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From MHC President Justin Swanson: Update on Craft Hemp Flower Litigation in Indiana

Executive Summary: In June 2019, the Midwest Hemp Council joined small business owners in Indiana to challenge the criminalization of craft hemp flower in federal court. The U.S. District Court ruled in favor of the hemp industry and prohibited the enforcement of the statute criminalizing the production, sale and possession of craft hemp flower. This favorable ruling was appealed to the Seventh Circuit. Unfortunately, the Seventh Circuit inexplicably ignored the industry’s strongest argument and the one on which the U.S. District Court relied on to issue its injunction against the state—individual states do not have the authority to pick and choose what is legal coming off of the hemp plant, so long as the product is below .3% THC. This unfavorable order came out in July 2020 and resulted in the state being permitted to enforce the criminalization of craft hemp flower in Indiana. On Monday, May 24, 2021, after a nearly two-year battle in the federal court systems, plaintiffs voluntarily dismissed the case without prejudice. This means that if the regulatory or enforcement environment changes in Indiana, the door is still open if there is an interest in refiling the case.

Current Legal Status of Craft Hemp Flower in Indiana: Craft hemp flower is free to travel “in continuous transit” through Indiana so long as a Hoosier farmer didn’t produce it, a Hoosier small business owner didn’t sell it and a Hoosier consumer didn’t possess it. Yes, you read that correctly. It is the current policy of Indiana that out-of-state farmers and business owners are free to profit from one of the most lucrative markets in the hemp industry, while Hoosiers are shut out of the market. We will continue to engage and educate lawmakers, regulators and other stakeholders on why the craft hemp flower market is so crucial to farmers and the development of the whole hemp plant economy. The Indiana General Assembly is becoming more educated on this issue as reflected in HB 1224 this year, which passed out of the House with bipartisan support 69-28 and would have responsibly reopened the market to Hoosiers. Unfortunately, the bill stalled in Senate committee and did not receive a vote. We are looking forward to building off of this momentum during the 2022 legislative session.

SB 197 Amended to Negatively Impact Indiana Hemp Industry

It's been a busy legislative session for hemp in Indiana, and next week is no exception. In addition to HB 1224 being heard in committee on Monday, we wanted to alert you to an amendment that was added to a 127-page bill that negatively impacts the hemp industry in Indiana. On Wednesday, the House Committee on Courts and Criminal Code added an amendment to SB 197 that would represent a significant policy shift away from the black letter law of the 2018 Farm Bill in Indiana. The amendment was taken by consent, with only the Indiana Prosecuting Attorneys Council testifying in support of the amendment and with no opportunity for input from the hemp industry.
 
The hemp industry, just like any other industry in Indiana, needs certainty and uniformity in order to be successful. While reasonable minds can disagree on the intent of the 2018 Farm Bill, Congress continues to focus on ensuring that USDA has sole regulatory jurisdiction over all derivatives, extracts and cannabinoids coming from the hemp plant and ending any claim of DEA jurisdiction over hemp and hemp processing. This intent was expressed yet again in a letter submitted this week to the Attorney General of the United States and the Secretary of the Department of Agriculture asking for the agencies to meet jointly with industry stakeholders to resolve nearly universal concerns with the DEA’s Interim Final Rule.
 
The Midwest Hemp Council has been hard at work educating lawmakers on the negative impact the amendment would have on farmers and the whole hemp plant economy in Indiana. While we are cautiously optimistic about our progress to date, we may need to activate you and the rest of our strong grassroots foundation to engage lawmakers on the issue. Be on the lookout for an update next week from your only source of timely and accurate information about the whole hemp plant economy in Indiana.

Midwest Hemp Council Statement on the Importance of HB 1224:

"We are extremely disappointed with the recent ruling on Indiana’s current craft hemp flower laws from the Court. Despite the setback, we remain optimistic that the Indiana General Assembly will find an appropriate legislative solution to re-open the projected $300M-$400 craft hemp flower market for farmers, small business owners and consumers across Indiana.
 
"Modernizing Indiana’s hemp laws is critical to the development and growth of the whole hemp plant economy. Such an act will directly lead to significant investments in and job creation across rural and urban Indiana—without state or federal monetary assistance. Under current Indiana law, craft hemp flower is permitted to travel “in continuous transit” through the state — so long as an Indiana farmer didn’t grow it, an Indiana small business didn’t sell it and an Indiana consumer didn’t possess it.

"HB 1224 modernizes Indiana’s hemp laws by leveraging what has elevated Indiana to a national leader on hemp policy—the appropriate labeling and testing requirements for low THC hemp extract products. Couple this demonstrably successful solution replicated across the country with the availability of several types of road side test kits for law enforcement, HB 1224 is a major win for the whole hemp plant economy.
 
"HB 1224 has been assigned to the Senate Committee on Commerce and Technology. This is a great sign as this committee has been supportive of hemp production in Indiana in the past."
 
What’s next? 
  • Indiana members: Be on the lookout for communications from us on the best time to engage the committee in asking for their support of HB 1224. 
  • Members: Be on the lookout for a halftime report on all cannabis legislation at the Indiana Statehouse.

 


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USDA Issues Final Hemp Rule

USDA has issued its final hemp rule! While we are still reviewing the 301 page document, there are changes that reflect the industry’s comments, including:
  • extending the harvesting window to 30 days
  • improving sampling requirements
  • allowing remediation
  • raising the negligence threshold from .5% THC to 1% THC.
Thank you to all who submitted comments - great work! This final rule supersedes the interim final rule and is effective within the next 60 days or so. We will provide an in-depth analysis in the coming days.

From OISC: Untrustworthy hemp seed suppliers pose risk to farmers

WEST LAFAYETTE, Ind. - The Office of Indiana State Chemist (OISC) is warning the public about predatory hemp seed vendors known to be currently active in the state.

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Comment Now: DEA Interim Final Rule

The DEA Interim Final Rule - Why it Threatens Farmers, Small Businesses and the Entire CBD Industry

 
Make Comments Today!

Smokable hemp banned after local grower lobbies for legalization

“It’s an interesting situation trying to figure out how to navigate. Having a revenue stream shut down as a small business is very detrimental for investing in our business and home state here. We’re trying to scale our business, and having restrictions like this are detrimental to us trying to build jobs and providing economic impact. It has a heavy impact on businesses like us.”

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Update on Smokable Hemp in Indiana

On August 6, 2020, the Seventh Circuit denied the Petition for Rehearing regarding the pending smokable hemp litigation in Indiana. The practical impact of this denial means that Indiana will be free to prosecute farmers, small businesses and other entrepreneurs that grow and/or sell smokable hemp beginning on August 13, 2020.

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Seventh Circuit Issues Ruling on Smokable Hemp

The long awaited ruling from the Seventh Circuit on criminalizing smokable hemp arrived late yesterday evening. The decision is a mixed bag for the industry in that the decision affirmed part of the district court’s rationale for the injunction but found that the injunction was too broad. We believe the 7th Circuit’s decision affirms the unconstitutionality of portions of SEA 516 and look forward to addressing those arguments on remand. As of now, the injunction being lifted will officially be in effect on July 29, 2020. You should plan to have all smokable hemp products off the shelf by this date.

Read the ruling here.

Shipping Hemp from A to B: The Challenges of Transport

After decades of prohibition, the modern legal hemp industry is still in its infancy. Along with figuring out best practices for growing, harvesting, and processing the plant, the hemp sector is also navigating how best to transport the production generated by hemp farmers and processors.

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