Clark Kauffman, a writer for the Iowa Capital Dispatch, authored the following paragraph:
“The plaintiffs will be stuck in a regulatory limbo as of July 1, 2024.”
Another set of businesses has filed a lawsuit against the new hemp law for its recent hemp legislation, which imposes limitations on the THC levels of consumable products.
According to the latest reports, eight companies have claimed that the regulations they are required to follow to comply with the new state law that restricts hemp-related consumables may not be finalized until July 17th at the earliest. This is more than two weeks after the law became effective, which has raised concerns among these companies about their ability to comply with the regulations on time.
According to them, their products have been criminalized, and they are now stuck in a state of “regulatory limbo” due to the actions taken by the government.
Another lawsuit has been filed against the state, making it the second of its kind. Climbing Kites, a Polk County beverage manufacturer, and Field Day Brewing Co., the Johnson County producer of the Day Dreamer line of cannabis sparkling water, filed the first lawsuit last month over the same law and requested an injunction to prevent its enforcement.
The state has been opposing the issuance of an injunction, claiming that it would be too early to do so since the regulations haven’t been finalized yet. However, Climbing Kites and Field Day have recently stated that even if the state decides not to enforce the regulations on July 1st, it would still cause irreparable harm to their business, as their partners are hesitant to purchase their product due to the current risk of imprisonment.
Chief Judge Stephanie M. Rose of the U.S. District Court denied Climbing Kites and Field Day’s motion for a preliminary injunction on Friday. She expressed her “serious concerns” about the law’s constitutionality, citing its vagueness in defining a serving size and limiting the amount of THC in each serving. Rose also highlighted the ambiguity surrounding the enforcement of this provision.
She claims that the plaintiffs’ main justification for opposing the law is the federal law’s preemption. However, she states that there is no evidence to support this position.
All of the companies that are currently suing the state of Iowa are local businesses based in the state. Among them are HW Premium CBD, located in Urbandale, American Shaman which operates retail locations in Altoona, West Des Moines, and Indianola, as well as Greene Goods Market and Greenhouses in Jefferson. Your CBD Store, a national franchise with a store in West Des Moines, is also on the list of plaintiffs, along with Beyond CBD located in Des Moines, Campbell’s Nutrition Centers in Des Moines, Sky High in Cedar Falls, and Icanna of Iowa.
In the U.S. District Court for the Southern District of Iowa, they have filed a lawsuit this week to challenge the constitutionality of House File 2605 and House File 2641. Both of these files were passed by state lawmakers to regulate the production and sale of hemp and its products in Iowa.
Businesses: We stand to lose hundreds of thousands of dollars
On May 17th, Governor Kim Reynolds (R) signed the legislation into law, citing her concerns with the measure. However, she ultimately decided to prioritize the protection of minors from dangerous and intoxicating products.
According to the new legislation, the concentration of THC in both a container and a single serving of hemp-related consumables must be limited. However, some companies are arguing that this law will essentially shut down the Iowa cannabinoid business by restricting the use of synthetic tetrahydrocannabinol in any consumable hemp product.
According to reports, the newly enacted law fails to make any provisions for the hemp-derived products that have been legally sold in Iowa for the past year. As of July 1st, these products will be classified as controlled substances, exposing anyone who possesses them to the risk of criminal and civil enforcement.
This year, Iowa passed two bills that mandate the Iowa Department of Health and Human Services (DHHS) and Iowa Department of Agriculture and Land Stewardship (IDALS) to create regulations for implementation and enforcement. Although DHHS has developed draft regulations, they are not expected to be finalized until July 17. On the other hand, IDALS has yet to propose any regulations, as stated by the plaintiffs.
According to the lawsuit, come July 1, 2024, the plaintiffs will be caught in a regulatory limbo. The lawsuit claims that vital phrases remain undefined, and instructions on how to comply with provisions have not been provided. Furthermore, the regulations intended to provide clarity on these matters will not be implemented until at least two weeks after the law goes into effect.
The absence of finalized regulations has resulted in several unresolved issues, including the requirement for a warning notice on every container of consumable hemp product. The notice is intended to make consumers aware of potential risks associated with the product’s use, but the exact wording of the warning has not yet been specified by DHHS.
The 2018 Farm Bill, which legalized hemp and hemp-derived products, initiated the dispute. Iowa removed hemp and hemp products from its controlled substances list and legalized production and sale of these products in the state following the Farm Bill’s approval.
Iowa has opened the doors to a new industry with the approval of additional state legislation in 2020, which regulates consumable hemp products. However, House File 2605 has limited the definition of a legal, consumable hemp product by setting a maximum THC concentration of three-tenths of 1 percent on a dry weight basis, or 4 milligrams per serving, or 10 milligrams per container—whichever is less.
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According to the plaintiffs, the new law’s intention to safeguard minors from accessing these products is easily undermined. They point out that while the law prohibits many of their products, it is possible to legally sell them by repackaging them into smaller portions, thereby reducing the overall THC content per container.
The lawsuit alleges that the newly enacted law lacks restrictions on purchasing, allowing consumers to buy eight smaller bottles of a product instead of a larger-sized bottle.
According to the new law, HW Premium CBD expects to suffer a loss of $171,000. Unfortunately, American Shaman, also known as A.J.’s Health and Wellness, has already been forced to close one of its stores and may soon have to close its remaining locations. Beyond CBD anticipates a revenue loss of nearly $200,000, while Campbell estimates that they will lose $50,000 per month. These projections are a cause for concern for these CBD companies.
According to the businesses, the state’s recent legislation is in violation of their due process rights and is preempted by the federal Farm Bill. They are urging the court to grant an immediate stay of enforcement of the law, as well as a restraining order and injunction to prevent its enforcement.
As of now, the lawsuit remains unanswered by the state.
Iowa Capital Dispatch was the first to publish this story.
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Kimzy Nanney graciously provided the photo featured in this article.
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