Welcome back to Higher Law, our weekly briefing on all things cannabis. I'm Cheryl Miller, reporting for Law.com from Sacramento.

This week we're talking about:

• The Ninth Circuit's punt on a highly watched hemp case • The death of a CBD bill in California • Big lobbying revenues from marijuana clients • Federal prosecutors talking pot in Portland

Hey, Higher Lawyers. I recently chatted with Law.com editor Vanessa Blum about the ever-changing world of marijuana law for the podcast Legal Speak. Check it out here. Let me know what you think and what I might have missed. And if you have any advice for listening to yourself on a recording without cringing, drop me a line at [email protected]. You can also reach me at 916.448.2935. Follow me on Twitter @capitalaccounts.

 

Big Sky Gets a Big No from the Ninth Circuit

That didn't take long.

One week after hearing oral arguments, a Ninth Circuit panel on Wednesday punted Big Sky Scientific v. Bennetts, the case surrounding a seized shipment of hemp, to the Idaho state courts.

In a brief memo, Circuit Judges Michael Daly Hawkins, M. Margaret McKeown and Jay Bybee said a federal magistrate in Idaho erred by not deferring to related state-level judicial proceedings, which include felony trafficking charges against the contract driver of the hemp and a forfeiture case tied to the shipment.

"Our decision is based in part on (1) Defendants' counsels' representation at oral argument that Idaho will immediately move to lift the stay in the in rem forfeiture action, and (2) the assumption that, apart from any criminal proceedings, the Idaho District Court will proceed expeditiously with the in rem action, including Big Sky's challenge to Idaho's interpretation of the federal Agricultural Improvement Act of 2018 (known as the 2018 Farm Bill), and Big Sky's Commerce Clause claims," the court wrote.

>> Bottom line: The hemp industry is not going to get the broad ruling it sought on the legality of interstate shipping under the Farm Bill, at least not right now.

"It's a disappointing ruling for Big Sky," said Stoel Rives partner Elijah Watkins, who is representing the Colorado-based hemp company. "We still believe the Ninth Circuit is the appropriate venue to hear a federal issue."

Duane Morris, which wrote an amicus brief in the case on behalf of the American Trade Association for Cannabis and Hemp, issued a client alert on the Ninth Circuit ruling late Wednesday:

>> "The Ninth Circuit's decision to 'punt' on the issues presented in the appeal leaves unanswered crucial questions about the legality of interstate of commercialization of hemp. However, to reach that result, the Ninth Circuit reversed the federal district court's decision interpreting the law so that the district court's opinion has no force or effect. It is now up to the Idaho court to decide the fate of the hemp shipment. But, unlike a federal appeals court decision that would have impacted multiple states, the Idaho courts' decisions are limited to Idaho."

Idaho police in January seized a Colorado-bound hemp shipment valued at more than $1 million, labeling the cargo illegal drug contraband. Idaho state law does not distinguish between low-THC hemp—designated a legal agricultural commodity by the 2018 Farm Bill—and its more potent cousin, marijuana.

Big Sky has intervened in the state forfeiture proceeding, which was stayed while the federal case proceeded. Watkins said Idaho authorities have refused to allow Big Sky to see the hemp, and company officials believe that the plants are "probably destroyed" by now.

California Hemp Bill Stalls

Speaking of hemp, a California bill that would have created a framework for the sale of hemp-derived CBD products has fizzled.

AB 228 failed to make it out of a fiscal committee by a legislative deadline, effectively shelving the bill for the year.

"We have been asked by the governor to work with his staff during the interim on the complex issues of food safety related to CBD, as well as the complicated rules associated with selling products in state marijuana dispensaries," the bill's author, Democratic Assemblywoman Cecilia Aguiar-Curry, said in a prepared statement. "I am confident that we will have a bill ready for the governor to sign at the beginning of next year, so that our California hemp farmers and producers of hemp-CBD can take advantage of this new multi-billion dollar opportunity."

