The U.S. Court of Appeals for the Ninth Circuit has ruled that hemp-derived delta-8 THC is legal under the 2018 Farm Bill, in a case arising out of a trademark dispute in California.
Upholding a U.S. District Court’s decision, the appeals court found that the Farm Bill’s definition of legal hemp “expressly applies to ‘all’ such downstream products so long as they do not cross the 0.3 percent delta-9 THC threshold.”
The ruling is a victory for proponents of delta-8 THC, who have argued that the compound is a legal derivative of legal hemp.
Lesser known than delta-9 THC most commonly derived from marijuana plants, delta-8 THC naturally occurs in cannabis but only in trace amounts. Producers, however, have been turning out products with higher concentrations of delta-8 THC by putting hemp-derived CBD through a synthetic process.
Regulators and even some hemp stakeholders have pushed back against delta-8, suggesting the Farm Bill never intended hemp to be used for products that can be classified as psychoactive, and because delta-8 THC is not derived from the hemp plant in a natural manner.
The case in California involved e-cigarette and vaping products maker AK Futures, which claimed Boyd Street Distro, LLC, a Los Angeles retailer and wholesaler, was selling counterfeit products under AK Futures’ Cake brand.
Boyd Street countered that AK Futures products are illegal under federal law – meaning their trademarks cannot be infringed.
But the court ruled that the Farm Bill removed hemp and its derivatives from the Controlled Substances Act as long as they contain no more than 0.3% delta-9 THC – making the Cake-brand products legal. The Farm Bill is “plain and unambiguous” and “compelled the conclusion” in the case, according to the ruling, handed down last week.
Trademark infringement therefore can and did occur, the court further ruled.
“The record on appeal convinces us that AK Futures’ delta-8 THC products are lawful under the plain text of the Farm Act and may receive trademark protection,” the opinion states.
The court noted that the Farm Bill does not include a separate definition of “industrial hemp” and that a U.S. Code provision defining that term is open to even broader interpretation. Congress likely did not intend to impose a rule that hemp be produced exclusively for industrial purposes, the court therefore concluded.
Underscoring its strict reading of the 2018 legislation, the court said “ambiguous legislative history, nor speculation about congressional intent” can supersede the statutory language in the Farm Bill, and that if Congress left an unintended loophole for delta-8, it should revisit relevant laws.
“Regardless of the wisdom of legalizing delta-8,” the court will not “substitute its own policy judgment for that of Congress,” Judge D. Michael Fisher wrote in the 3-0 opinion.
The decision in California comes as states all over the USA are grappling with delta-8, which is unregulated by the U.S. Drug Enforcement Administration and had therefore fallen into a legal gray area. Some states have outlawed the compound altogether while others are treating it under rules for marijuana products.
While proponents of delta-8 may be cheered by the appeals court decision, the ruling is unlikely to cause the United States Patent and Trademark Office or other federal agencies to change their approach to hemp, according to analysis from Goodwin, a California-based law firm.
The appeals court ruling, which upheld a decision by the United States District Court for the Central District of California, affects producers in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. Producers in those states can now seek trademark protection for their delta-8 brands.