Despite complete state and federal legality, municipalities are increasingly prohibiting and prosecuting hemp-derived intoxicating product sales imposing civil and criminal penalties on both the business and its owners.
Intoxicants: Regulated and Rogue
Delta-9 THCComprised of three plants containing 480 compounds (including over 120 cannabinoids), cannabis’ most lucrative component is the intoxicant tetrahydrocannabinol (THC). Specifically, cannabis flower “bud glands” (i.e., trichomes) excrete an oily substance containing an acidic form of cannabinoids (THCa), which, following heating, are decarboxylated to produce THC and other cannabinoids like cannabidol (CBD), cannabinol and cannabigerol. This THC already contained in these plants (i.e., “naturally expressed”) is classified as Delta-9 THC.
Legally, marijuana is defined as “cannabis sativa L. containing less than 0.3% plant chemical Delta-9 THC” by the Controlled Substance Act, 21 U.S.C. Sections 801, (1970) (CSA) and regulations promulgated thereunder by the Drug Enforcement Agency (DEA). Listing it next to heroin as a Schedule I controlled substance having “a high potential for abuse” and for which there’s “no currently accepted medical use in treatment” and “a lack of accepted safety for use” “under medical supervision”, the CSA renders Marijuana 100% federally illegal. The CSA prohibits marijuana’s cultivation, distribution, dispensation and possession and, pursuant to the U.S. Constitution’s supremacy clause, state laws conflicting with federal law are generally preempted and void. See U.S. Const., Art. VI, cl. 2; Wickard v. Filburn, 317 U.S. 111, 124 (1942) (“No form of state activity can constitutionally thwart the regulatory power granted by the commerce clause to Congress”). Those cultivating, processing, infusing, transporting or dispensing cannabis are deemed to be “plant-touching” marijuana-related businesses (MRBs) and subject to the CSA’s onerous penalties.
Because the CSA prevents cannabis from being sold outside of each respective legalized-marijuana state and, thus, no “interstate cannabis commerce” can occur, state regulators like Illinois’ Cannabis Regulation Oversight Office, and not federal agencies like the Food and Drug Administration (FDA), issue licenses and regulate MRBs.
Rogue IntoxicantsMirroring Delta-9 THC’s effects, hemp-derived THC requires no license, is unregulated and imposes health concerns regarding these untested and unregulated products’ safety and potency.
A fast-growing, sustainable, and inexpensively produced plant, hemp is a variety of cannabis sativa L. containing less than 0.3% Delta-9 THC. The Agriculture Improvement Act of 2018 (2018 Farm Bill) both legalized hemp and its derivatives and removed plant cannabis sativa L. containing no more than 0.3% Delta-9 THC on a dry-weight basis from the CSA and DEA’s purview. Passed every five years and forming the federal government’s primary agricultural and food policy instrument, the Farm Bill permits importing, exporting and transporting hemp and hemp-derived products like any other crop, and tasks the Department of Agriculture (USDA) with promulgating hemp regulations, and charges states, territories and Indian tribes with submitting hemp-growing regulations plans to the USDA including “THC testing procedures.”
A cannabinoid of the THC “family” of compounds commonly derived from the cannabis plant, Delta-8 THC is a double bond isomer of Delta-9 THC. An isomer is a type of “chemical analog” comprising one of two or more compounds containing the identical number of atoms of the same elements but differing in structural arrangement and properties. There are 30 known THC isomers, and Delta-9 THC and Delta-8 THC differ regarding the single double bond’s location. Stated another way, while similar in molecular structure, Delta-8 THC is a different molecule than Delta-9 THC.
Unlike Delta-9 THC, which is naturally and abundantly expressed in the plants, Delta-8 THC, Delta-6 THC, Delta-10 THC and tetrahydrocannabivarion (THCV) (hereafter, collectively referred to as “Rogue Intoxicants”) are derived either directly from the hemp plant or converted from the CBD isolate. Because hemp cultivars do not express Rogue Intoxicants in sufficient concentrations or quantities to be economically viable for commercial extraction purposes, and CBD is cheap and abundant, deriving Rogue Intoxicants by converting from CBD isolate is the faster, cheaper and more popular method.
Rogue Intoxicants are not federally illegal and often require no license, less regulated and cheaper than Delta-9 THC, and both sold over-the-counter at convenience stores and smoke and deployed by fishy MRBs to more cost-effectively enhance their product’s potency.
