In what appears to be a landmark verdict, in late September Chief Admisitrative Law Judge Honorable James G. Gilbert of the United States Postal Service Judicial Officer Department wrote an opinion ruling in favor of an appeal filed by Colorado Hemp Cultivator KAB, LLC after the United States Postal Service (USPS) seized a package in January 2018 in Denver, Colorado containing 1,170 Grams of Cannabidiol (CBD) Powder (est. value $35,100 at $30.00 retail per gram) that was derived from industrial hemp. The USPS claimed this package was a controlled substance and deemed an nonmailable Item. Upon seizure, KAB worked with Courtney Moran, Esq. of EARTH Law, LLC to file an appeal stating that the hemp derived CBD powder was in fact not a controlled substance and therefore should not have been seized and witheld.
KAB appealed USPS’s decision, arguing that the powder was not a controlled substance and therefore should not have been withheld. Administrative Law Judge (ALJ) James G. Gilbert oversaw the appeal and wrote an opinion in favor of KAB. The Judicial Officer Department is a neutral, independent forum within the United States Postal Service comprised of the Judicial Officer, the Office of Administrative Law Judges, and the Postal Service Board of Contract Appeals. Hon. James G. Gilbert is the Chief Administrative Law Judge along with Judicial Officer, Hon. Gary E. Shapiro and Associate Judicial Officer, Hon. Diane M. Mego. The Judicial Officer and Office of Administrative Law Judges perform quasi-judicial duties as designated by the Postmaster General, applicable statutes and regulations. The Judicial Officer is the agency for the purposes of chapter 5 of Title 5, to the extent those functions are delegated to him by the Postmaster General.
In the opinion presented, Judge Gilbert considered whether or not the CBD grown and cultivated from industrial hemp, in accordance of Section 7606 of the Agriculture Act of 2014 (Farm Bill), was nonmailable as a Schedule I Controlled Substance as claimed by the USPS upon seizure. The Judge stated that marijuana is in fact classified Schedule 1 under the Controlled Substances Act (CSA) and that specifically that “CBD that is a derivative of the marijuana plant, as defined under the CSA, is non-mailable.” This ruling further draws the line of acceptability regarding what is deemed industrial hemp and what is marijuana. Few may know that in many states, plants are tested prior to harvest and those with THC levels exceeding the allowed amount of industrial hemp must be destroyed. See: Hot Hemp: How High THC Levels Can Ruin a Legal Hemp Harvest
United States Postal Service Publication 52 is the section regarding Hazardous, Restricted, and Perishable Mail § 453.31 (Aug. 2017) states that“[i]f the distribution of a controlled substance is unlawful under [the CSA or related regulation] than the mailing of the substance is also unlawful under 18 USC § 1716.” In his opinion, Judge Gilbert again cited the Farm Bill of 2014 reciting the well-known § 7606, which establishes the following:
Notwithstanding the CSA, a state department of agriculture may cultivate industrial hemp if it is grown for the purpose of research conducted under an agricultural pilot program and is permitted by state law.
Industrial hemp means the plant cannabis sativa L. and any part of such plant, whether growing or not, with less than .3% THC on a dry weight basis.
Judge Gilbert went on to identify that the Farm Bill and Controlled Substances Act indeed to appear to be in conflict when it comes to CBD and industrial hemp. The Controlled Substances Act broadly defines marijuana to include nearly every element of the cannabis plant while the Farm Bill defines industrial hemp as all parts of the cannabis part of the plant as well. The only true difference, as consumers of CBD Oil are learning, is the 0.3% threshold that defines marijuana or industrial hemp, as both are the cannabis plant. Industrial hemp has begun to have a more broad range beyond just what was once grown for stalk or seed with Phytocannabinoid Rich Hemp being grown specifically for it’s CBD contents and medicinal purposes. To many, this hemp CBD looks and smells like marijuana, further adding confusion to the current status of hemp. Administrative Law Judge Gilbert determined in his opinion that the Farm Bill drew a “clear and distinct difference by delineating that the plant with less than 0.3% THC concentration is industrial hemp.”
The Honorable Judge Gilbert also referenced the very ridiculous DEA’s Statement of Principles on Industrial Hemp that reiterated their position determining sale and transport of industrial hemp across state lines was prohibited. Judge Gilbert gave that statement little weight in his opinion and wrote, “in correspondence from members of Congress to agency officials, the [Statement’s’ legitimacy as a valid interpretation of the Agriculture Act of 2014 was strongly criticized.”
It was statutory interpretation that was the primary determining factor of the opinion with a focus on the use of “notwithstanding” in the Farm Bill:
By choosing to define industrial hemp based upon the concentration of THC in the plant Cannabis sativa L, Congress did not amend the CSA so much as carve out a clear exception for industrial hemp. The language “[n]otwithstanding the Controlled Substances Act” is particularly instructive in this regard. “The Supreme Court has indicated as a general proposition that statutory ‘notwithstanding’ clauses broadly sweep aside potentially conflicting laws.” United States v. Novak, 476 F.3d 1041, 1046 (9th Cir. 2007) (citing Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993)) (“As we have noted previously in construing statutes, the use of such a ‘notwithstanding’ clause clearly signals the drafter’s intention that the provisions of the ‘notwithstanding’ section override conflicting provisions of any other section.”)[.]
EARTH Law LLC stipulated to the fact that KAB had was registered with Colorado Department of Agriculture (CDA) and possessed a license to cultivate industrial hemp. It was this industrial hemp that was used to create the CBD powder. Within the package of 1,170 Grams of CBD Isolate seized by the USPS was “Industrial Hemp Inspection and Chain of Custody” paperwork from the Colorado Department of Agriculture that verified the powder was derived from a crop of industrial hemp with less than .3% THC and an approves substance. The CBD isolate also tested for low amounts of THC. Given the clear evidence that the powder was made in compliance with the Farm Bill, the Judge Gilbert ruled it was in fact a mailable product. KAB was returned the product that was seized.
Additionally, it has come to light from reddit’s r/CBD forum that another cultivator, Kalbra CBD, has been contacted by a Federal Postage Inspector that they are allowed to come pick up multiple pounds of hemp CBD flower (CBD Buds) that were confiscated after being sent from registered, approved and legal industrial hemp farms in Oregon to a retail location in Pennsylvania. Additionally, Pure Spectrum CBD had a case vs. the USPS over CBD package seizures which was also dropped. COO Dan Huerter spoke on the topic as well in a recent episode of The Drip on YouTube saying “We are very excited and we think this is a great day for the industry.”
This ruling is a wonderful precedent for the industrial hemp and CBD insdustries but continues to be a reminder that despite growing industrial hemp legally under the Farm Bill and state pilot programs, producing CBD below the 0.3% threshold, and even including a legal declaration of industrial hemp inspecition and chain of custody, hemp and CBD still remain a very confused area and issues can and will arise until the newest Farm Bill is passed and relief finally occurs for the industry as a whole. Unwarranted seizure, business disruption and litigation are expenses no business should have to endure.
You can read the full USPS Final Decision including Initial Decision, Relevant Facts Not in Dispute, Discussion and Order on the USPS website here: P.S. Docket No. MLB 18-39 – Appeal of the Determination on Nonmailability of Hemp CBD