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A federal court has partially blocked New Jersey’s new hemp law, finding it unlawfully restricts sales and transportation of federally legal hemp products and discriminates against out-of-state businesses.
Federal Judge Zahid Nisar Quraishi granted a partial win to hemp businesses on Thursday, challenging the state’s new law on intoxicating hemp products but refused to strike down the law in its entirety, as first reported by New Jersey Monitor.
A group of hemp businesses filed a lawsuit challenging the New Jersey Hemp Act Amendments (NJHAA), arguing that its stricter THC regulations violated federal law and the U.S. Constitution.
They claimed the law conflicted with the 2018 Farm Bill by criminalizing federally legal hemp products and unfairly favored in-state businesses over out-of-state competitors, violating the dormant Commerce Clause.
The judge accelerated the ruling as businesses would have until October 12 to remove intoxicating hemp products from shelves. After that date, those products cannot be sold again until the state agency establishes regulations.
The court sided with the plaintiffs, ruling that parts of the NJHAA were preempted by federal law and discriminated against interstate commerce but upheld certain provisions, such as the ban on sales to individuals under 21.
However, the impact of the judge’s decision on New Jersey’s hemp industry is still unclear.
The NJHAA, effective on October 12, established new limits on what can be sold as hemp and how such products may be sold, including how much THC those products can contain. In September, New Jersey passed Senate Bill 3235 regulating intoxicating hemp products, banning the sale of hemp products containing THC to minors and limiting sales to licensed cannabis businesses in the state. The same law, however, allows hemp-based beverages to be sold through liquor stores when the regulations are written.
In light of the new legal landscape created, plaintiff hemp businesses here argued that the NJHAA ran afoul of the 2018 Farm Bill, which allows the interstate commerce of hemp products containing no more than 0.3% THC. They further argued that the NJHAA was unconstitutional because of federal preemption and because it ran afoul of the so-called dormant Commerce Clause’s prohibition on state laws that discriminate against out-of-state businesses.
The state of New Jersey defended the NJHAA, claiming it was a legitimate state regulation aimed at protecting public health and safety, with clear guidelines for compliance.
Judge Quraishi ruled in favor of the plaintiffs, determining that the NJHAA was partially preempted by the Farm Bill and violated the dormant Commerce Clause by favoring in-state over out-of-state producers. The law’s definition of THC, which included “total THC,” was found to impose illegal restrictions on products compliant with federal regulations.
The court granted partial summary judgment, agreeing with the plaintiffs that the NJHAA’s restrictions on out-of-state hemp products, particularly its criminalization of products with over 0.3% total THC, were inconsistent with the Farm Bill’s express preemption clause. This clause prevents states from imposing limits on the transportation of federally compliant hemp products. The court also noted that the NJHAA’s provisions unjustly discriminated against out-of-state producers, protecting local hemp businesses at their expense.
While the judge did not completely overturn the NJHAA, he upheld certain provisions, including the ban on selling THC products to individuals under 21.
The ruling highlighted that while New Jersey has the authority to regulate hemp production within the state, it cannot criminalize the sale or transport of hemp products that adhere to federal law from other states.
Adam Terry, CEO of Cantrip, a brand that produces hemp-derived THC drinks and one of the plaintiffs in the lawsuit, said that the court order is a win for hemp, as it resolves legal conflicts with the state, including federal preemption. He expressed satisfaction that the ban on selling to minors remains, and the company is awaiting the state’s plan for moving forward.
“We are vindicated in the belief that an outright ban on hemp is not the path forward, and we must work together with lawmakers to develop sensible regulations that keep these products in the hands of adults that want them and away from the hands of children and teenagers while generating critical tax revenue for the State of New Jersey,” he said.
New Jersey is the latest state to crack down on intoxicating hemp products.
Last month, California restricted the retail sale of food, beverages, and dietary products containing intoxicating hemp. Stakeholders of the hemp industry are challenging California regulators, requesting a temporary restraining order to stop the state’s new emergency ban on these products.
Recently, Missouri’s ban on intoxicating hemp products has been paused, allowing these products to stay on store shelves while the state focuses on identifying misbranded items instead of imposing broad embargoes. Meanwhile, the state’s health department will send misbranded products to the Attorney General for enforcement without stopping the sale of compliant products.
Intoxicating hemp products like delta-8 THC have not been regulated at the federal level, creating a gray area in the law.
While some states are banning their use, others have implemented regulations.
The ban on these products is at the center of several legal battles at the state level, and hemp is being reviewed for the next Farm Bill, with some lawmakers and marijuana stakeholders advocating for a ban on the extraction of intoxicating compounds from hemp, which could result in significant economic losses for the hemp industry.
“}]] A federal court has partially blocked New Jersey’s hemp law for unlawfully restricting federally legal products and discriminating against out-of-state businesses. Read More