‘Home Rule’ Municipalities’ Basis and Power
Depending on how organized, states are either “Home Rule” (empowering respective municipalities to make own laws), Dillons Rule (preventing municipalities from creating laws not permitted by state statute), or a blend of the two.
Specifically, “Home Rule” relates to a city, town, borough or village’s (hereafter, collectively referred to as “municipalities”) authority to exercise governance powers whether specifically delegated by the state or implicitly allowed (unless conflicting with state or federal constitutions or prohibited by state-level action). Home Rule states include: Alaska; Arizona; Florida (except for taxation); Iowa; Massachusetts; Montana; New Jersey; Ohio; Oregon; Utah; and West Virginia.
Conversely, limiting Municipalities to exercising only state-granted powers, “Dillon’s Rule” defines the bounds of a Municipalities legal authority via state statutes requiring the legislature’s permission to pass a law or ordinance not specifically permitted under existing legislation. Dillon’s Rule states include: Delaware; Mississippi; Nevada; New Hampshire; Oklahoma; Vermont; Virginia and Wyoming.
The remaining states are a blend of “Home Rule” and “Dillon’s Rule”: Alabama; Arkansas; California; Colorado; Connecticut; Georgia; Hawaii; Idaho; Illinois; Indiana; Kansas; Kentucky; Louisiana; Maine; Maryland; Michigan; Minnesota; Missouri; Nebraska; New Mexico; New York; North Carolina; North Dakota; Pennsylvania; Rhode Island; South Carolina; South Dakota; Tennessee; Texas; Washington and Wisconsin.
How Municipalities Regulate and Derail Intoxicants
How Municipalities Regulate IntoxicantsComprised of 564 municipalities, New Jersey is a Home Rule state in which each city, town, borough and village mightily flexes its muscles against state-complaint marijuana-related businesses.
First, although the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act, NJ Rev Stat Section 24:6I-50 (2023) legalizes statewide adult use marijuana, each New Jersey municipality is empowered to “opt out” and bar state-legal cannabis growers, processors, manufacturers and dispensaries. Stated another way, through an ordinance or resolution’s passage, 564 municipalities can halt an MRB from even sticking a shovel in the ground.
Second, via ordinance, resolution or approval, each of New Jersey’s 564 municipalities can block and regulate most of an MRB’s operational aspects including: odor; noise; inspections; frequency and by whom (e.g., health, zoning, police and fire departments); local tax and hosting fees; license types (allowing growers, banning dispensaries); hours of operation; signage permittivity and dimensions; capacity (30 patrons per 1,500 square feet); lot and building size; and parking requirement (number of spaces).
Among the weightiest municipal regulation is “location restrictions” limiting how far an MRB must be (1,000 feet) from sought-to-be-protected establishments (daycare, preschool, schools, college, university, houses of worship, drug and alcohol treatment centers, park, library, public building, residential or redevelopment zones, and other MRBs) and how distance is measured (“as crow flies” of “from lot line to lot line”).
Beyond the obstacles imposed upon existing multiple-location MRB seeking to navigate and comply with onerous and seemingly random restrictions, the confounding compliance burden weighs against prospective business owner opening in New Jersey.
How Municipalities Derail IntoxicantsDespite complete state and federal legality, municipalities are increasingly prohibiting and prosecuting “Rogue Intoxicant” sales and production imposing civil and criminal penalties on both the business and its owners.
First, despite acknowledging legality under both the Farm Bill and laws of its home state, Illinois’s Rolling Meadows City Council unanimously approved an ordinance prohibiting Rogue Intoxicant sales subject to penalties ranging from $50 to $1,000 per violation and business license suspension or revocation.
Second, following an Allen, Texas smoke shop raid seizing $8,000- $10,000 of hemp-derived intoxicants (plus phone, laptop, iPad and computer drives), the owner, his wife and son were arrested, jailed and charged with “manufacturing a controlled substance” in a state in which Rogue Intoxicants are fully legal.
In his suit against the police, sheriff and DEA, the proprietor claims that, “The DEA, Allen Police Department, and Collin County Sheriff’s Office targeted his small business, bringing the full force of the federal government, teamed with an aggressive, headline-seeking police department, and together they treated him like the kingpin of a drug cartel, despite hemp being legal.”
Reprinted with permission from the October 31, 2024 edition of the The Legal Intelligencer©2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or [email protected].