Vicente Sederberg Representing Hemp Industry In Federal Lawsuit Against The DEA

DISTRICT OF COLUMBIA:  A national hemp trade association and a South Carolina-based hemp company have filed a federal lawsuit against the Drug Enforcement Administration, challenging a rule the agency implemented last month that could have far-reaching consequences for the U.S. hemp industry.

The petition filed Friday afternoon in the U.S. Court of Appeals for the District of Columbia Circuit asks the court to review an interim final rule, “Implementation of the Agriculture Improvement Act of 2018,” which was promulgated by the DEA on August 21. The lawsuit claims the rule is unlawful because it exceeds the DEA’s legal authority and violates the Agriculture Improvement Act of 2018, also known as the farm bill. The petitioners also argue that acting DEA administrator Timothy Shea, who is individually named as a respondent along with the agency, issued the interim final rule without observing procedures required by law.

The DEA’s interim final rule clarifies that all hemp derivatives or extracts exceeding 0.3% THC shall remain Schedule I controlled substances. This could be interpreted to include intermediate hemp derivatives that temporarily exceed 0.3% during processing, but contain less than 0.3% in final products. As such, it improperly establishes the DEA’s authority over legal hemp activities, which is contrary to the plain language and intent of the 2018 farm bill, according to the petitioners.

The petitioners in the lawsuit are RE Botanicals, Inc. and the Hemp Industries Association.

RE Botanicals, Inc. is a hemp manufacturer and retailer based in South Carolina. In 2019, it acquired Palmetto Synergistic Research LLC (dba Palmetto Harmony), which was founded to provide lawful, reliable, and high-quality hemp products.

“We are a small, woman-operated company,” said Janel Ralph, CEO of RE Botanicals. “The DEA’s new rule could put us out of business overnight.”

HIA is a trade association that represents approximately 1,050-member hemp businesses, including approximately 300 hemp processors and individuals involved in, or impacted by, the manufacture, distribution and/or sale of hemp extract and other products lawfully derived from industrial hemp. HIA successfully challenged DEA rulemaking in 2003, when the agency amended federal regulations to include naturally occurring THC within the definition of “synthetic THC,” thereby treating it as a Schedule I substance despite it falling outside the definition of marijuana in the Controlled Substances Act.

“When Congress passed the 2018 farm bill, it explicitly carved hemp and its derivatives out of the Controlled Substances Act so that hemp can be regulated as an agricultural commodity,” said HIA President Rick Trojan. “The DEA’s interim final rule could create substantial barriers to the legal manufacturing of hemp-derived products, a critical component of the hemp supply chain, and devastate the entire hemp industry. Although the DEA states that is not its intention, the rule must be amended to ensure hemp remains an agricultural crop, as Congress intended.”

The petitioners are represented by leading hemp industry attorneys at Vicente Sederberg LLP, Kight Law Office PC, and Hoban Law Group, along with appellate attorneys from Yetter Coleman LLP, which has received national attention for its work against the DEA in the realm of cannabis research.

“The DEA implemented this rule without following proper rule-making procedures, such as providing the public with notice and the opportunity to comment,” said Shawn Hauser, a partner at Vicente Sederberg LLP and chair of the firm’s hemp and cannabinoids practice. “The petitioners believe legal action is necessary to protect the lawful U.S. hemp industry that Congress intended to establish when it enacted the 2018 farm bill.”

Helix Technologies Sells Security Guarding Business

COLORADO: Helix Technologies announced today the divestiture of its security guarding business. The strategic decision to sell the guarding unit solidifies Helix’s transition into a pure play technology company focused on the cannabis industry.

The divestiture of the guarding business is expected to increase gross margins and allow management to focus on growing the Company’s scalable, high margin suite of critical technology infrastructure services. Denver-based, Veteran-owned Invicta Group purchased the business and Security ProAdvisors LLC represented Helix in the sale. Helix will use the net proceeds to pay off existing liabilities and strengthen its working capital position.

“We are incredibly proud of what we have accomplished with Helix Security. In a short time, we went from start-up–without a single client– to the undisputed leader in the Colorado security market, clearing the field of well-established, larger competitors, and leveraged that dominant position to expand into higher-margin critical technology infrastructure, and data. Now we will continue to bring that same discipline to bear – focused solely on our core technology strengths and on creating a more streamlined value proposition for investors” said Zachary L. Venegas, Helix Technologies’ Executive Chairman and CEO. “The additional working capital and narrowed focus provided by the divestiture will allow us to accelerate growth and continue shaping the cannabis technology landscape.”

Paul Ballenger, Invicta Group CEO added “This is a tremendous opportunity for us and our investors. Helix built a dominant business, and I could not be more excited to leverage our expertise to continue the rapid growth. Recent social unrest has underlined the need for this type of service, and I am excited to help our clients continue to grow while feeling safe and confident in their future.”