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Texas Legal & Regulatory News

Texas smokable hemp ban case heard in court now awaits judgment

Several prominent smokable hemp producers argued in court on March, 22nd that the state’s smokable hemp production and retail ban we’re unlawful.

Several prominent smokable hemp producers argued in court on March, 22nd that the state’s smokable hemp production and retail ban were unlawful.

Previously, DSHS equated the ban on the manufacture of smokable hemp products in HB 1325 to a ban on the sale. He asserted it was the intent of that bill. Eldred implied that HB 1325 grants this and DSHS is only making it explicitly known.

In opening statements the plaintiffs argument was led by Matt Zorn. The state claimed that regulating hemp this way is that it is related to enforcing marijuana laws. Zorn compared this to the state saying that if it needs to focus on enforcing cocaine laws, to which it then tries to ban baking soda use. It wouldn’t make any sense to do so.

Zorn stated that Hemp is an entirely legal good. That the state has created a regulation and law on a legal good with no rational basis for doing so. Noting it is an oppressive burden to the market and businesses, comparing this to the oppressive burden noted in the TX SCOTUS case Patel v. Dep’t of Licensing & Regulation which found that the training required for eyebrow threading was an irrational oppressive burden for the occupation. Zorn leads that the court needs to find if the interest of the government outweighs the oppressive burden created.

Zorn reiterated that enforcement of marijuana laws is the issue at hand and DSHS states that it is also about cops not being able to immediately know the difference between hemp and marijuana. From there he elaborated that if that is the goal, then it would mean that reducing the prevalence of people smoking would have to be what takes place for that goal to be reached. This enforcement however will not reduce the prevalence as officers do not know the difference at face value. The fact people can make this on their own and smoke in public keeps that prevalence from being reduced.

Charles K, Eldred, representing DSHS and the State of Texas, started his argument by noting the marijuana and hemp are the same plants, Cannabis Sativa L. That the legislature passed a law for hemp to e regulated which is cannabis Sativa l. So it has a job to regulate the two as the same while following the definition of hemp as described by federal law, scheduling, and Texas law.

Livingston asked Eldred to describe what the change was from before Texas passed its own hemp law via the 86th legislature.

Eldred further stated that in the ’70s hemp and marijuana were just called marijuana, but that today the two are separate because of the psychoactive response upon ingestion and are not separable using other senses. The ban focuses on how hemp isn’t distinguishable from marijuana. Now, hemp is considered legal but given the change in technology, we can tell the difference quicker. He also pointed out that there had been a long-time ban on hemp until recently, and the smokable products. Eldred provided no evidence of such.

Livingston asked if there is a rapid test to determine the difference. If there is a suggestion that these companies that existed before the ban went into effect that is making hemp by a THC definition, are also in the business of marijuana which is legal, isn’t there a simple test to distinguish the two?

Eldred noted that nobody is suggesting they are making marijuana products. The issue is somebody smoking what is believed to be joint of marijuana and not hemp at face value.

Livingston asked how a product made in Oregon and legal to be imported into Texas, is going to be solved by this ban, how will it solve the LEO reaction.

Eldred said the law meets a rational basis and compared it to the plastic bag ban that was put in place in Austin, TX. That it has a conceivable basis. Along with that, the state has the right to ban the manufacture of any item in Texas. From there Eldred admitted that the law isn’t perfect, but still rational which is the bar he claims the law has to meet. He then reminded Judge Livingston that this is a facial challenge and that the burden of proof is on the plaintiffs as they made the claim.

Eldred also claimed that prior to 2019 that nobody was authorized to create Hemp products in Texas or anywhere because it was a schedule 1 substance. That from there he has no idea what these companies were doing before the legislative bill was passed, as he claims the manufacture was still illegal in Texas.

Livingston pointed out the Wild Hemp Hempettes was in business prior to 2019 and that a company with HEMP in the title was obviously involved with Hemp. Furthering that the state obviously knew that this company was around, but if illegal why nothing was done then.

Livingston asked how the law advances the goal that DSHS claims if the public can go around the sales ban and still smoke in public. DSHS admitted that it would just reduce the prevalence because sales aren’t available the law isn’t perfect.

Eldred continued using the same basis repeatedly, in different terms, for the states opening argument.

In the evidence presentation economist Robin Goldstein was brought forward to discuss the economic fallout a ban would have on the industry. His calculations states that it would be $2.9 million minimum possible profit loss for partial closing with reopening in Oklahoma, and up to an estimated $13.8 million if the ban is in full effect with no relocation and a complete shutdown of just Wild Hemp Hempettes in Dallas. Goldstein then calculated $1.4 million in relocating cost and $54 thousand in ongoing monthly costs for things such as maintaining labor force during relocation fees. These figures were just for Wild Hemp alone in Texas, and not countless other businesses.

Eldred objected to several questions asked of economist Goldstein, stating that testing and the issue of prevalence was not in the realm of Goldstein’s profession of economics, as he considered these technological questions. Livingston sustained the objections.

Sarah Kerver noted that the business she owns, 1937 Apothecary, which sells and manufactures smokable hemp products would likely go out of business entirely if the ban is put into full effect.

“This would put my employees and daughter out of work as well. This is a legacy business,” Kerver stated.

Kerver further explained that if she operated outside of Texas she would be able to still sell to Texas residents. That if only the retail ban was upheld, she would be able to manufacture, send them to a business outside of Texas, and then they could be sold to Texas residents again. If a complete shutdown happens, her legacy would disappear with the business.

Zorn later stated in the case that the law itself has contradictions with other existing laws in the state.

In their closing arguments, Zorn reiterated what was standard required by the Patel case and that the state had shown no evidence to the contrary of their own presentation. Eldred repeated the same basis and terms that the state expected for the law.

Full disclosure: Funding for the legal fees and attorneys on the case is coming from plaintiffs. A small fraction of expert research and court appearance fees funding comes from the Texas Hemp Legal Defense Fund which also looks to fund other cases without private plaintiffs. Texas Hemp Reporter receives no compensation from this fund and is only involved in the reporting of the current case.

A date has not been set for any more testimony or judgment as another hearing has to be held about redacting proprietary information. The temporary injunction is still in place.

It will be noted that of the speaker in the case, Eldred was consistently cutting in and out as it appeared he had a poor audio connection and Zoom issues at the beginning of the hearing.

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