Judge doubtful of feds’ lawsuit against hemp farm

January 20, 2019

CHARLESTON - A federal judge voiced doubt last week over the U.S. government’s civil prosecution of a Mason County hemp farm and related parties.

On Thursday, U.S. District Judge Robert C. Chambers lifted a stay in the case caused by the partial government shutdown and dissolved an injunction that prevented the farmers from transporting or selling their hemp.

But after U.S. Attorney Mike Stuart and his office made a motion seeking to test the hemp, Chambers delayed his lifting of the injunction until Wednesday, Jan. 23, to give defendants a chance to respond to Stuart’s request.

While Chambers noted his Thursday order is not a final judgment, he said he has “become increasingly doubtful of the government’s case on the merits” and mentions the passage of the federal Farm Bill, which legalized industrial hemp.

“Despite being enacted after the issues in this case arose, the 2018 Farm Bill expresses congressional intent that current public policy supports states exercising primary control over hemp production,” the order states.

West Virginia legalized production of industrial hemp for research purposes in 2017 under an earlier iteration of the Farm Bill.

Stuart and his lawyers argued previously that the passage of the Farm Bill had no impact on the case because it happened after the alleged offenses. They also argued the farmers “created the problems of which they now complain” regarding contractual deadlines to process the hemp because they did not adhere to their original project description.

In a shift from the original thrust of the lawsuit, Stuart also argued the injunction should remain in place because the defendants plan to use the hemp to produce CBD, which is generally illegal unless it comes in the form of Epidiolex, an FDA-approved drug.

Chambers brushed aside the CBD argument.

“The mere potential of a downstream use that may violate certain federal regulations does not entitle the government to an injunction on producing and selling the CBD isolate here,” the judge wrote. “In fact, there is no evidence before this court that defendants will be adding the CBD isolate to food or health products or making unsubstantiated health claims about the benefits of CBD without approval of these agencies.”

A lawyer representing Matthew Mallory, one of the farmers, said he was happy with Chambers’ Thursday ruling. He made those comments before Friday’s order, however.

“For my client, this isn’t an academic exercise. This is his livelihood,” Carte Goodwin said. “He was happy to see the court’s reasoning, happy to see the court express skepticism over the government’s case, and most importantly, happy to see he can harvest and sell his crop, which is what this whole case is about.”

Goodwin made his comments before Chambers’ order Friday temporarily keeping the injunction in place.

In the original lawsuit, Stuart alleged the defendants - Mallory, Alternative Medicinal Options LLC, Gary Kale and Grassy Run Farms - obtained their hemp seeds unlawfully in Kentucky, in violation of their licensure proposal with West Virginia.

Stuart also alleged they did not install security measures around the farm like fencing, a gate with a chained lock, cameras, and signage to note the difference between hemp and marijuana.

Hemp is a product legal under state and federal law that comes from the same cannabis sativa plant as marijuana, although it is comprised of less than 0.3 percent of THC, the psychoactive component of marijuana.

According to information from Bob Troyer, a former U.S. attorney from Colorado who oversaw the state’s transition in legalizing recreational marijuana, the average strain of marijuana is about 70 percent THC.

Stuart’s lawsuit charges the farmers with the manufacturing, possession of and intent to distribute marijuana - not hemp - in violation of the federal Controlled Substances Act (which no longer includes hemp, thanks to the Farm Bill).

Because the charges are civil and not criminal, the farmers’ plants, property, equipment and seeds could all be seized and forfeited to the government. Stuart’s complaint states the U.S. is subject to receive either $250,000 in civil penalties or twice the sum of the defendants’ gross receipts, whichever is greater.

Late Thursday, Stuart filed a motion with the court stating the hemp “needs to be tested” to see if it’s above the 0.3 percent THC threshold, which would make it marijuana in the eyes of the law, not hemp. He offered no evidence indicating reason to believe the hemp is above the threshold.

Crescent Gallagher, a spokesman for the West Virginia Department of Agriculture, which regulates industrial hemp, said the department has not tested the farmers’ crop since the harvest, citing a broken machine.

Goodwin said although the move to request the THC testing “reeks of desperation,” Mallory has no problem seeing the crop tested.

“It’s pretty disingenuous for the U.S. Attorney’s Office to use that as a grounds to further delay this case when they’ve had four months while the crop was sitting in Mason County to ask for this,” he said.

Defense attorneys, who also include Elise McQuain and Philip Reale, had not yet responded to the motion as of Friday evening.

Reach Jake Zuckerman at jake.zuckerman@wvgazettemail.com, 304-348-4814 or follow @jake_zuckerman on Twitter.

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