The hemp industry is still waiting for the U.S. Food and Drug Administration to issue guidance on CBD edibles, topicals and dietary supplements. That's left states to take their own, different tacks on the increasingly popular derivative. In California, the Department of Health's position is that CBD is not allowed in foods, drugs and cosmetics, and both state and local regulators have ordered various products removed from shelves.

"This position by the California Department of Public Health has put our state in an Alice-in-Wonderland world, where adult consumers can walk into a licensed marijuana dispensary and purchase all manner of recreational cannabis products, but they cannot legally purchase non-psychoactive hemp products that they believe can bring them calm or reduce their pain," Aguiar-Curry said.

>> A separate bill, SB 153, which would create a state hemp cultivation program that conforms with the federal 2018 Farm Bill, was still awaiting an Assembly floor vote on Thursday.

Who Got the Work

• Boston-based law-and-lobbying firm Smith, Costello & Crawford reported $1.98 million in lobbying fees during the first half of 2019, a firm record fueled by active marijuana clients, according to the journal CommonWealth. Smith Costello has 30 marijuana clients, although only 16 actively lobbied during the filing period. "That has been our biggest growth area," Smith Costello partner Jim Smith told CommonWealth.

• San Francisco firm Emergent LLP has filed a proposed class action against marijuana tech firm Baker Technologies and the company it merged with in 2018, Tilt Holdings Inc., over alleged violations of state and federal anti-telemarketing laws. Emergent partner Peter Roldan will serve as counsel to plaintiffs who say Baker harvested customers' phone numbers and sent them telemarketing texts without their consent. The Telephone Consumer Protection Act suit is filed in the U.S. District Court in California's northern district.

In the Weeds

>> Federal prosecutors are talking pot in Portland. Billy Williams, the U.S. attorney in Oregon, is hosting federal prosecutors from California, Colorado, Florida, Vermont, Washington and West Virginia today for "a sharing of perspectives on the current state of marijuana." According to an agenda obtained by Marijuana Moment, the USAs will hear from law enforcement officers, federal regulators and the chief risk officer of a credit union that serves cannabis business clients. [Marijuana Moment]

>> A politician's marijuana ties blocked her bid for bankruptcy protection. A federal attorney with the Department of Justice's U.S. trustee program moved to dismiss Spokane City Councilwoman Karen Stratton's bankruptcy case because she and her husband own a share of a state-legal marijuana farm. The couple chose not to fight the motion. The Department of Justice under the Trump administration has increased challenges to bankruptcy filings by debtors with ties to state-legal marijuana assets. [The Spokesman-Review]

>> Would better banking access really be a good thing for a nascent marijuana industry? The New York Times opinion writer Christopher Caldwell questions whether easier access to capital and "sophisticated banking" might "turn an artisanal space into a corporate one." Big money begets big corporations, Caldwell writes. "Would we be content with a Microsoft of marijuana?" [NYT]

>> What are recruiters looking for in cannabis counsel? Risk-takers, say two in-house counsel recruiters at Major, Lindsey & Africa. "Finding that person in a pool of qualified people who are willing and able to leave the security of what is probably a pretty good job is difficult," said Major Lindsey's Gigi Birchfield. [Law.com]

>> Why didn't New Jersey Gov. Phil Murphy sign an expungement bill? In a 19-page conditional veto message, Murphy said he wants a system for clearing marijuana convictions that's less time-consuming and costly for those who are eligible. Critics say the changes Murphy is seeking would actually shrink the pool of people who would qualify for expungement. [New Jersey Law Journal]

 

What's Next: The Calendar

Sept. 6 - Summit County Public Health presents the program "The Medical Marijuana Symposium: Ohio's Changing Landscape" in Akron. Listed speakers include Marcie Seidel, a member of the Ohio Medical Marijuana Advisory Committee, and Karen Pierce, managing director or Working Partners Systems, Inc., which advises employers on complying with Ohio's medical marijuana laws.

Sept. 15-16 - The International Cannabis Business Conference takes place in Vancouver, B.C. Scheduled speakers include Lori Ajax, chief of the California Bureau of Cannabis Control and Tom Zuber of Zuber Lawler & Del Duca.