As an update to our previous blog post on the legal challenge filed by the U.S. Hemp Roundtable and other hemp operators to California’s new emergency hemp regulations, on October 11, 2024, the Superior Court of California for the County of Los Angeles issued an order denying the plaintiffs’ application for a temporary restraining order (“TRO”) following a lengthy hearing on October 10, 2024. After opining that issuance of a TRO is a “drastic remedy” that under California law requires “the exercise of a delicate power, requiring great caution and sound discretion, and rarely if ever, should be used,” the Court concluded that the plaintiffs failed to demonstrate sufficient irreparable harm and, likewise, failed to demonstrate a likelihood of success on the merits sufficient to support a such a drastic remedy.
According to the Court, the plaintiffs failed to demonstrate sufficient irreparable harm for several reasons, including:
- The fact that hemp operators can still sell final form food products without detectable levels of THC in California or, in the alternative, sell THC products through the legal cannabis system;
- The economic harms alleged by the plaintiffs were speculative; and
- Even if those harms were not speculative, any discussion of irreparable harm necessarily requires consideration of harm that is likely to result from granting the TRO and, in this case, the state’s interest in “protecting the health and safety of its residents – especially children – and closing a loophole that permitted the distribution of high doses of THC outside the regulated cannabis system outweighs the potential economic harm” alleged by the plaintiffs.
A subsidiary conclusion in the Court’s order was that the state’s purported basis for the emergency regulations to protect against a public health risk was amply supported by the record before the Court. Indeed, the Court stated that “the potential harm to Californians, especially children, outweighs the potential that individual hemp businesses will not be able to adapt to the new regulations.”
In turn, the Court also concluded that plaintiffs failed to meet their burden of demonstrating a likelihood of success on the merits. A key component of the plaintiffs’ legal challenge was their argument that the California Department of Public Health (“DPH”) failed to comply with the traditional notice and comment requirements of the state’s Administrative Procedures Act and could not rely on Health & Safety Code § 110065 to fast track the emergency regulations. The Court was highly skeptical of that argument, noting that § 110065 permitted the DPH to, among other things, “adopt any regulations that it determines are necessary for the enforcement of this part” and “adopt emergency regulations to implement this division.” In light of that language, the Court was not persuaded that the plaintiffs’ interpretation of § 110065 was necessarily correct. Applying recognized canons of statutory construction, the Court acknowledged the permissive nature of § 110065 in authorizing “any regulations,” including those adopted on an emergency basis, to implement the statute and, further, that there were no temporal constraints on such authorization. In other words, according to the Court, § 110065 does not necessarily preclude the DPH from adopting additional emergency regulations based on new circumstances.
Also central to the plaintiffs’ legal challenge was the argument that the emergency regulations conflict with the Farm Bill’s express preemption clause, which prevents states from interfering with the “transportation or shipment” of hemp in interstate commerce. Although not totally dismissing the notion that certain restrictions within the emergency regulations might, in theory, run afoul of this federal prohibition, the Court elected to narrow its inquiry to the central focus of the plaintiffs’ challenge – that is, the ban on distributing intoxicating hemp products in California. The Court noted that even if the plaintiffs were correct in their interstate commerce arguments, they still would not be entitled to a TRO because intoxicating hemp products can no longer be manufactured or warehoused within the state, meaning that there would be nothing located in California to ship to another state. Finally, the Court also summarily dispensed with plaintiffs’ void for vagueness due process argument, concluding that the definitions of “detectable” and “limit of detection” in the emergency regulations did indeed provide fair notice of the standard of detection to the industry.
Although the plaintiffs failed to meet the exceptionally high burden for obtaining the prayed-for injunctive relief, the Court’s order did seem to provide at least some sliver of hope that the plaintiffs may ultimately be able to succeed on the merits of their federal preemption claim. The express preemption clause of the Farm Bill has proven to be a third rail of sorts for states seeking to regulate intoxicating hemp products. It will be interesting to see how the Court evaluates plaintiffs’ preemption claim at later stages of this litigation. The case is now scheduled for a trial setting conference on November 22, 2024.
