NY hemp companies re-file lawsuit that shut down market for ‘diet weed’ products

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A group of New York companies have re-filed a lawsuit against the state, seeking an injunction that would let them continue to sell intoxicating hemp products.

Claiming enforcement of new rules governing hemp-derived cannabinoid products cost them millions of dollars in losses, the state-licensed hemp operators re-entered a suit against the New York Cannabis Control Board (CCB) and Office of Cannabis Management (OCM) after a judge earlier this month threw out a previous, similar case on technical grounds.

The plaintiffs say raids that were part of a broader crackdown on New York’s illicit cannabis trade continue to envelop the market for delta-8 THC and other intoxicating cannabinoids made from hemp, after revised hemp regulations started to be enforced in November.

Alternatives to pot

The group filing the lawsuit includes CBD producers, distributors and sellers trading in hemp products that contain synthetically produced compounds such as delta-8 THC that in concentrated form can give users a “high.” Products that include the compounds have been called “diet weed” or “marijuana light,” and are marketed as alternatives to marijuana.

The producers say the regulations are unconstitutional, and that the state has violated their rights to due process. The new rules established a 15:1 CBD-to-THC ratio, which immediately made an estimated 75% of already available hemp goods suddenly illegal in the state, the plaintiffs claim.

Some companies had hundreds of thousands of dollars worth of hemp goods confiscated, causing several to have to shutter operations that previously had been profitable, the lawsuit further charges.

Back and forth

Some parties to the latest federal lawsuit won a victory in a similar case that reached the New York State Supreme Court. That decision allowed them to overcome strict emergency measures put in place by the state last August intended to spur enforcement of rules adopted in 2016 that prohibit the sale and possession of all such compounds.

But after the state Supreme Court ruled against the state agencies in November, the CCB and OCM issued further regulatory updates. It is those most recently revised rules and their enforcement that are challenged in the complaint re-filed late last week.

A ruling in the plaintiffs’ favor could limit states’ abilities to regulate intoxicating hemp-derived cannabinoids, while a ruling in favor of the regulators would bolster all states’ authority to regulate or ban hemp-derived goods as they wish, notwithstanding the 2018 Farm Bill, which legalized hemp and its downstream products.

Hearing set May 9

Judge Edgardo Ramos, assigned to the new case, has scheduled a hearing for May 9 on the plaintiffs’ request for an injunction to bar the state from enforcing the rules.

New York is the third biggest CBD market among U.S. states, with 2024 sales projected to be $1.5 billion, according to data provider Statista, which ranks California the biggest, at $3.3 billion, and Florida the second biggest at $1.8 billion.

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