Definition of THC
[4] The DEA contends that Appellants’ food products may
be banned as “any material compound, mixture or preparation”
that “contains any quantity of” THC. See 21 C.F.R.
§ 1308.11(d). However, the definition of THC under the CSA
includes only synthetic THC. 21 C.F.R. § 1308.11(d)(27)
(defining banned THC as “[s]ynthetic equivalents of the substances
contained in the plant, or in the resinous extractives
of Cannabis, sp. and/or synthetic substances, derivatives, and
their isomers . . . .”).4 As we noted in Hemp I, with a more
elaborate explanation than we will provide here:
Notably, if naturally-occurring THC were covered
under THC, there would be no need to have a separate
category for marijuana, which obviously contains
naturally-occurring THC. Yet Congress
maintained marijuana as a separate category.
Hemp I, 333 F.3d at 1089. The controlled substances listing
of THC is different from the listings for DMT, mescaline, psilocybin,
and psilocyn, the definitions for which are not limited
to synthetic forms of the drugs. See 21 C.F.R.
§ 1308.11(d).
Therefore, DEA-205F may ban products that “contain[ ]
any quantity” of THC only insofar as it does not improperly
expand the definition of THC as it is used in the CSA. For the
4The Final Rules at issue here amend the definition of THC to include
naturally-occurring THC. Because we consider here the propriety of those
amendments, we quote the previous definition, which had been in effect
since 1970. See supra note 3.
1798 HEMP INDUSTRIES ASSOC. v. DEA
same reason, 21 U.S.C. §§ 823(f) and 841(a)(1), which disallow
human consumption of Schedule I controlled substances
outside of FDA-approved, DEA-registered research, do not
apply to non-psychoactive hemp products: such products do
not contain a “Schedule I controlled substance” as the CSA
defines it.
[5] As we did in Hemp I, we reject the DEA’s contention
that the Final Rules merely “clarify that the longstanding
placement of THC in schedule I includes both natural and
synthetic THC.” 68 Fed. Reg. 14116 (Mar. 21, 2003). The
DEA’s action is not a mere clarification of its THC regulations;
it improperly renders naturally-occurring nonpsychoactive
hemp illegal for the first time.
2. Statutory Definition of Marijuana
[6] Under 21 U.S.C. § 802(16):
The term “marihuana” means all parts of the plant
Cannabis sativa L., whether growing or not; the
seeds thereof; the resin extracted from any part of
such plant; and every compound, manufacture, salt,
derivative, mixture, or preparation of such plant, its
seeds or resin. Such term does not include the mature
stalks of such plant, fiber produced from such stalks,
oil or cake made from the seeds of such plant, any
other compound, manufacture, salt, derivative, mixture,
or preparation of such mature stalks (except the
resin extracted therefrom), fiber, oil, or cake, or the
sterilized seed of such plant which is incapable of
germination.
The non-psychoactive hemp in Appellants’ products is
derived from the “mature stalks” or is “oil and cake made
from the seeds” of the Cannabis plant, and therefore fits
within the plainly stated exception to the CSA definition of
marijuana.
HEMP INDUSTRIES ASSOC. v. DEA 1799
[7] Congress was aware of the presence of trace amounts
of psychoactive agents (later identified as THC) in the resin
of non-psychoactive hemp when it passed the 1937 “Marihuana
Tax Act,” and when it adopted the Tax Act marijuana
definition in the CSA. As a result, when Congress excluded
from the definition of marijuana “mature stalks of such plant,
fiber . . . , [and] oil or cake made from the seeds,” it also made
an exception to the exception, and included “resin extracted
from” the excepted parts of the plant in the definition of marijuana,
despite the stalks and seeds exception.5 21 U.S.C.
§ 802(16). Congress knew what it was doing, and its intent to
exclude non-psychoactive hemp from regulation is entirely
clear. The DEA’s Final Rules are inconsistent with the unambiguous
meaning of the CSA definitions of marijuana and
THC, and the DEA did not use the appropriate scheduling
procedures to add non-psychoactive hemp to the list of controlled
substances.
[8] Although we have determined that non-psychoactive
hemp is not banned under Schedule I, we need not determine
in this proceeding whether under the current statute it could
be listed if the agency were to undertake appropriate rulemaking.
We hold only that the DEA did not follow the requisite
proceedings for scheduling under 21 U.S.C. §§ 811(a) and
812(b). The Final Rules therefore may not be enforced with
5The DEA argues that because hemp seeds contain some THC, we
should allow it to include hemp seeds and its derivatives as within the “exception
to the exception” for the extraction of resin. Neither we nor the
DEA are in any position to ignore the express exception for hemp seeds
in the CSA, nor can we construe “resin” broadly to mean “seeds” as well.
As the DEA informs us, the “exception to the exception” for resin was
apparently included out of concern that the “active principle” in marijuana,
later understood to be THC, might be derived from nonpsychoactive
hemp and so be used for psychoactive purposes. We note
that Congress’ policy decision is still effective in prohibiting psychoactive
drugs: the DEA makes no showing that extracts from parts of hemp seeds
or stalks other than resin are used or could be used for psychoactive purposes.
1800 HEMP INDUSTRIES ASSOC. v. DEA
respect to THC that is found within the parts of Cannabis
plants that are excluded from the CSA’s definition of “marijuana”
or that is not synthetic.
We find unambiguous Congress’ intent with regard to the
regulation of non-psychoactive hemp. Therefore, we reject the
Final Rules at step one of the Chevron test and need not reach
Chevron step two.6
IV. CONCLUSION
[9] The DEA’s Final Rules purport to regulate foodstuffs
containing “natural and synthetic THC.” And so they can: in
keeping with the definitions of drugs controlled under Schedule
I of the CSA, the Final Rules can regulate foodstuffs containing
natural THC if it is contained within marijuana, and
can regulate synthetic THC of any kind. But they cannot regulate
naturally-occurring THC not contained within or derived
from marijuana—i.e., non-psychoactive hemp products—
because non-psychoactive hemp is not included in Schedule
I. The DEA has no authority to regulate drugs that are not
scheduled, and it has not followed procedures required to
schedule a substance.
[10] The DEA’s definition of “THC” contravenes the
unambiguously expressed intent of Congress in the CSA and
cannot be upheld. DEA-205F and DEA-206F are thus scheduling
actions that would place non-psychoactive hemp in
Schedule I for the first time. In promulgating the Final Rules,
the DEA did not follow the procedures in §§ 811(a) and
812(b) of the CSA required for scheduling. The amendments
to 21 C.F.R. § 1308.11(d)(27) that make THC applicable to
all parts of the Cannabis plant are therefore void. We grant
Appellants’ petition and permanently enjoin enforcement of
6Because our conclusion with respect to Chevron deference suffices to
invalidate DEA-205F as applied to non-psychoactive hemp products, we
need not address Appellants’ Regulatory Flexibility Act arguments.
HEMP INDUSTRIES ASSOC. v. DEA 1801
the Final Rules with respect to non-psychoactive hemp or
products containing it.
PETITION GRANTED.
1802 HEMP INDUSTRIES ASSOC. v. DEA
_________________
Rev. Charles A. Tucker
Cannabis Sacrament Minister-Iowa Chapter.
of the "Hawaii Cannabis Ministry".
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PostPosted: Mon Mar 07, 2005 11:46 am    Post subject: Reply with quote

A very important case, indeed.

Bliss,
Ben
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