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The Court concluded that the 2018 Farm Bill explicitly included all hemp derivatives, including psychoactive substances such as delta-8 THC, in the definition of hemp.
On May 19, 2022, the United State Court of Appeals for the Ninth Circuit (9th Circuit) ruled in a landmark case regarding the legality of delta-8 tetrahydrocannabinol (delta-8 THC).
The 9th Circuit held, in AK Futures LLC v. Boyd Street Distro, LLC, that the plain and unambiguous text of the 2018 Agricultural Improvement Act (2018 Farm Bill) compelled the court to the conclusion that e-cigarette and vaping products containing delta-8 THC are lawful.
The 2018 Farm Bill Legalized Hemp Derivatives and Extracts, Which Includes Intoxicating Cannabinoids Such as Delta-8 THC Flower
In the opinion, the Court analyzed the text of the 2018 Farm Bill to determine whether hemp-derived delta-8 THC was lawful. The 2018 Farm Bill removed hemp from the Controlled Substances Act (CSA) definition of “marihuana” as well as tetrahydrocannabinols in hemp. The Court then turned to the definition of “hemp,” which in full reads as follows:
The term “hemp” means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 [THC] concentration of not more than 0.3 percent on a dry weight basis.
The Court analyzed the language of the 2018 Farm Bill as follows:
Importantly, the only statutory metric for distinguishing [CSA] controlled marijuana from legal hemp is the delta-9 THC concentration level. In addition, the definition extends beyond just the plant to ‘all derivatives, extracts, [and] cannabinoids[.] This seemingly extends to downstream products and substances, so long as their delta-9 THC concentration does not exceed the statutory threshold[.] Certainly, a substance must be a derivative, extract, cannabinoid, or one of the other enumerated terms to fall within the 2018 Farm Bill’s statutory definition. However, these terms do not impose meaningful constraints.
The Court concluded that the 2018 Farm Bill explicitly included all hemp derivatives, including psychoactive substances such as delta-8 THC, in the definition of hemp and therefore those compounds are lawful and distinguishable from “marihuana” under federal law. While this case dealt with delta-8 THC to the exclusion of other hemp-derived cannabinoids, its reasoning certainly suggests that hemp-derived cannabinoids and their downstream products, such as CBN, enjoy the same federal legality as delta-8 THC.
Context Is Key
It is important to note that this decision is only binding in states inside the jurisdiction of the 9th Circuit, which include Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. While this decision is likely to be persuasive in other regions, it is not dispositive and other Circuits could deviate from the 9th Circuits analysis.
While proponents of products containing delta-8 THC are justifiably pleased with this result, the facts of the case are important to consider when planning operations after AK Futures v. Boyd Street Distro. Here is how the Court framed the dispute:
AK Futures LLC, a manufacturer of popular e-cigarette and vaping products, brought suit for trademark and copyright infringement against Boyd Street Distro, LLC, a downtown Los Angeles storefront and smoke products wholesaler. According to AK Futures, Boyd Street has been selling counterfeit versions of its “Cake”-branded e-cigarette and vaping products containing [delta-8 THC] a chemical compound derived from hemp. Boyd Street contends that AK Futures does not have protectible trademarks for its Cake products because delta-8 THC remains illegal under federal law.
AK Futures was seeking to affirm an injunction issued by the District Court to prevent Boyd Street from continuing to infringe on its intellectual property. An injunction is an order from a court that enjoins (stops) a person from beginning or continuing an action that threatens another person’s legal rights. The District Court enjoined Boyd Street from selling goods bearing imitations of AK Futures’ two Cake logo trademarks or copying of Cake’s branding and from “reproducing, distributing . . . , or displaying” copies of the copyrighted Cake design.
Via Getty Images/ArtistGNDphotography
To obtain a preliminary injunction, a party must show, in part, that it will likely succeed on the merits. Boyd Street did not contend that it was selling counterfeit Cake products, instead it argued that AK futures could not own a valid trademark because delta-8 was illegal under federal law. The Court held that “AK Futures is likely to succeed on its trademark claim because its delta-8 THC products are not prohibited by federal law, and they may therefore support a valid trademark.” In reaching this conclusion, the Court first determined that AK Futures legally used the Cake brand in commerce.
To Read The Rest Of This Article By Daniel Shortt on The Fresh Toast via Green Light Law Group
Published: May 30, 2022
